I was looking at apartments to buy in Hyderabad and I was trying to see how you can justify such high prices.
In Japan, there is a land constraint and high prices are justifiable.
In DC where my parents own a home, high prices are justifiable, every little piece of property has been built upon in the DC metro and in fact companies are buying large groups of housing near the metros and then tearing them to built highrises.
In NY there is almost no land and they are in fact tearing down warehouse space and other underutilized space for construction and there is no end to demand.
Vasant is buying a house in Hyderabad for $800,000 and all around near him are thousands of more overpriced apartments along with acres and acres of open land, I simply cannot see a justificaiton for such high prices in Hyderabad. Maybe in Jubilee or Banjara Hills or the old city where there is no land I can fathom just high prices, but there is no possible way that prices should be so high in Guchibowli area. I was thinking of buying a place that Naveen was going to build, and his project makes sense, but none of the new developments make any sense as far as cost.
I can see a big slowdown coming in India and I wonder if prices will really fluctuate like they do in the rest of the world based on supply and demand and other economic factors, or will people simply stop buying or selling and everyone can claim they are this rich or that rich based on assumed prices.
I find India very strange as far as land prices.
My cousin has been buying land at 10 lakhs an acre in our village and the income on that per year in a good year is about Rs. 10,000-20,000 a year. That means that on a pure percentage terms your rate of return on capital is 1-2%. Everyone around seems to think that this is absolutely normal. In a good year you get 1-2% and on a bad year you get nothing, why the hell would you buy land, and my cousin buys more and more land every year.
Does this mean that most of the public simply do not understand the stock market?
Does this mean that there is so much cash flowing around that people do not know what to do?
Does this mean that there is so much black money, land is a natural investment for these people?
Does this mean that there will be a bigger sucker to come along and buy this land from you at a higher price, and this is the norm.
Anyway, this is not for me, I will let all these other great investors make their money in land, I will keep investing in businesses.
India makes almost no sense to me.
