Anyone think that the prices of flats will fall 40% from the mid 2007 prices ?
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  • psvjaya writes:
    Anyone think that the prices of flats will fall 40% from the mid 2007 prices ?


    Can you please explain the basis of your pre-assumption?
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  • If there was a normal growth in the property since 2003, we would have reached these price levels only ie., 40% below the current prices ....However, no property developer seems to reduce the prices eg., the hiranandanai upscale, jains etc.,
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  • Originally Posted by mail1295
    The only reason i could think of prices of properties in chennai would fall to rock bottom is if sea level rises by 30 to 50 feet and engulf 10 to 12 kms into the city. Thats minimum 200 years away (considering extreme worst case scenario) and averagely 1000 years away (considering average runaway scenario)

    It might be interesting quote made here that the price fall may be 10% or less or no price fall. I think Chennai is already in 10% price drop zone and this is only the tip of the iceberg.
    I will be happy to see this person coming over and reviewing his/her statement in a years time. God bless
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  • Flat prices can fall in Chennai, not because of pink slips or global recession but because of the Second Master plan which allows better FSI. So land price factor will reduce. However even then knowing the con brokers of Chennai, they will like to keep the price up, while land owners like me will ask for more price for our land. So maybe the price fall will be minimal for flats. Now this is true in Chennai, which is CBD of Chennai. So if flat price falls in Tiruvallur or in Vayalur (there is this guy selling flats in Vayalur and calling that as Chennai!), that is not the discussion I am into.
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  • I am getting mails from the flat promotors intimating the price reduction from Rs 3200-3300 per sqft to Rs 2800 per sqft. About 15% reduction.

    That too now repeated calls & e mails, scope for further negotiation
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  • Are land prices falling in Chennai? Does anybody know what the average price per ground is in the kilpauk area?
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  • Land prices should go up in Chennai with the new Master plan. It allows more FSI enabling at constant price of flat, more value for land. To take an example. An Ordinary building can now have 6 kitchens and can get FSI of 2 in place of 1.5. This means that price of flat being fixed land price has to sky rocket.
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  • Originally Posted by ak15
    Are land prices falling in Chennai? Does anybody know what the average price per ground is in the kilpauk area?

    I spoke to few real estate guys to buy a property at Chennai.. When I call them they said prices are came down.. they further said you can negotiate and buy 30%-40% lesser than 2007 price.. But the situation is PRICES ARE FALLING day by day.. It will come down to 2004 rate it seems..this is the feed back from the people involved in real estate business..
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  • Since when did flat prices remain fixed? And who fixed it?

    Originally Posted by Natarajg007
    Land prices should go up in Chennai with the new Master plan. It allows more FSI enabling at constant price of flat, more value for land. To take an example. An Ordinary building can now have 6 kitchens and can get FSI of 2 in place of 1.5. This means that price of flat being fixed land price has to sky rocket.



    This genius assumes that price of flats will remain fixed and therefore price of land will skyrocket. Since when was it mandated that price of flats will remain constant? And by what laws of nature (or of commerce) was it mandated as such? If he took the extra 2 seconds to consider, "what if price of flats declines?" (obviously the brain was too small to accomodate 2 pieces of information simultaneously), he would come to the shocking conclusion that the bets he took buying land at exorbitant prices thinking they will rise because "FSI increase coupled with flat prices remaining constant" is a BS logic which will take him straight to the doghouse!

    For the rest of you people who actually use their brains (and don't think that everyone else who disagrees with them is a fool), please consider the following evidence and arguments.

    CREDAI (no doubt according to this genius, they too are morons since it does not suit his argument) has "requested", actually mandated that builders reduce prices anywhere from 10% to 20% so that properties may start selling again - based on the arm-twisting by banks who are getting impatient with the money builders already owe them and are not able to repay since people have sharply reduced buying and the money is locked up in unsold property.

    So, with property already in the 10% to 15% decline in various parts of the city, adding another 10% to 20% will take the decline to between 20% to 35% decline from peak.

    Consider the worst case of a 35% decline as of today (assume builder is eyebrow deep in debt and simply cannot wait to sell). Assume FSI has gone up from 1.5 to 2.0 which is a 33.33% increase (is this ruling passed already? Or is it a fantasy-of-the-future in this person's mind today? :)). The 33% increase in FSI is compensated by the 35% decline in price.

    So, the price of land will skyrocket? The rocket just ran out of fuel on the launch pad itself :D!!!

    This genius must first read up basic economics and laws of demand and supply - Economics 101 as one of us put it on a post. Supply has skyrocketed in the recent past (with builders, bankers and realtors all talking up their demand and buyers falling suckers to this argument that prices will forever increase in double-digits going forward. Ever heard of the greater fool theory? When the number of fools who bought overshadow the number left to buy, supply exceeds demand and prices will stagnate first and then fall as all other fools realise that their punt has failed and prices are not increasing anymore, so their bets will fail .

    Demand is already falling sharply - the very fact that so many of you are holding back and confused about whether to buy now or buy at all, means demand has fallen significantly. There is increasing oversupply in the market.

    Since everyone of us is optimistic (and greedy) by nature, we tend to be overoptimistic and like to think that the next month will bring cheer. But so many next months have gone by and no cheer? Why?

    Based on the reading from the US - like it or not the US is the dog (consumers) and India, China and the rest are the tail (producers) - its going to be a longish wait and probably end in the 2010 - 2012 timeframe.

    Since the tail can never wag the dog, if the US consumption falls sharply (and you will have to be blind and deaf to not figure this out by now) and ramains low for an extended period of time, we in India and China too will be forced to fall back on the Hindu Rate of growth or worse (to wipe out the excesses of the recent past) :(!!!

    If this genius will take some time off to read the papers (keeping aside his prejudiced perception) he will notice that the second busiest ports in the US, Long Beach, is flooded with imported cars with importers leasing space around the port itself to park thousands of Mercs and things since no one wants them anymore; even dealers are refusing to lift stock since they have run out of credit!!!

    Couple of days back, an article in EcoTimes mentioned that the port of Goa and many other ports are clogged with exporters as well as importers refusing to clear goods since no one wants them anymore (of course according to this genius all of those businesspersons must also be stupid, right?). We are realising (once again after several years of unsustainable boom) that its healthy trade that brings in prosperity to consume the fancy things we consume in excess (basic consumption will go on and provide us the Hindu Rate of growth anyways which is 2-3%). If economic trade declines, our growth rate will decline from the 7-8% to the Hindu Rate of growth in which case the RE price growth will also decline to the 1970s rate which is in the low single digits; but first it will decline from current prices to adjust for these few years of madness (and buying with bullshit logic like "Flat prices will remain fixed so land prices will skyrocket").

    So people. It is very important to keep abreast of the news as well as to keep an eye (and most importantly an open and unbiased mind) on the evolving news and various arguments about where all this is headed and will end up.

    IMHO, the RE decline continues to follow the chart I have already laid out (which is how RE declines have hstorically happened). Only, this fall will be steeper, deeper and longer than previous ones since the boom has also been so. If prices have fallen 10% to 15%, please realise that this must be probably 20-25% of the decline phase. So, the serious decline phase has to come still and we could see it last for 2 years (at least) from the peak; probably more in RE.

    It is probably more important that youngsters concentrate on building their financial strength (by saving and maybe buying some Gold) so that they can buy property at lower loan proportions as well as maintain savings at a healthy rate. Remember, common logic is that your EMI must not exceed 35% of your take-home income, so that you will have enough to eat and some to put away. And this take-home must not be your peak salary of recent boomtimes. Rather take it as 5-year average to increase your safety margin (just in case your salary declines for a short period as it very well may :)).

    When property prices fall significantly (IMO around 50% or more) as well as stagnate for a considerable period of time to iron out the weakness among buyers, that would be a great time to buy since supply will be large and you will get lots of choice.

    Flat prices don't remain fixed. Sometimes they decline too :D.

    cheers
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  • Ah Wiseman. U r worked up mentally but ingenuity is a missing link in you by birth I suspect. Now u seem to be telling that U WANT INDIA TO GROW AT HINDU GROWTH RATE. Sounds like u dont want India to grow and maybe as you dont care about this country u want others to lose out too.
    People like you no longer matter to this country and those NRIs who came crashing looking for shelter in India in the past 3 years. Now you must be probably in that breed, having lost your job in US and now your home in US being sold for 2 cents, you are asking Chennai realestate to crash to 2 cents so that you can have a home of you own.
    I PITY YOU.
    As for 30% crash in flat price will bring 30% crash in land price, shows you just dont know mathematics one bit. Thing of that imaginary school which you rated second and ahead of IIM C. What a pity? Let us assume land price is 7000psft and construction cost is 1200psft. If flat price collapses by 30% calculate the collapse in land price. It will depend on the ratio of land to construction cost as also how much money is being sucked out by unscruplous builders. Also depends on how much margins NRIs stuck into the deal 2 years ago and how many escaped and how many were left expecting to buy later at 2cents like you!
    Finally do take a look at the post below. It will let u know that u and ur american nris might have to work for me and my indian peers in due course probably cleaning our cars!

    Article from 99acres

    Decrease in Residential Property Prices By 5%
    With the ongoing slowdown in the Indian real estate industry and correction in secondary markets, some of the major cities have witnessed up to 5 per cent fall in capital values in residential properties, a Cushman & Wakefield (C&W) report said. According to the report, the high - end residential market of Pune has seen a decrease of 5 per cent in capital values during July-September period, while it fell by 1 per cent in the mid-range category. Other prominent markets, like Mumbai and Bangalore, witnessed a fall of 4% and 3% respectively in the mid-range housing sector, it added. However, a few locations in Chennai have witnessed appreciation in capital values by up to 8 per cent. "Most markets are predicted to continue to have stable capital values with a softening bias in the last quarter of 2008, with the exception of Chennai which may see some further strengthening in key micro markets. A lacklustre festive season, along with sharp drop in the stock markets have further aggravated the situation for developers, who are also battling conditions such as high rates of servicing debt and liquidity issues," C&W India Director (Residential Services), Ms Aditi Vijayakar said. Such conditions have led many developers to re-align their strategies and several developers may be now looking at targeting the middle-income groups, where the demand is high and mostly driven by end-users, she added.
    4 Nov 2008 indianrealtynews.com

    Cheers
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  • Say something original instead of parroting Industry Shills :)

    Originally Posted by Natarajg007
    Ah Wiseman. U r worked up mentally but ingenuity is a missing link in you by birth I suspect. Now u seem to be telling that U WANT INDIA TO GROW AT HINDU GROWTH RATE. Sounds like u dont want India to grow and maybe as you dont care about this country u want others to lose out too.
    People like you no longer matter to this country and those NRIs who came crashing looking for shelter in India in the past 3 years. Now you must be probably in that breed, having lost your job in US and now your home in US being sold for 2 cents, you are asking Chennai realestate to crash to 2 cents so that you can have a home of you own.

    Cheers



    You must be the congenital idiot. Natraj (you vocabulary also seems to be weak, like you intellect and intelligence). The word for "from birth" is congenital. But then, for someone who can't hold 2 pieces of information in one brain at one time - forget math - how is that possible?

    As others have said in this post (and I think the IIT you passed out of must be Idiot's Institute of Technology :p), why can't we see even A SINGLE ORIGINAL PIECE OF ARGUMENT THAT SEEMS TO APPEAR LOGICAL TO ANYONE?

    Except for firing off arguments based on faulty and magical premises like "flat prices will remain fixed" (the actual mathemtically accurate term for it is "constant" and not "fixed"; for one who berates other's math, your knowledge of mathematical terms seem to be woefully inadquate if not pathetically poor!) there has not been a single originally thought out piece of logic.

    You must be a complete washout man. And also waiting for the price decline to wash out what little you may still possess! God help you.

    cheers
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  • Originally Posted by wiseman
    You must be the congenital idiot. Natraj (you vocabulary also seems to be weak, like you intellect and intelligence). The word for "from birth" is congenital. But then, for someone who can't hold 2 pieces of information in one brain at one time - forget math - how is that possible?

    As others have said in this post (and I think the IIT you passed out of must be Idiot's Institute of Technology :p), why can't we see even A SINGLE ORIGINAL PIECE OF ARGUMENT THAT SEEMS TO APPEAR LOGICAL TO ANYONE?

    Except for firing off arguments based on faulty and magical premises like "flat prices will remain fixed" (the actual mathemtically accurate term for it is "constant" and not "fixed"; for one who berates other's math, your knowledge of mathematical terms seem to be woefully inadquate if not pathetically poor!) there has not been a single originally thought out piece of logic.

    You must be a complete washout man. And also waiting for the price decline to wash out what little you may still possess! God help you.

    cheers

    Blowing your top will not mean that others will conceded. U have a strong tendency to avoid questions about you, a tendency to scream at something you dont understand and then try to call yourself wise. God save the poor visitors on this forum for having to deal with you. I wont aggravate your pain as regularly as I am doing now, so that you dont have to take more valium. After all you are already hallucinating about realestate crash in Chennai.
    As for calling IIT by names. I am sorry. As an IITian I dont need to defend it. There are 200K high brained folks wanting to get in there and while 5K or so sneak in today in my times it was 1190 that was the last rank into IITM. So I wont fight with you on that. However please do let this board know where you passed out off. You are trying to tell us a big lie about your background is what I suspect.
    Ok I think if you read more of my writings to you, the local medical shop will run out of valium. So I will desist from answering your banterings. However comeback tommorow and let us know WHO U R that U talk as if u r the owner of Realestate and AS IF U KNOW ANYTHING about ECONOMICS. If U lost your job a couple of years ago in US and u came home, just relax. Maybe your children will find their way to US in the next many years. So relax...be calm.
    Bye.
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  • I have gone through couple of these cycles myself, in US as well as in India. Property that I bought in mid '80, was available at half the price in mid 95.
    In '93-94 a DLF Phase-II, 215 sq. yd house was at Rs 25 lakh, in todays price it is 2.5 crore.
    During Mumbai property crash, 2-3 BHK flats in Malad, Guregaon, Kandivali were easily available for 13 lakh to 30 lakh. At today price these are at 60 lakh to few crores.
    Around '98, 300 sq. yd builder floor in South Delhi were available for 50-70 lakh range. At today price, these are quoted at 3 to 5 crores.
    In 2003, a 100 sq. yd builder floor in one South Delhi area, was available for Rs 10 lakh, at todays price, similar property is quoted at Rs 60 lakh or more.
    After price crash, I have seen properties been sold at same price that were at the beginning of previous boom.
    Self used property owner, realistically sees an average of 10-12% yearly return over 10-15 years time period.
    An property developer/investor can rake in high profits in a rising property market. However, when market crash, they crash with double impact taking down all those who are in the business.
    Basically, to grow the wealth consistently you need considerable skills. In property business (and also stock market), is relatively easy for common person to enter and make money. But stakes are very high as there are lots of people with lots of money. All of them want to make quick bucks. By simple logic, it is not possible for someone to keep amassing wealth without someone else losing it. So things have to correct.
    Once greed forces developers to drives profit up and investors gets in there like hungry sharks, there is nothing left in short period of time.
    When there is no speculation, prices are determined by buyer and seller. These set realistic market prices.
    Yes, there are lots of people who need property in India. However, you cannot sell a property to someone who can't afford to buy it. If those who cannot afford, are lured to buy at artificial prices, they leads to a bigger problem, as we see subprime crisis in US.
    Property prices mainly rose to un-realistic level mainly because property changed many investors hands, every time previous one raking in some profit in short period of 2-3 months. Builders saw that investors are making so much money, why they can’t. They started raising prices every few months in tune with investors. There is a limit to which you can increase price of any asset. When that price value reached, buying selling came to standstill. In this process property prices reached to a level, which are many times above the affordability level of someone who is willing to pay its right price.
    I believe there will be biggest ever crash in Indian property market in months and years to come because prices levels are so much more the affordability levels. It is sad, everyone is going to suffer, builder, investors, banks, people involved with property business, and poor people who were lured to buy property at inflated prices.
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  • Hi Wiseman,

    I am Salim (a_salim_99) taken another avatar, as the admin has blocked and removed my id on suspicion of spamming the forum. I was trying to post the same content multiple times and paid the price. I joined the forum again, to participate and share my thoughts. :D

    May be I will raise some questions or thoughts over the weekend. (Nag)

    UscoKumar,

    I am new to real estate for that matter investments as a whole. My problem is this have gone pear shaped when I am *ready* to make a purchase and I am itching to spend my savings esp., towards buying a house. The more I know the more I am advised to wait and watch. What would you do if you were in my situation (simple question) ?
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  • Please ignore my typo and mistakes in my post.

    I had to try several times before I could post a message and in the process I lost the plot and is riddled with mistakes and half of my post does not make sense anymore even to me !

    Thanks,
    Salim.
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