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  #1  
Old 28th November 2017, 02:44 PM
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Default India Economy - House Booking - Money Flow



This question is related to Mumbai real estate - within and around. And I think this question is applicable to all other cities which has seen OR seeing boom in real estate.

In Mumbai, I see apartment costing nearly (more or less) 1+ Crore. These are getting booked, my question is from where these money comes?

Now my question is (take example of salaried class), in current time major slot of salaried employees will think twice to book house claimed to be 1+ Crore. And that too from pure savings of a person who is earning and wanted to buy.

I am not talking about sell one house (e.g. father’s house) and get money or get someone else money and buy house of crore.

I am not able to get full picture of this business or mentality of people clearly….

If you can share your insights, will be thank full…
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  #2  
Old 28th November 2017, 02:55 PM
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Default Some possibilities I can think of

Some possibilities I can think of –

1. People are now a days earning nearly few lakhs per month – in which they will be able to afford it.

But if this is true, I am 100% sure, the amount of people in this section will be very very less..

2. Majority of these booking comes from people, who sells their ancestor’s property, and transfer that in to another real estate

3. People who is earning slightly less but nearly lakh rupees a month, can go for loan, and buy… But in my opinion this is dangerous trend.

4. Black money – by which houses are getting booked.
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  #3  
Old 28th November 2017, 03:33 PM
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That is a good question - and even I have the same question. Actually, any decent 3 bhk costs anything beyond 2 cr, even in places like Bangalore. Someone like me who works in IT, and has a decent income, cannot afford it. So who are the people who can afford such houses - and are there really so many of them? Or is it, that the builders are marking up the price but there is no much sale?
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  #4  
Old 28th November 2017, 06:42 PM
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For Bangalore -

ok what I know and seen for Bangalore, my question holds true.. However, in Bangalore nearly all class is salaried. Guys who go for house buying are which has worth 1+ Cr has either 7 to 11+ experience, may be wife working, may have gone to abroad trip/s.

But sure thing in Bangalore is - this money is purely salaried + loan amount, by which houses are getting booked.

For Gujarat, MP, Raj Cities -

What I know/ think of - huge black money associated.. real estate business is down..

But is my assumption is correct? How's it in Vadodara? Ahmedabad?
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  #5  
Old 29th November 2017, 10:54 AM
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Take home salary of majority in IT Service companies may not be more than a lakh pm but they can save a lot during their onsite assignments. One bachelor I know saved 24 lakhs in 14 months in an inhospitable nordic city, by living stingily.

Those who go out of country with an aim of coming back can easily afford a very very huge down payment. Actually people make more money outside of US.

Salary in non service base IT companies are better. 30+ lakhs is not so unheard of, and esops in non-indian cos have given returns of a few crores in last 5-6 years.

Even law firms are hiring freshers from NLIU with salary packages which will make engineers go red with envy.

And this is about salaried class, a smart businessman in a conducive environment can mint a lot.

And there is the corruption money, that needs deployment. Modi may have reigned in corruption at the top but middle and down there is not much improvement. RTO, electricity dept, pwd, etc are as corrupt as they were earlier.

Last edited by Atiker : 29th November 2017 at 10:56 AM. Reason: Language
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Old 29th November 2017, 10:57 AM
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Quote:
Originally Posted by jatanr View Post
That is a good question - and even I have the same question. Actually, any decent 3 bhk costs anything beyond 2 cr, even in places like Bangalore. Someone like me who works in IT, and has a decent income, cannot afford it. So who are the people who can afford such houses - and are there really so many of them? Or is it, that the builders are marking up the price but there is no much sale?
You are right.

People are there, but how many it is anybody's guess.
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  #7  
Old 30th November 2017, 07:05 PM
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In Bangalore - It is "some what" understandable, not fully digestible though..

However, another cities apart from Bangalore - I am clueless..

Just would like to know simple economics, from where the money comes?

Or truly Indians are getting richer? I understand 7 to 10 years before earning of someone to now at this point... it's increased.. But to what level?
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  #8  
Old 2nd December 2017, 06:35 PM
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Mumbai is the financial capital of India. The amount of money that circulates in Mumbai is huge.

Majority of the big companies in India either have their head-office in Mumbai or have a significant presence in Mumbai. Almost all big financial firms/companies/banks have their head-office in Mumbai.

The number of high-paying jobs in Mumbai is significantly higher than anywhere else in India. 7 figure monthly salaries (10 lac+) are common in Mumbai.

Quote:
India’s financial capital Mumbai, which is home to 46,000 millionaires and 28 billionaires, is the richest Indian city with a total wealth of $820 billion, says a report.
Mumbai richest Indian city with total wealth of $820 billion: report - Livemint

The points mentioned in post #2 and #5 are valid.

Black money is a major driver of the real estate sector in India and it is likely to remain so at least for next decade.

Unless the actual generation of black money is controlled, efforts to curb the flow of black money into real estate will prove futile.

In tier 2 and tier 3 cities too, land has become ridiculously expensive, but apartments are still affordable.

In Vadodara, tenements/bungalows are slowly getting replaced by flats/apartments because land prices are no longer affordable, even for the upper-middle class.

New bungalows are getting constructed only on the outskirts, where land is cheaper. A 1300 square feet plot (minimum needed for 2bhk) in the central areas costs a minimum Rs 75 lac. Plots of similar size and touching main roads go for 1.25 crore and more.

Unless supplemented by funds from some other source, no middle-class family can afford to buy or construct a bungalow in the central areas with their own income.

Plots are still cheaper on the outskirts and one can get a decent bungalow for 45 lac.

Apartments are still affordable and 30-40 lac can buy a decent apartment in a central area.
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