Chennai real estate is now on a downward slide.

Market studies have shown that prices of land, apartments and even commercial rentals, particularly that of IT buildings, have come down by about 15 per cent.

Land in Sriperumbudur, which was selling at Rs.7 lakh to 8 lakh per ground, has come down to Rs.5 lakh to 5.5 lakh. Layouts promoted at Vadkapattu, on the outskirts of Chennai, which were selling thick and fast, are stagnating. About 25 per cent of the plots in many layouts, priced at Rs. 650 per sq.ft., remains unsold even after months.

If you are a serious buyer, prices can be negotiated considerably, say brokers. The stagnation is visible. Not that the big builders are finding it easy. One of the upmarket builders near Navalur, on Old Mahabalipuram Road, has about 50 per cent of his apartments unsold. Last year’s euphoria has died down.

Srinivasa Shipping and Property Development Limited Managing Director Prakash Challa estimates about 20 million sq.ft. of IT space will be added to Chennai by 2008 and may put pressure on rentals.

A few promoters confirm off the record that IT companies, which were willing to pay rental of Rs.35 to 40 per sq.ft. until a few months ago, are now offering only Rs.25 to 28 per sq.ft. In August 2006, similar commercial space in T. Nagar was rented out for Rs.70 per sq.ft.

Builders’ Association of India (Southern Centre) chairman A.V. Ramaswamy confirms the downward trend and attributes it to higher land prices, speculation, rising construction costs and higher interest rates.

Experts say the price to earning ratio of Chennai properties is high and has reached unsustainable levels. Such corrections are bound to happen. Some predict that stagnation in property market will lead to further drop in prices. The current market correction, however, has not made housing or land affordable to large sections of people. The biggest gainers will be big realtors, who could buy large tracts of land at a relatively lower price.

- The Hindu
6th July,2007
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  • Houses

    can u tell me there is any houses available in chennai with range of 5 to 10 lakhs but the house should be in housing area...
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  • how to send post

    can u tell me how to send new thread by my own actually i am using this reply only pls help me to send the post
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  • Anyone , who can tell me the Real Estate trend in the velacheary - Tambaram main road. I see very less land available to sell. In my area , they are quoting 60L / Ground. Will it further go up next year or come down ? Last year i thought it will come down , but it went up by 10 L.
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  • Looking in the wrong place ...

    Originally Posted by ashypeshy
    Anyone to Agree to my idea...come on guys y is Every one so...towards Chennai.


    Long ago in 19th Century England, Sherlock Holmes was walking home after solving a case one day. Sun had already set and it was dark, except for the pools of light under the lanterns which were used to light up the road.

    By and by, he came upon a young man keenly searching the ground under a lantern. Upon asking him he was told that the man had lost a VERY valuable ring which he HAD to find. Sherlock being who he was, joined and searched and searched, but was finally defeated. The Great man who had solved so many cases could not find a gold ring in a small pool of light!

    Shocked at this he finally asked, where exactly the man had lost the ring. The man pointed to a place far away in the darkness. Amazed (but relieved too ;)), Sherlock asked, "but why were you searching here then?". To which the man replied, "Because the light is here!" :D

    Ashypeshy, if I have to live in Chennai (for various reasons and compulsions) I can only buy in Chennai. Simply because the price is cheaper in Madurai it is not reason to buy in Madurai. This is the simple difference between buying to reside in and buying for investment purposes.

    Besides, low price never means great value. And high price does not always mean poor appreciation going forward. Whatever the price level its because that is what the public deems it to be worth at that point in time. There is always a reason for a price.

    No offense.

    cheers
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  • Wiseman, Good analysis and prediction. I completely agree. I am an NRI who owned property in US and sold in the height of bubble @ 70% profits..now I am waiting to buy in chennai..no hurries though. I also feel it is just the beginning, quite a bit to go. Would be interesting. I saw an apartment in poes garden for 75laks at 3800per sqft in 2004 and I thought it was expensive. Ha! Now it is something like 12000 per sqft. It should come back to ground.
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  • How to check the real estate status on daily basis? Please advice.
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  • There are better ways to sped your life!

    Originally Posted by senthilmurugan
    How to check the real estate status on daily basis? Please advice.


    Senthil,

    No offense here. If I got your question right, just trying to help you avoid the mistakes I made in life earlier! :)

    I also spent a part of my youth (meaning around 15 years ago) doing the same thing in the Stock Market. Went nuts trying to track several prices on a minute to minute basis - with TV today, millions of people do that every day - a National waste! And their moods go up and down along with the index :D

    I then realised that it was a complete waste of time. Do it like the professionals do it (say Warren Buffet in Stocks or Sam Zell in Real Estate). Each of these guys are willing to wait not just for a few years. They are willing to wait for decades!!!

    So, when the markets crashed in 1991 after the S&L fiasco, the US created what was called the Resolution Trust Corporation to bail out the finance companies and buy out all the distressed properties and sell them at bonanza prices.

    "U.S. government agency created by the 1989 bailout bill to merge or close savings and loan institutions becoming insolvent between 1989 and August 1992. The RTC was terminated in 1996 ..."

    Sam Zell used this opportunity to finance himself to the hilt and bought huge number of properties at bargain basement prices and used them to rent and create huge cashflows and reinvested repeatedly to ultimately become a billionaire from then on till today based on astute property management. About Warren there is nothing left to say :)!

    So, you don't have to track the market every day unless you are an agent or trader in the markets. And they do not generally make the big swings - simply because they do not hold assets for long enough like the big guys mentioned above.

    Unless you have a valid reason - trading, etc - track it once in a while, say monthly or even quarterly. In these times, prices will move rather slowly, either way.

    Did I read your question wrong?

    cheers
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  • Originally Posted by senthilmurugan
    How to check the real estate status on daily basis? Please advice.

    Dear Senthil, but why do want to do that? One of the researches by Univ of Illinois stated that the more frequently you follow the daily swings of the market, the more mistakes you make! Reason is simple: We lose the fundamentals and get carried away by the moves!
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  • Originally Posted by rvenkat2
    Wiseman, Good analysis and prediction. I completely agree. I am an NRI who owned property in US and sold in the height of bubble @ 70% profits..now I am waiting to buy in chennai..no hurries though. I also feel it is just the beginning, quite a bit to go. Would be interesting. I saw an apartment in poes garden for 75laks at 3800per sqft in 2004 and I thought it was expensive. Ha! Now it is something like 12000 per sqft. It should come back to ground.

    US is not India and NRIs no longer are glamorous. In 2002 the director of the US office of the MNC I was in, was earning around 2 times in real terms the salary I was getting in INdia. TOday the equations are so developed that the INdian head gets much more than US heads in many software organisations. And most NRIs continue to be Software engineers even after 20 years some specialising in the same set of 100 test cases as one funny guy in BNR was many years ago (Manikka Thygarajan was his name!). WHen the 100 test cases become obsolete his job disappears. So dont ask me why Poes garden price goes up. It deserves to go up, not some suburb 40 miles away from Atlanta where u might be living.
    DONT COMPARE INDIA WITH US. You NRIs disappeared from India since U COULD NOT SURVIVE HERE. Now dont tell us rules here are laid by the FAILED RULES OF USA. Very soon Rupee will get stronger and your dollar is going to dumps. And if u keep a dollar deposit in US you will be getting negative interest already. IF YOU WERE NOT CAPABLE OF BUYING A FLAT IN POES GARDEN IN 2004 THEN U ARE ONLY CAPABLE TODAY OF BUYING A FLAT IN VAYALUR.
    ROTFL.
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  • Reverse logic

    Nats,

    In one of your posting you derived RE prices will go up once $ vs Rs value tending to 1$->200Rs. Now it seems to be a reverse logic, if rupee is getting stronger, obviously RE prices has to come down.
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  • U bet u r right. That is assuming price went up due to NRI investment. Now it will go up due to internal growth. US is dying for now so investment from them to India is also possible since their currency is dying and they need avenues to invest. Think of it. If Indian govt allowed foreign players in, after next election, u will see a super boom. Remember even today a foreigner cant buy Indian realestate.
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  • Please note. NRIs are cheapos by nature. They will buy something which is cheap, not something that is worthwhile. So they missed this boom and those that entered in 2006 sold out desperately in 2007 and are now clamouring for prices to fall. On the other hand foreigners look for good investments. So money coming in this time will be if their currency collapses which is the case with Dollar. So it is better for rupee to strengthen in a dollar killed market than for rupee to just shoot up to 200 vs dollar which is indian govt intervention to prevent price falling. Ofcourse there is one trouble, Indian salaries from foreign sources will fall but well investment from abroad will more than unset this.
    IN simple. If rupee depreciates then it is artificially keeping Indian realestate price stable for prevention of economic collapse by Indian govt. That was what I said before.
    Today things are better. With Dollar literally on the street, India will become an investment destination. So this is a genuine boom atleast for sometime to come.
    In other words if I can buy a sexy villa in Hacienda Heights today by selling my land in Vadapalani, if Dollar depreciated method works then I will buy 2 Hacienda villas in California in the next 2 years with the same Vadapalani land. In the rupee depreciation method I would not be able to do that.
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  • Natraj has gone ballistic on this forum ... and here's why, I think ...

    Folks,

    I DO NOT TAKE PLEASURE in calling a Bear Market. But I do take pride in calling it correctly MUCH BEFORE IT HAPPENS so that people can be warned and take evasive action in advance and avoid the worst of the hit!

    Natraj has gone ballistic and is probably employing multiple people to type in random comments (call it rants, if you like) across the entire forum. Like the FED going to near-zero rate, this is unprecedented here. But fun anyway to see one man take on the entire forum and try talking the price up even after all the builders and bankers have given up!!! :D

    And this is why I think he is going ballistic. With these reports below, I believe that the "news" is finally out and Nats is probably seeing all his well-crafted property spculations going for a big toss. Please read all these reports yourself and come to your own conclusion about where we are headed in next 6 months:

    1. House dream crashes in Bangalore, DNA
    http://www.dnaindia.com/report.asp?newsid=1213947

    2.GOING, GOING, GONE, http://indiahousingbubble.blogspot.com/2008/12/going-going-gone.html
    Read the comments after the blog, gives you the mood of the crowd here

    3. Top Builders meet to discuss slashing prices, - This guy seems to be a Big Bear!
    http://indiahousingbubble.blogspot.com/

    You can plug in more posts, but it seems that 1 in 10 loans in Bangalore Banks portfolios are in trouble. And we have not even officially entered recession.

    So, what do you guys think? That somehow other IT centers (not to mention manufacturing centers like the Sriperambudur, Ranipet
    and Hosur Belts in TN) will somehow escape this severe recession coming up? Are they getting their business from Mars?

    As mentioned already, please understand this well here and now.

    This will be a slow and excruciatingly painful decline! Do not believe that it will end in 3 or 6 months - it has not even started seriously, and the source, US and EU and Japan see the end only after 2010 at the earliest!

    Get out of debt at any cost as early as possible - of course if you don't there is a good chance the Banks will anyway force you out of debt by taking away your asset; but that is not what I mean here! With so many properties (there is mention of thousands of properties in Bangalore by Corporation Bank - need to validate that info) being repossessed all of these will be put into market by banks immediately for resale at any price they will get - unlike Builders who are artificially trying to keep the prices "above their costs". With hardly any buyers, there will be a stampede of selling when the first bunch of weak borrowers buckle and rush to market.

    Do not believe me. Please be patient and watch it unfold. I am ready to admit that I was wrong, in case this does not happen in next 1-2 years. But we need to wait till it fully unfolds. Its not enough to see short bursts of activity and believe that the worst is over.

    All the best on your debt elimination.

    cheers
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  • land prices

    Originally Posted by ksmraj
    In chennai, Brokers are dancing, especialy Mr.Jesudurai (broker) is dominating Indiaproperty website. He is fixing the price for land. (any doubt pls. check this site) If you call, he will tell "thats gone, if you want I will recomend another land which is nearest to that plot". simply he is killing people. some brokers are cheating. Defenetely it will come down. B'cos Most of the properties are not yet sold. still there (6 month back ADVT also)


    Most advts. of even 6 months still remain in the web sites as the people who have given the advts. do not bother to remove the same once their property is sold. Only when you phone up, then they will tell, it is already sold.
    ks2071746
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  • Originally Posted by whatheheck
    Whenever i read Nataraj's post, i used to remember a comedy scene in one of Pandiyarajan's movies.

    Pandiyarajan will hire 10 mentally retarded people and take them to an auction house.

    During the bid, each one of these mentally retarded people must call some numbers in thousands.

    1st person will call "Rendaaaaaayiram"
    2nd person will say "Naaaaaaaaaalaaaaaaaaayiram"

    They will keep on calling those numbers throughout the bid.


    Similarly our friend Nataraj has been calling "1 C", later "2 C"

    "3.2 C", "5 C" and so on.


    Nataraj, some advice for you.
    Please make sure you don't roam on the chennai streets chanting "1C", "2C" "2.5C" etc.

    at last....pimpiliki pilapi.....mama biscoothu
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