It is amazing that strategies which looked very smart in a bull market can make you look very foolish in a bear market. One ‘house marketing’ company based in the suburbs of Mumbai had a big team to sell ‘second homes’. Obviously the team included marketing people, branding, sales, call centre…etc. These were people who were pulled out of other decent jobs and given a nice designation and a decent salary.
In 2002 life must have been difficult…but the bull market made all those transactions look great (in retrospect!). So the employees started emulating the clients.
One employee on a salary of Rs. 48000 (take home) was paying EMI on 3 houses! (one house to stay, one to rent out and one where he was anyway living!). And he looked very smart when the marketing head kept telling him ‘prices have gone up’ on a weekly basis. Now of course it is a different story. He has not received his Feb salary. Bonus has of course disappeared. ALL THREE HOUSES ARE SELLING BELOW HIS COST PRICE AND prices may deteriorate further.
In Thane (where he has all the 3 flats) I WAS offerred houses at Rs. 2700 a sq foot – at a time when the ‘announced’ price was Rs. 7k a sft.!!
WEll it is a tough world out out there!
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