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20 October 2011



saving and investing

s 51 Children’ Education

Politicians treat natural resources as private jagirs; The PM has studiously ignored appeals to him; From a buyer, Anil Ambani is now a seller

Grounded Realty

Given rising inflation, a loan makes better sense

Different Strokes

by 22 Hobbled the Past


uying a home in cities like Mumbai and Delhi has become a distant dream for many, thanks to the sky-high prices and expensive loans. Now, when the economic situation looks even more uncertain, prospective home-buyers and investors are confused about how bad the situation really is. The go-to person in this case is Pankaj Kapoor, founder and managing director of Liases Foras, an independent realty research and rating firm. The Liases Foras database is considered the most comprehensive and authoritative. In his talk with Moneylife, Mr Kapoor shared the June 2011 quarter data and his views on the sector. In the six cities tracked—Mumbai, Delhi, Pune, Hyderabad, Bengaluru and Chennai—the situation is not uniform. Mumbai and Delhi, which constitute 50%-60% of the country’s organised retail sector, have fared the worst in terms of sales and affordability. Pune, however, is still an efficient market; Chennai and Hyderabad are reasonable and promising; whereas Bengaluru is reaching a saturation point. Despite the inefficiencies, prices have not corrected. Mr Kapoor explains why this is so; how inflow of private capital has made homes unaffordable; and why, despite getting funds from private equity players, the big realtors see their debts ballooning. He also talks about the hype surrounding tier-II and tier-III cities, the myth of affordable housing and the state of commercial real estate. He explains why, inspite of noble intentions and increased capital available for affordable housing, we have more slums within the city and uninhabited townships dotting the extended suburbs. And Mr Kapoor also gives his projections on some areas that may emerge as good investment options. While Mr Kapoor feels that a correction is imminent, it is difficult to predict when that will set in. There is no bad time for a home loan— although the environment is conducive when interest rates are near 9%. If one needs a place to live in, one will go ahead with buying property. But it would be best to wait a couple of months to gauge RBI’s (the Reserve Bank of India) intentions about the next interest hike. Then, go for it. Debashis Basu 

MONEYLIFE | 20 October 2011 | 10

The market regulator seems unable to break free from the past SMART MONEY

30 Cover Story

Will Real-estate Prices Fall Now?

Will real-estate prices fall and is it a good time to buy property? Shukti Sarma analyses


Your Interest

75 fake institutes in Maharashtra & Delhi; Click to track LPG dealer; Forest clearances fail green test; Railways 1st in graft complaints; SEBI: NFOs to raise at least Rs10 crore; GoM plans to launch RTI portal

14 Your Money Investor Protection: From the frying pan into the fire; Gift-transfer limit to NRIs increased; Mobile payments to touch $245bn: E&Y; CRISIL’s self-serving research; SBI, Dena Bank cut rates on home loans; Investors lost money in 85% of GDRs; Job market slowing down; RBI: Increase safety measures for card usage; Experian ties up with SBI; Education: The top savings goal; New Launches: Axis Bank’s MyDesign Card; SCB’s Approval-in-Principle; Dhanlaxmi Bank’s Forex Card; American Express Gift Card


Current Account

– Making fuel from ethanol based on corn consumes more energy than it produces

19 LOOSE CHANGE Moneylife Quiz; Soundbites Disclaimer: Moneylife has a policy of not allowing its editorial staff to buy and sell stocks that are written about in the magazine. All personal transactions in individual stocks are subjected to internal disclosure rules.

24 Accounting Substandard Companies are able to hide more than they reveal and auditors are strangely comfortable with that


56 Italy: Art Cities-II


This country has a number of historical sites that cannot be covered in a single visit. Jaideep Mukerji brings you more on this shoe-shaped Mediterranean marvel


Balkrishna Industries gained 2%, whereas Orchid Chemicals tanked 20%

Medium Term

Kajaria Ceramics jumped 6% and Idea rose 2%, while Petronet LNG tumbled 11%

Long Term FUNDS

28 Fund Pointers – Since NFOs have no track record, how would you decide to invest in them? – DSP BlackRock Dual Advantage: Is the timing right? – Sundaram Select Micro Cap: Getting in at the bottom?


Asian Paints rose 4%, while Godrej Consumer Products declined 6% EVENTS



Insurance Trends

– iSecure Loan: Decreasing cover for loans; increasing cover for term life – ICICI Pru Elite ULIPs for the rich – “We should have freedom to offer highest NAV ULIP” — Future Generali India Life Insurance – Fine Print: Highest NAV ULIPs; IRDA: Low on insurance; Claims rejection AUTO

48 Resale Values Crash

NMDC: Demand is steady, RoE is great and the stock is inexpensive; eClerx Services: Expanding services & increasing penetration across verticals

There are no takers for pre-used luxury petrol-driven cars, says Veeresh Malik Legally Speaking

40 Bear This Out The market may be undervalued but there is no sign of long-term uptrend


Part Prepayment Key To Mitigating Rate Woes – Will: The Only Way To Handle Your Legacy –


37 Street Beat WHICH WAY

Foundation 60 Moneylife Events

Bank Introduction; Think before Signing

Be careful, while giving an introduction to someone for opening a bank account

for 66 Care Special Children

Sangopita caters to children with special needs who require constant care away from home

DEPARTMENTS Letters............................. 4 Book Review.....................54 Living .............................59 Money Facts.....................63


Will Real Estate Prices Fall now?