Slump in the cement industry

A very happy New Year to you!

But, I am not sure if major players in the cement industry would be partying tonight. The reason is the slump in the cement industry.

Not surprisingly, the slump is due to the slow down in the economy or more directly put a slow down in the real estate sector.

This is what today’s Business Line had to say about the industry

Starting on a bullish note with prices touching historic high amid buoyant demand, cement industry slipped on to a sticky wicket as the realty sector was rattled by the unprecedented financial crunch.

An interesting observation

My friend A.R. Hemant today made an interesting observation concerning Satyam-Maytas issue. It was simple and yet it left me spellbound. In fact many in the industry (real estate or software) would not have even thought about it.
He just said, “Maytas is Satyam spelt the other way round.” What an observation, Sirji!

Real Estate — Has it lost its sheen as a lucrative investment avenue?

That is the question doing rounds in the realty market. And there are ample reasons for many to feel that way. I personally feel a major factor which is keeping investors or for that matter genuine buyers at bay is the overall economic slump.

No doubt sops have been announced by the government to bring the industry back on rails, but I don’t think they would in anyway raise the earnings of an individual buyer, who till two months back would have been on the radar of the hawks in the industry (property dealers), but now is more busy trying to retain his job.

With more and more companies announcing job cuts, employment has become the priority for many.

A headline in today’s ET read: “Real estate: No more an attractive investment”

And what followed below was an eye opener. Here’s what it said:

Investors have shed 50-60 % of their investments in realty stocks. Investors’ perception has been dealt a severe blow. Measures like interest rate cuts for low-value homes and correction in property prices don’t seem to be working. But a further 200-250 bps rate cut and a 20-25% price cut can spur demand. And people may once again start buying houses to live in them, rather than for investment purposes.

I think it’s high time Real Estate becomes what it was earlier – an avenue for providing people with shelter rather than an investment.

An investment opportunity?

Yesterday, I saw this huge full page advertisement on Page One of the Hindustan Times. The advertisement screamed First Time in India @ Cost Price. The site address was six minutes drive from International Airport in Bangalore.

And below an International Villa price was quoted for Rs 69 Lakhs and further down was given the price for a 2BHK apartment. At 13.59 Lakhs it certainly promises to be a steal.

And then there were other offers too. One of them offered a Mercedes Benz for a down payment of Rs 10 lakhs. Now…Now, builders of late have started using such marketing tactics to boost up their sales. It can be justified considering the ongoing recession. But, I still feel the prices quoted by them are not just affordable but a steal, especially with regards to their 2BHK flats.

In the end a word of caution – do watch out for hidden clauses which are usually enumerated under the cliché “conditions apply”.