19 ms·

Investments in property is booming in India . Don't know if it's a bubble or not . But I cannot afford one right now (not even as investment ) , reason its too

Investments in property is booming in India . Don't know if it's a bubble or not . But I cannot afford one right now (not even as investment ) , reason its too expensive and loan is not my cup of tea and I think investing same money in your own startup will be worth more ( as experience)

th3iedkid 11y ago
Very true! Cost gap across needs vs wants in India seems very much inverted as of today. I've seen so many people living out of real bad conditions , working hard for earning just enough. But surprisingly they all seem to have good & new smartphones, commute long distances for work and unable to afford a decent sized house![0] Am not saying its bad for them to own new phones, its atleast a good emotional distraction for them,but reality is only getting tougher for them, day-by-day. Predatory lending,in india had gotten off fast the last decade .Lots of people have more lots of unpaid credit-card bills.Banks started reporting lots of non-profitable assets.Some of the top private-lenders in india are loosing money by the day.[1] Value is being eroded of Real estate with both corruption and extortion involved even in remote rural areas! Though there is not much of stats in public domain for above, but [2] is indicative. [0]:http://www.statista.com/statistics/257048/smartphone-user-penetration-in-india/ http://www.statista.com/statistics/257048/smartphone-user-pe... [1]:http://dbie.rbi.org.in/OpenDocument/publicOpenDocument.jsp?iDocID=17409896 http://dbie.rbi.org.in/OpenDocument/publicOpenDocument.jsp?i... [2]:http://www.thehindu.com/news/cities/chennai/file-detailed-report-on-real-estate-crimes/article7046819.ece http://www.thehindu.com/news/cities/chennai/file-detailed-re...
VLM 11y ago
"I think investing same money in ... startup will be worth more" You are correct on a micro-level but there are also macro-level issues when capital and rent (rent of money) are tied up in non-productive assets. An individual who buys a $1M house cannot put that $1M into a startup, but also on a societal level a bank that loans $100M of mortgages cannot loan that $100M to build infrastructure or a new manufacturing plant or a (large) school. So high price of non-productive assets hurt the macro scale as much or more than it hurts micro scale. Its very bad for the economy when the best thing to do with a pile of money is buy something that doesn't produce anything or grow anything. Its as bad economically as stuffing the money into a mattress.
- alextgordon 11y ago
  > on a societal level a bank that loans $100M of mortgages cannot loan that $100M to build infrastructure or a new manufacturing plant or a (large) school As a technicality, the whole point of modern banking is that banks can loan out the same money over, and over, and over again. So in fact you can eat your cake and have it too.
  - VLM 11y ago
    There are limits to that of course. Aside from that, I don't think it changes the bigger pix that "everything" involved in making a non-productive capital investment is unavailable for productive investments. Can't build a rail line thru there, can't that wood and stone into an office building. All that energy and labor invested, you're never going to get a return on that. I'm not saying a world devoid of art and fun is a good goal, but am saying that going way overboard to one extreme is going to result in blowback.
srathi 11y ago
loan is not my cup of tea Also, the mortgage rates in India are around 10-14%, compared to the US average of 2-4%.
- kamaal 11y ago
  That is also because the inflation is at 6 - 9%, if they have a US average 2 - 4%, the loan principle will lose its value at 4% - 7% a year. That would straight away mean loss to banks. Plus real estate is growing at a stellar rate, and probably will till the next 100 years. For India's rate of population and room for economic growth this is anything but inevitable. Heck there are even people who own 2-3 houses in the US. Doing this is Indian is hardly surprising.

th3iedkid 11y ago

Very true! Cost gap across needs vs wants in India seems very much inverted as of today. I've seen so many people living out of real bad conditions , working hard for earning just enough. But surprisingly they all seem to have good & new smartphones, commute long distances for work and unable to afford a decent sized house![0] Am not saying its bad for them to own new phones, its atleast a good emotional distraction for them,but reality is only getting tougher for them, day-by-day. Predatory lending,in india had gotten off fast the last decade .Lots of people have more lots of unpaid credit-card bills.Banks started reporting lots of non-profitable assets.Some of the top private-lenders in india are loosing money by the day.[1] Value is being eroded of Real estate with both corruption and extortion involved even in remote rural areas! Though there is not much of stats in public domain for above, but [2] is indicative. [0]:http://www.statista.com/statistics/257048/smartphone-user-penetration-in-india/ http://www.statista.com/statistics/257048/smartphone-user-pe... [1]:http://dbie.rbi.org.in/OpenDocument/publicOpenDocument.jsp?iDocID=17409896 http://dbie.rbi.org.in/OpenDocument/publicOpenDocument.jsp?i... [2]:http://www.thehindu.com/news/cities/chennai/file-detailed-report-on-real-estate-crimes/article7046819.ece http://www.thehindu.com/news/cities/chennai/file-detailed-re...

VLM 11y ago

"I think investing same money in ... startup will be worth more" You are correct on a micro-level but there are also macro-level issues when capital and rent (rent of money) are tied up in non-productive assets. An individual who buys a $1M house cannot put that $1M into a startup, but also on a societal level a bank that loans $100M of mortgages cannot loan that $100M to build infrastructure or a new manufacturing plant or a (large) school. So high price of non-productive assets hurt the macro scale as much or more than it hurts micro scale. Its very bad for the economy when the best thing to do with a pile of money is buy something that doesn't produce anything or grow anything. Its as bad economically as stuffing the money into a mattress.

alextgordon 11y ago
> on a societal level a bank that loans $100M of mortgages cannot loan that $100M to build infrastructure or a new manufacturing plant or a (large) school As a technicality, the whole point of modern banking is that banks can loan out the same money over, and over, and over again. So in fact you can eat your cake and have it too.
- VLM 11y ago
  There are limits to that of course. Aside from that, I don't think it changes the bigger pix that "everything" involved in making a non-productive capital investment is unavailable for productive investments. Can't build a rail line thru there, can't that wood and stone into an office building. All that energy and labor invested, you're never going to get a return on that. I'm not saying a world devoid of art and fun is a good goal, but am saying that going way overboard to one extreme is going to result in blowback.

srathi 11y ago

loan is not my cup of tea Also, the mortgage rates in India are around 10-14%, compared to the US average of 2-4%.

kamaal 11y ago
That is also because the inflation is at 6 - 9%, if they have a US average 2 - 4%, the loan principle will lose its value at 4% - 7% a year. That would straight away mean loss to banks. Plus real estate is growing at a stellar rate, and probably will till the next 100 years. For India's rate of population and room for economic growth this is anything but inevitable. Heck there are even people who own 2-3 houses in the US. Doing this is Indian is hardly surprising.