In Hyderabad

Its hard to find an optimist in the Hyderabad Real Estate scene now a days.

DLF recently launched an apartment complex at Rs 1850 per sqft and with all amenities included you will get your apartment at the golden mile [ kokapet ] for around 2300 per sqft. Builders are sh**t scared and the local mafia is trying to play it down saying that a) Land is not cleard b) Permissions are not clear c) DLF is going to cut corners in quality etc., but I think DLF finally brought some sense of relief to the market led by lies.

They had the guts to agree that Land had some issues in the past and that some permissions are still pending. When it comes to quality, I dont think DLF will fare any worser on the Quality front compared to the local Hyderabad Builders. My Take, if you are ok with waiting for 3 years and have the cash, its a good buy. There are still some issues with the overall project, but its better to invest in a company that is being transparent instead of your neighbour’s milk man who turned into a real estate baron.  Will DLF stay afloat ?, thats a different question and only time will tell..

Auctions, Auctions, Auctions

1) HMDA put up a number of plots at slashed prices and could not evoke any interest in the plots at nallagandla etc.  Last I heard is that they received 20 bids for 500 open plots.. remember those days when they used to get 6 times the number of open plots..

2) DC recently reported that there are 20 thousand apartments up for Auction from defaulters. They dont call them foreclosures but this is equivalent to a Hyderabad Foreclosure list. Most assets I hear are from the overstretched Software Engineers who bought expansive homes based on future earnings and when jobs are tough to retain and when increments are hard to come by, they have no option but to default. I am still trying to figure out how I can get more info on these auctions and will post it if I get some more details

3) Car lots and Truck lots of financiers are full with repossessed vehicles.  Starting from Chit Fund Financing companies to banks that have funded a number of loans in this sector are trying to dump the depreciating assets. Fire sales are not on yet, but if the market continues like this for a while, I dont see the bottom holding  for too long

Hill County Blues : If you are invested in any of the properties of Maytas particularly in their Hill County development, you are in for a long drawn out litigation and battle with the state and Satyam share holders. Greed of Raju’s has ended up hurting a number of commoners who wanted to call this place home.

Hyderabad Job Scene : Its deteriorating day by day, just like in the US.  Most companies have stopped hiring except for a few critical roles.  During Mid 2007, Early 2008 there was an increase in employees leaving to be independent consultants and enterpreneurs and now a days a lot of them are coming back to find permanent roles as the market has really dried up. Class of 2009 is waiting for their offers to turn into a real Job as the big 4 have decided to delay the actual hiring even though they have rolled out the offers.   Indian IT companies continue to rake in contracts, but they  put stringent controls on cost to weather the storm.  Gone are the days of weekly dinners, monthly parties, quarterly offsites, 20-30 % raises etc.

Commercial Real Estate :This is turning into a night mare, Financial health of the large chains is not that great and they are negotiating atleast 25% reduction in cost per sq ft and owners have no choice but to agree. Large chunks of office space is lying empty as companies consolidate into one or two spaces instead of sprawling across the city.  DLF in gacchibowli has become the favourite destination with cost as low as Rs 30 / Sq Ft in a state of the art building.

Whats next ?.. I have no idea.. Is it time to buy real estate ?.. One plot that was proposed to me in Jubilee Hills at 80K last year is now back on the market at 45k per sq yd.. Is it time to buy ?.. I am not sure.. The good old agents keep telling that the market will pick up after the elections, but I am unable to make up mind.

For the time being I will stay put in metals/gold and ride it for a little longer before dumping them. With bargains all around, I am finally planning to venture out and pick a house/plot I like in the next couple of months. I may finally see my hope of buying a property on my terms turn in to reality after 2.5 years of arriving in Hyderabad.

PS : These are my opinions and mine only.. Do your own research before you take the leap.. Noobs to the blog, please read my past entries before you send me email about R2I etc.