Anyone think that the prices of flats will fall 40% from the mid 2007 prices ?
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  • Nice one Ajith !
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  • Good question. Till 2004 is not the apt question. For example the rate has changed depending on time. Let us take the 1966 investment I mentioned. It has returned between 20 to 35% depending on the time. Now if you do read my messages instead of just one, then u will notice that in the first 10 years of invesment land prices sometimes give you returns less than bank rate. So if you guys maybe in your ealy 20s with not much inclination to finance (qualification does not matter as most MBAs dont know much finance!) know only of 2004 boom, there were equal and mightier booms in 1992-1996, in 1985-87 and other periods as I mentioned in another post. As for stocks. My RIL invesment in 1983 returned a CAGR of 30% approx and I sold it just when it was getting converted to multiple shares in 2006 (after the feud completed in RIL becoming multiple companies!). It might have yielded a higher return if I held onto 2007 and may be not so high if I held it till today.
    Now RE and stocks are different stuff. Stocks are for trading much against my invesment on RIL which was hardly much. In RE it is purely an investment ticket unless u r a builder or promoter of RE. I am not in that mode much against many of the folks wishes on this board!! LOL.
    So if u told someone who is not sure about his job not to buy RE, I would have said that to him in 2004,5,6 and any time whatever. Anyone who does not know what to do with his life cant be helped. So what is your question?
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  • PS. The above reply was to AJITPKL. Sorry for not mentioning it!
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  • Originally Posted by nabishek
    Natarajg007, can I get your response for my query please?thank you.

    Nabhishek,
    First of all I dont know how to quote within the message in this forum. So I had to cut and paste from your message. So here we go.
    <If 20 grounds was sold for 13.18 Cr i.e 66 lakhs/ground at 4000 Rs/sqft.wasn't it because the buyer also took into consideration the 3.5 FSI while making the deal?>>
    Yes the final buyer has to bother about the 3.5FSI.
    <<(20*2400) * 3.5 * rate/sqft for land = 13.18 Crore
    Therefore, the intrinsic rate/sqft for land is approximately only Rs 785, which is more or less the guideline value there in pallikarnai.>>
    U r assuming a builder who gets 3.5 on the entire land. One point u need to note is when u make roads etc that maynot be taken into FSI consideration especially when plots are made from agricultural land. Anyway as per ur method which is applicable to builders, 787psft is the intrinsic value factored into every square foot of building.
    <>
    Did I? Huge profit is a non mathematical term..and what is huge is left to u!!
    <>
    If u r laying plots from 1acre, setting aside roads will yield only 10to12 grounds per acre. So 13.18cr/12=1cr per ground approx will yield around 4K psft. So that should be the market price of land typically.
    <hence the market price should be
    (1.5 * 2400) * 785 = Rs 28,26,000 which is approximately 1200 Rs/sqft.
    If a flat is constructed, applying the same logic.It has to be sold at
    (1.5x1200+1200)/1.5=2000 Rs/sqft
    How can land of two different size and extent be compared and the same rate applied to both?if it can be done then FSI should not be considered at all and land transactions should be done only on 785 Rs/sqft.
    Am I missing anything here?>>
    The last bit of your argument is a little TOO unclear to me. Let me do this way.
    I as a small buyer bought land at 4Kpsft per ground. I can build 2400x1.5 (FSI as u said)=3600sqft of flat/house whatever.
    Suppose I spent 1200psft for construction. I will spend
    3600x1200+1Cr(land)=1.432Cr to construct 3600sft flat.
    So psft rate of flat is 1.432Cr/3600=4000psft.
    In other words the flat builder gives u a flat at a 3.5FSI where ur intrinsic land value is 785psft of flat. The local builder in the same area gives u flat with intrinsic land value of (4000-1200(cost of construction))=2800psft. Note I assume both costed the flat at 4000psft. However u must notice that in the latter case u own more land than in the earlier case, since FSI is less in the latter case.
    In net much against what u said the essential price of land was only 785psft and FSI is not relevant.
    WAS THAT CLEAR OR WAS IT MORE CONFUSING??
    Just think of it like this. U pay for land, and u pay for building. If u go into Multi storey complexes u r investing largely on the building which depreciates, while when u go to smaller builders/houses u r investing largely on land (lesser FSI) but land appreciates. So u need to think about which u want.
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  • Nabhishek, My earlier message should tell u why in reality given a long term perspective one should buy land or flats with lower FSIs. Also why large MSBs (multi storey buildings) should actually be cheap irrespective of their claims for swimming pools and lakes (Like brigade in bangalore!). Even with those costs they should be much cheaper than the normal simple apartments given that they are hardly giving u a long term asset namely land. The problem is not many understand it and I am happy u r attempting to get this picture. In Bangalore this is understood as simple flats in Malleswaram cost more psft than the Brigade fiasco. IN Chennai unfortunately it is the converse. Chennaites are just beginning to learn about the big cheaters also called as builders. So if they price low they are only cutting their profits. They have very little to lose. So in the Carborundum context, go and see the India Bulls stuff at 2700psft in Medavakkam. It is yet very costly by the value of land there. So to me I will expect land price to shoot up there!
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  • Originally Posted by Natarajg007
    Nabhishek, My earlier message should tell u why in reality given a long term perspective one should buy land or flats with lower FSIs. Also why large MSBs (multi storey buildings) should actually be cheap irrespective of their claims for swimming pools and lakes (Like brigade in bangalore!). Even with those costs they should be much cheaper than the normal simple apartments given that they are hardly giving u a long term asset namely land. The problem is not many understand it and I am happy u r attempting to get this picture. In Bangalore this is understood as simple flats in Malleswaram cost more psft than the Brigade fiasco. IN Chennai unfortunately it is the converse. Chennaites are just beginning to learn about the big cheaters also called as builders. So if they price low they are only cutting their profits. They have very little to lose. So in the Carborundum context, go and see the India Bulls stuff at 2700psft in Medavakkam. It is yet very costly by the value of land there. So to me I will expect land price to shoot up there!

    Thank you very much Natraj, I get your point.

    I used to calculate from bottom up and fail to understand why the market price is 4000 Rs/sqft is fixed for 1 ground plot when calculating from the intrinsic value 785 Rs/sqft

    My rate is (1.5 * 2400) * 785 = Rs 28,26,000 which is approximately 1200 Rs/sqft.

    and used to feel since the FSI is less so 4000 rs/sqft shouldnt be paid for 1 ground as ROI is very less.Think i got too granular.

    Now I see that once there is a sale of 1 Cr/ground in the locality, The market price applies to all plots in the layout as collectively the price per acre has increased.
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  • I do not have any questions here, I have just expressed my opinion. Like most conservatives more than 75% of my networth is in land. However, by looking at the current situation my advice to anyone who wants to invest in Land/Flat for investment or othwerwise is to wait for 6-12 months. You will get your dream property at a cheaper rate.
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  • Lands @ good price

    Originally Posted by ajithpkl
    I do not have any questions here, I have just expressed my opinion. Like most conservatives more than 75% of my networth is in land. However, by looking at the current situation my advice to anyone who wants to invest in Land/Flat for investment or othwerwise is to wait for 6-12 months. You will get your dream property at a cheaper rate.


    Sometimes one can also get it in weeks but ensure that its below 50-60 percent of its peak value and ensure you dont pay and regret later.

    We have seen from a posting here that an land quoted by land-owner @ 40 L has been jacked up to 52 lacs. Think of the case when the same property undergoes 2-3 transactions in a year.

    Its just the brokers have taken up the price to peak thanks to cheap loans by salaried IT and MNC employees. As the slowdown will have a impact both on salary and salaried employess , there are corrections now which is being witnessed in apartment and will be followed by Plots.

    Cheers.
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  • 40% in Bangalore too

    Just for a info:
    Last JAN 2008 the SQFT in KR Puram Before Bridge land price was 2000/sqft. And today it is 1200/-sqft/ still no buyer....
    :D
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  • For Wiseman

    Wiseman,
    What is your thought about real estate trend considering the reduction of 75 basis points in home loan interest rate?
    Waiting for your insightful thoughts.
    Happy to see Vadivelu(Nats) still wiggling around and begging others to believe him
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  • Price - Not Interest Rate

    The Builders who have robbed gullible peoples money do not seem to understand that the RE slowdown is because of the exorbitant price .

    Read from other thread that DLF has cancelled its recent launch in Bangalore (acco to TOI Chennai Edition) not sure whether DLF has formally announced it.

    The interest rates will have a say on the tenure of torture one will have in the name of EMI.

    Cheers
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  • Buy Now - Indicators

    Hi All,

    Read an interesting article in outlook money, thought should share it.

    They advise, one should buy when

    Rental Yield >= 5%-6%

    Rental Yield = ((Monthly Rent *12) / Market Price of House ) * 100

    (or) Current Price = 2005 Price + 15%

    (or) Current Price = 65%-75% of Peak Price.

    They suggest perhaps, by end of 2009 the prices should bottom out.
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  • I do not completely disagree that real estate prices will fall for next 1 year or so.

    But afterwards it will again pick up. Yes for next one year it is problamatic year for real estate business
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  • Identity theft?

    Originally Posted by Nataraajg007
    I do not completely disagree that real estate prices will fall for next 1 year or so.

    But afterwards it will again pick up. Yes for next one year it is problamatic year for real estate business


    Nataraj, are you using both the id's Natarajg007 and Nataraajg007?

    Hope someone else is not trying to pose as you.Please clarify and confirm.
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  • what has gone up by 1000% in 10 years has to correct atleast 50%

    dear friends,
    I read the articles posted by wiseman with great reverence & interest as he gives ideas from out of the box thinking and really he is a genius.what I feel is "what has gone up by 1000% in 10 years has to correct atleast 50%".property prices have been jacked up by vested interests by more than 10 times in 10 years so now it is the beginning of the end of the upward move, which will correct or fall atleast 50% from the peak.
    let us wait and watch. buyers be patent and reap rich. it is the speculators who will be hurt.companies like DLF and UNITECH have amassed thousands of acres at rock bottom prices. even if they sell flats at 1300-1500 per sqft they will still earn reasonable profit.but they may not earn that 100 % gain they used to have. Government should not give any concession to those companies. Let them reduce prices to normal levels.demand will automatically pick up.construction companies deserve no sympathy.they are shylocks.they have sucked the blood of people and will continue to do so. Govt should put an end to this menace or Govt should provide housing at 1000/ sqft .people must revolt
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