gsvenkat

Can anyone tell me that How much appreciation we can expect in 5 years term if one invests Rs 30 Lakhs in South Chennai. Assume that no new developments like Bus stand, new 200 feet road, no new industry nearby, no new big malls nearby..etc.

Just want to know the RE trend for the next 5 years. Price appreciation will be ?

Munish Malhautra

Venkat,
The question is incomplete due to the parameters that u mentioned, it looks like the land is close from being called as agricultural land or village land.

anyway my take on what i think abt an average industry standard based on statistics, they reveal that housing sector makes up 80 percent of the real estate market. And still there is a gap of almost 41 billion sft in demand and supply. The sector is expected is growing at the rate of 25-30 percent per annum as average industry standard.

__________________
MM

gsvenkat

The Chennai real estate prices were on Top price in the year 2007 August. After the US bubble and Lehman collapse the RE prices went down. Corrected to 30 %. So from the year August 2007 to May 2009 the prices of the Chennai suburbs were not increased. From the middle of 2009 and 2010 have seen some raise in RE price but not the peak of 2007 rates. This year also will not see any much raise in land price. So the intrest loss for 3 years for the people who bought at the high price of July-Aug 2007. They have to wait for another bull run to exit/Sell their lands at higher price than the 2007 price.

I feel the second tier cities (like Kovai, Madurai, Nellai, Tiruchy and Salem) will do better in Real Estate than Chennai. The Chennai suburb RE price was increasing because of IT industries. As of now all the IT majors are having enough lands in the suburbs, so they don't buy any more. Pune and Bangalore were the two cities developed quickly due to IT in the year 1995 to 2005. After 2000 the cost of living in these cities were high and the IT companies started lookin at Chennai. Chennai started growing from year 2000.

I think now it is the time for Tier II cities of Tamil Nadu will do better than any other State in India for IT and other sectors.

ssankarss2003

Hi GSVENKAT & Other Friends

Great reply... But need direct answer...!

Considering the past trend what is the expected growth in chennai real estate... market//

Do you still think correction is expected ? if so how much ?
If then, Is this good time to buy as we see some amount of movements is already on in the market and prices started increasing...? or Do we need to wait...!!!

Pls. suggest

gsvenkat

I feel the price may not increase as it was in the period 2003-2007 despite the inflation peaking 15 %. Please note that in the year 2003-2007 the bank interest rates were going down (9 % to 7 %). After the inflation rise the bank rates started raising. My banker told last year that the interest rate will not fall below 8 % even the inflation goes down OR your bank interest option is floating one.

Now all the banks set their base rate above 8 % and RBI also started increasing base to 0.25 %.

Having all these I think it is very difficult to see the prices double in 4 years time.

What do you think......?

gsvenkat

Another fact is all the Indian Cities are expected to grow by 60% in the next 20 years. That means the Chennai population will be more than 1 crore by year 2030. But if the govt can provide enough infrastructure facilities in the Tier II cities then these cities can grow faster and can avoid much population in Chennai !

More population means more pollution, more traffic, more water problem, more slum dwellers etc etc

greschennai

Hi,
In general, in a healthy and steady market, annual RE appreciation is 10-20%. Its difficult to generalise how much a 30Lacs plot in south chennai will cost in 5 years - it will definitely depend on infrastructure development like connecting roads, new rail network, new commercial / industrial activities in the vicinity; and more importantly prevailing market sentiment. However South Chennai has historically been a safe bet for investment. Going by general historical trend, 30Lacs should be approx 50-60 Lacs in 5 years.
Regards,

Economist

NO ONE CAN GIVE AN ANSWER TO SUCH QUESTION.

If they do then "it is a guess as good as yours"

5 yrs investment time horizon for RE is short and not appropriate.

To me you are not an investor you are a speculator looking for quick bucks.

Speculation is risky business. Some make good money or Losse the lot when trying to play the market, time the market or speculate the market.

No one know which part of the cycle we are on.

If you want to Invest in RE , look at the fundamentals of the investment asset, your affordability and have a investment horizon of 10 - 12 years for Indian RE.

If some one is predicting XYZ % then they are fooling themselves and you.

Ask your self:

1. Do you believe in Indian RE and Indian economy?

2. Do you think Indian Inflation will grow in many multiple % over 10 years.

3.Do you think population of the City and area (of Investment) will grow rapidly in the next 10 yrs?

4. will there be shortage of land in 10 - 12 yrs in that location?

5.What is the availability of current supply in the area?

6. FINALLY Can you afford the investment (i.e holding it for 10 - 12 yrs without being pressured to sell)

YOU WILL GET THE ANSWER.

If your RE invest horizon is 5 yrs then you are a GAMBLER.

Economist

NO ONE CAN (OR SHOULD)GIVE AN ANSWER SUCH QUESTION.

If they do then "it is a guess as good as yours"

5 yrs investment time horizon for RE is short and not appropriate.

To me you are not an investor you are a speculator looking for quick bucks.

Speculation is risky business. Some make good money or Losse the lot when trying to play the market, time the market or speculate the market.

No one know which part of the cycle we are on.

If you want to Invest, look at the fundamentals of the investment asset, your afford ability and have a investment horizon of 10 - 12 years for Indian RE.

If some one is predicting XYZ % then they are fooling themselves and you.

Ask your self:

1. Do you Trust Indian RE?
2. Do you think Indian Inflation will grow in many multiple % over 10 years.
3.Do you think population of the City and area (of Investment) will grow rapidly in the next 10 yrs?
4. will there be shortage of land in 10 - 12 yrs in that location?
5.What is the availability of supply in the area?
6. FINALLY Can you afford the investment (i.e holding it for 10 - 12 yrs without being pressured to sell)

YOU WILL GET THE ANSWER.

If your RE invest horizon is 5 yrs then you are .