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November 02, 2008

"2009: The Year of Collapse for Indian Real Estate"

Stock market investor and trader Deepak Shenoy who had a very accurate prediction for markets in 2008 has come up with another for 2009.

Here are some of his going forward predictions:
  • If 2008 was about world drama, 2009 will be about the collapse of the Great Indian Real Estate Story. Prices will start coming down, though it may take a full year for panic to set in. At least one real estate company - of the big ones - will go bust. At least one bank will face serious threat of collapse due to high exposure to RE. In all likelihood, the government will rescue the banks. Commercial real estate will be in the doldrums, with distress sales reducing prices even more dramatically. NRIs who invested in India and thought they will keep their properties for a good day will call their brokers to sell, at any price. Banks will refuse to lend to real estate. Some may even try to give homeowners margin calls, but that will fail as political pressure will force them back.
  • The dollar, after a small rise, will fall hugely against the rupee. People who hedge in the 50s will be treated as heroes.
  • ...India, along with the world, will go into a severe recession. This means contracting GDP (no more 7% growth), unless there is a black-money-amnesty scheme set up, with dramatic tax cuts.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in