Sunday morning… As I opened my Times of India a barrage of advertisements fell down. Mostly local malls announcing various schemes & offers for the Diwali season. But the front page was different today. Of course it was a big 2 full page ad for a property developer as has been the case for more than a month now. But today it was for a big developer in Delhi announcing 14% assured returns for 7 years for a 15 acre commercial property that was being developed. Now this was different.. When was last time that developers announced 100% assured returns in 7 years for a commercial property in Delhi by giving full page ads in Mumbai editions? I think early 2008 after the sensex had begun its historic descent. This is because typically real estate market trails financial market at least by few months. This made me stop sipping my tea and think. I have been observing for last 2 months that ads giving picturesque details about “Great Value” for various properties have suddenly gone up. The frequency and number of stalls in MCHI exhibitions have increased. The bulge of property times edition on weekends has suddenly swelled with more and more glossy ads clamouring for my attention. Various freebies are on offer again…. Latest one being savings of more than 1 lac in property value plus a chance to win furnishing of 4 lacs from a prominent developer in Mumbai. (Again see today’s Mumbai Mirror – 2 full page colour ad). But real estate rates have gone up. I know it first-hand because after buying a flat for myself around a year and half ago the rates in my locality are up by more than 50% and the developers are becoming less and less willing to negotiate with every passing day. Yet when I walked out I got 4 calls in next one month enquiring about my interest in the same property. Now what was that? Are the developers trying to hold on to prices even the demand has dried up exactly like they were doing in 2007 & 2008? Also the properties that were offering ready possession flats a year ago are still offering ready possession flats. Trust me.. 3 years of house hunting experience has made me a keen observer of real estate ads.
This is a case in point. Let me give you some more food for thought.
Number of IPOs so far this year is 63. It was 21 in 2009, 36 in 2008, 96 in 2007 and 73 in 2007.
SMSs offering “Dream Gains” from stock tips have reached the number of at least 15 a day.
A newly joined graduate trainee offered me a stock tip in a Z category stock assuring me triple digit returns in 3 months.
My colleagues discuss stock prices more than cricket and movies.
Number of calls per day from placement consultancies have again reached 2007 level. That too without updating my resume for more than a year.
New banks are calling me to offer credit cards and my existing banks are more than willing to double the limit on the cards I already have.
After doubling the price in last one year, the modular kitchen company I designed my kitchen from is again offering 40% flat discount.. That too in Diwali time.
Make my trip is again offering me mouth-watering deals for exotic locations. Like it did in 2009.
Is this Diwali for real or an ignited fire cracker about to burst? As far as I am concerned, I am cashing out of equities.
