I have always been an ardent believer of a saying in investing which is never to put all your eggs in one basket. With that in mind, i never invested too much into one asset which actually saved me from 2008 market crash and i came out with only a marginal loss. Now about my views on real estate. I do not claim to be any expert or anything in any financial savings or investments i just share what I believe.
Up until 2010 real estate market in Punjab looked really attractive and was one of the best place to park your money.
The prices were rising sharply and all and everyone was enjoying to their fullest in the mean time Beheading the real business and industry which is the backbone of Jobs and backbone of “Real Growth”. Can any state or country have real GDP growth based solely on the rising real estate prices. I know GDP has real estate in factor in it as well but I stated “Real”.
So much so that in Ludhiana bigger firms like Eastman started investing and selling real estate rather then focusing on their core business which has started to plummet now. Eastman’s core business is actually in ruins now because of excessive leverage on real estate that they took viz. a viz. Janpath Housing Society.
Uptil 2011 they sold good amount of real estate at Exorbitant prices to many gullible investors who bought into it thinking it will rise like it did from 2002 to 2011. But since last 2 years things are not rising but stagnant.
So everyone has a logic that they are stagnant for now but will start rising in near term. Remember one thing past indicators are never the logic for rise in any asset’s future pricing. I explained the plight of the industry and regular business in Punjab in previous example of Eastman. Same is the case with many more industry as well.
Almost 50% industry is running low on cash and is on the brink of closure. Rest of the industry is thinking to shift outside Punjab since govt. policies are really not that business friendly.
Now question to all investors who think property in Punjab will start rising soon. When industry dies or comes to a halt which will happen in next 7-10 years where will jobs come from? Where will money come from for people to buy their homes?
Does that not let a logical person question Why invest in real estate when jobs will die pretty soon?
This is just start of my series on why real estate is poised for 30-50% correction in coming 4 years.
Please stay Tuned for more updates from my side.
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