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Are Chennai Property Prices Fall Going To Fall In Near Future?

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Are Chennai Property Prices Fall Going To Fall In Near Future?

Last updated: January 7 2010
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  • #91

    #91

    Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

    Originally posted by yeskrish View Post
    Wiseman

    i can see that you are very knowledgeable:
    You know what, not from you, but i am sick of waiting for Chennai RE to tank, i have been hearing thatChennai RE is over priced and will fall.
    so i missed few good deals (2nd hand flats in tnagar/mambalam area). the quotes which were 3.5k to 5.5k for 10 year old flats back in early - mid 07 are now quoted much more.
    honestly, theory is fine. but will the prices fall and get more relaistic - in the city.
    if not huge fall, atleast will it get to 07 levels and if so when?
    i see that you mention 6-9 months from now, with so many variables, things may change by then.
    this is like bulls telling long term india story intact kinda stuff. nobody knows what that long term really is!

    no offense meant. but i am losing my patience
    Yeskrish. Ask yourself one simple question. Let us assume that WIseman is right and realestate will fall to pits as he claims. Then what do people who hold realestate do today? Sell desperately? What do people who want to buy like you do? Wait endlessly.
    As you rightly said the price of old resale flats are going up not down. And why, because their undivided share of land has risen in value. Wiseman will believe otherwise, as he is WISE!? The problem with these bear talkers is that they dont understand Realestate market in India. Full stop. They are just bunch of copy cats with no internals who will say since price fell in US, it will fall in INdia. THink of it. India has 3 times less land and 3 times more population approx than US, so price should be atleast 10 times higher for land in India than in US. So the extension of logic from Yankees and Kangaroos to INdia wont work. Why cant Wisey go and check the prices in Europe. THey have fallen a bit, but even today they are pricey by Indian standards and go and look at Japan. Japanese roads to houses are no better than we see in INdia, just their freeways match our current NHs.
    I am not here to attack WIseman or the Kangaroo. My problem is what does WISEMAN think one should do with his money today. Just wait endlessly like you to buy and see rises regularly.
    I know of folks who sold land in Urapakkam for 1.5lakhs per ground in 2004 end. TOday the neighbouring plot of Mine will not be sold by me for less than 40L per ground and in 2006 there was a guy sitting in my house asking for it at 12L a ground. Now such exponential growth might sound illogical, but then that is what happened to Japan in 1980s.
    All I suspect is that this board is infested with a bunch of NRIs, who have sold there property in US after the crash are just in the beginning of it. They want to invest in INdia but on their own terms. Well they want a crash and even though WIseman is no big fry as he accepts (why compare with AMbanis as he did, he cant even influence the man across the street), but he can very well confuse weak hands who might sell out. SO be careful with these bear insights.
    Yes Indian jobs will be cut. Yes Indian salaries will be cut a bit. Yet if you see the ratio of cost of land in prime area / salary today it is yet less than it was in 70s and 80s. TO put a clear example for all those so called data mad on this board. In 78 the salary of a bank officer was the most attractive and would be around 800 or about 10K p.a. and a house in Mylapore cost 70K. So about 7 times. TOday a software engineer at that 35 age bracket gets around 25L and house in OMR costs about 1.2 cr. Dont ask for Mylapore since you got to see the currently attractive area. Also as flats become attractive you got to compare those. So I will yet expect another 50% growth and then asin early 80s to unrealistic 20 times annual salary. SO it will be Rs 4C for a good flat before it starts tapering out.
    Finally even today I can get you on Seaward road quotes of Rs 4C for 3200sqft flats. In BOmbay though the price will be Rs 20C for such a flat. SO if the likes of Strongville who claims to earn 7K p.m. in 2004 are taken as example, they better aspire to get a flat in Urapakkam at 30L. They are not to dream of house in Mylapore which Wiseman is asking them to DREAM of. As given Strongville's background he wont be getting more than 30K to 50K p.m. today and with that he cant do any better than that. So such misinformed writers on this board cant do much harm to RE in total, but will make the fence sitting WEAK HANDS go kaput. Just my 2cents worth of info.

    Comment

    • #92

      #92

      Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

      Originally posted by wiseman View Post
      Hi folks,

      If you noticed the news today, the banks are finally starting to sit on real estate companies. Basically saying, you can't borrow money from us, (over)build and then sit on the loans without paying up. And RBI is getting stern about it.

      The choice given to them (RE) is either reduce prices and increase sales (in the hope that you can repay us) OR we will sieze property and sell at any price we get to get back our money. Apparently Unitech (which has also put its corporate office on the block) is due to repay around 2500 crores. So the haste to desperately sell off their assets.

      The chairman of CREDAI came on TV and say they have asked RE companies to oblige OR ELSE.

      Guess the price reduction being recommended. 25% - 30%!

      As far as I can see, this is just the beginning. The writing is already on the wall - except for some who refuse to see iit (pun intended ).

      Anecdotal evidence on reduction of production, buildup of overcapacity is starting to happen. Of course, people will be in denial about the duration and typically say, "this is only till Jan 2009" and so on. Basically no one really knows, though all people in positions of power know that if they go public with alarmist statements, they might just get to the head of the list to go first .

      As I have continued to say, the beginning of serious job losses will be the time the slope will steepen. Lets see.

      cheers
      Pun on IIT haha. What was that 2nd ranked MBA college in 1985? WIll you throw light. Must be Madurai Kamaraj univ and you can claim it is #2 as per a list created in Madurai? Guys like you are the reason that logic cant stand much in TN.

      Comment

      • #93

        #93

        Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

        Haha, I think Mr. Natraj is bringing the best out of Wisemen. Mr. Natraj may i know why you expect the RE prices to remain strong without going down. In addition, what is your take on Indian economy?

        I'm asking you this question because I'm not very much comfortable with the way the market is out there. It is official now that Citi Financial is closing down their up country branches and reducing the branches in Chennai. My strong feeling is many will follow suit.

        Dunlop has closed their factories in Kolkata and Chennai indefinitely leaving nearly 2000 people with very little compensation per month until they open again.

        I happened to have a informal chat with one of the AVP of a top IT company. He said if the market does not improve in March lay off's are inevitable.

        I myself can see most of my friends fear for their jobs and keeping on applying for safer jobs. They do not expect any hikes. What they are looking for is safe jobs.

        Mr. Natraj, I would like to make this a healthy debate.

        Thanks,
        Sridhar

        Comment

        • #94

          #94

          Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

          Originally posted by sridharchennai View Post
          Haha, I think Mr. Natraj is bringing the best out of Wisemen. Mr. Natraj may i know why you expect the RE prices to remain strong without going down. In addition, what is your take on Indian economy?

          I'm asking you this question because I'm not very much comfortable with the way the market is out there. It is official now that Citi Financial is closing down their up country branches and reducing the branches in Chennai. My strong feeling is many will follow suit.

          Dunlop has closed their factories in Kolkata and Chennai indefinitely leaving nearly 2000 people with very little compensation per month until they open again.

          I happened to have a informal chat with one of the AVP of a top IT company. He said if the market does not improve in March lay off's are inevitable.

          I myself can see most of my friends fear for their jobs and keeping on applying for safer jobs. They do not expect any hikes. What they are looking for is safe jobs.

          Mr. Natraj, I would like to make this a healthy debate.

          Thanks,
          Sridhar
          Fair enough Sridhar. Now any market has strong and weak hands. Most argument on this board are based on the assumption that
          a. Price of RE stocks determines price of REalestate. Now a cement company can be in loss even if cement price is high, if their input cost is high. So RE companies that priced flats high with huge mark ups for their inefficiency and greed will be butchered. Land owners have turned smart not to sell so input will get costly and inefficiency will be killed. U know what. IN a secondary city like Mysore, farmers are not ready to sell an acre at 65L, they want 1.2cr and they are cartelising against govt.
          b. Buying a branded flat by the job centred SW BPO et al guys is not panacea. So one day these guys will buy land and build. WIll put efforts to act, not just outsource. So RE companies may not thrive as wellas they do now.
          c. As for pricing I did discuss it in another post the ratio of realestate to purchasing power (aka salary) in 80s to today.
          d. I am not contradicting that jobs will be lost. What you all are assuming is prices rise just because of more BPOs. THat is not fully true. Prices dont fall just because BPOs collapse. THey will have a downward pressure no doubt. For example Wiseman was questioning how I would leave SW industry in 2003 when it was shooting up. My salary had gone up at an average 30% per annum cumulative between 87 and 03 and I have had enough of it to pursue other interests. Many in SW companies today do not know what is COmputer science. So they will have to be replaced over time. Again some other knowledge industry can take over. So assuming a dip suddenly is atbest extending Kangaroo wants and Yankee results in one go. So answer why should India yet have a 4% growth atleast while US is -ve? Extensions are for the peanut brained. I dont need to say that, do I to you?
          In net there will be corrections, but most often Indian govt will reset it by killing the rupee. SO for an INdian investor he will be killed by inability to pay loans taken in 2007 at high levels but it wont necessarily make price crash. Just that folks like WIseman who sold out thinking they know the top might benefit.
          FInally if u think I am wrong, then go on waiting. Dont complain in 2010 when the same flat u aspired now at 3500 which atbest dipped to 3200 goes to 5500 and your salary hardly moved up.
          RE is not simple to understand. There are no moving average curves. It is past experience and knowledge of particular economy. So in India the game is very different from US.
          Finally tell me, why did US price rise just by two times between 2003 and 2006 for RE while in INdia it went almost 10 times. DIfferent markets have different logics. Nifty went from 1400 in 2004 may to 6300, dji did nto move more than around 2 times. So where is the logic.

          Comment

          • #95

            #95

            Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

            Originally posted by chataara
            Friends,

            As far as I have spoken to many real estate people, for the last 10 months, real estate selling activity has come to a standstill. Frustrated sellers are quoting low price now. In choolaimedu, last year people were quoting more than 1 crore for one ground plot. But no sales. Now they are quoting between 70k and 80k. Still they are not able to sell their properties.

            I am having a CMDA approved plot near porur. As there is no increase in the rate for the last one year I decided to sell this property. I gave Advt in Hindu recently.

            To be frank with you, I got just 7 or 8 calls only. Among these, most of these calls were from brokers. So it lies unsold.

            This is the situation prevails all over chennai.

            So, there is no takers for properties. Definitely The rates will come down gradually.

            I accept Mr. wisemans arguments. Next year the situation will worsen deeply.

            Thanks
            chataara
            U r the classical example of a weak hand. WIseman certainly has instilled fear in you. So he is getting his job done. Cheers.

            Comment

            • #96

              #96

              Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

              No one can inject into every one's mind. Do you think all sellers are seeing this forum and changing their minds? No

              It is a fact now real estate prices in chennai are falling.

              I my self personally got a mail from a builder in "Iyappanthangal" whose intitial price was Rs 3200 per sqft for a new flat, is agreeing for the price of Rs 2800 per sqft.

              Comment

              • #97

                #97

                Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

                Thanks chataara and kar27us for throwing some light on the situation. Let's see what Mr.Natraj's reply for this

                Comment

                • #98

                  #98

                  Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

                  Property prices in Chennai

                  I think in the present situation, India is more vulnerable to collapse. The last 5 to 7 years saw prices of everything skyrocketting including the property. All of them had the basic belief that the investment in land and property will never fail.
                  While houses in US selling for single digit dollar sign, the property prices have fallen from 30 to 50% in major economies such as US, UK, Spain, Ireland, etc. The average per capita income on all these economies are far more larger compared to per capita income in India.
                  India has seen fewer percentage of people amazing quick wealth over the very recent years from IT jobs, business, shares etc which is a good thing ( make hay while the sun shine ). The US sub-prime has indicated and demonstrated, the inflated property prices cannot sustain indefinitely and is bound to collapse and when it collapses, it goes into a domino effect.
                  Going to a bit of statistics, the average income of people in the economy always follows a 3 sigma curve. While India has a bit more complicated system such as lower middle class, middle middle class and upper middle class, looking at the mean, even if you assume the average yearly salary of 2.5 Lakhs, it might be assumption on the high end.
                  If the average mean property prices within the economy is within 5 times the yearly salary ( 3 to 4 times is recommended ), it is a stable pricing. That is the reason, our parents in those days could not afford to have one house until their mid to late 40's.
                  Now that the banks offer huge loans without much collateral and everything was based mostly on the monthly income of the individual. IT industry is seeing a big decrease in the salary structure apart from job losses. Some of the multinational companies are offloading people which might bring back lots of NRI's back to India. The automobile industry is suffering badly which not only affects the automobile industry, but also all the associated industries such as machine shops, spares parts dealers, machine importers.....This demonstrates that there is domino effect and leads to further collapse on all essential areas.
                  People had been thinking that investment in the land and property is an valuable asset and these business people are releasing their property and land into the market. This is on top of the estate agents trying to sell their land and property which is currently leading to surplus.
                  The cycle of price drop in property started in US and then spread to Europe and it is time in India and Canada following the same price drop trends.
                  If someone in this climate closes the eyes and keeps mentioning the prices wont drop, they are in a fancy dream world.
                  If people are wishing to invest, have the fingers crossed until prices hit the bottom.

                  Comment

                  • #99

                    #99

                    Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

                    Chataara, why don't you sell it to the "strong" Nataraj?

                    Originally posted by chataara
                    Friends,

                    ...
                    I am having a CMDA approved plot near porur. As there is no increase in the rate for the last one year I decided to sell this property. I gave Advt in Hindu recently.

                    To be frank with you, I got just 7 or 8 calls only. Among these, most of these calls were from brokers. So it lies unsold.

                    chataara
                    Chataara

                    Make a cool 10 lakhs bonanza as well as leave Nataraj 10 L as profit for him since he can sell at a cool 1 Cr (a 50:50 windfall sharing deal). Sell your property to the ever-ready Nataraj for 90 L and pocket a cool 10 L more. After all, according to Nataraj, there is absolutely no fall in prices. So he can sell it at 1 Cr and pocket the other 10 L.

                    Taking up the challenge, Nataraj?

                    I don't think so. I think he has bought one too many properties at exorbitant prices and that is why he is so ready to glibly dump that Urapakkam property for 70 L on the unsuspecting public (selling is expressly prohibited in this forum, dude and that is what you were trying to slyly do ) when someone posts similar property for 17 L on 99Acres.

                    I think he is a RE Agent and having over-extended himself by buying too much at too high prices, is terrified of falling prices and so it dumping crap on any and every one who is even mentioning the word fall.

                    Keep it coming dude.

                    cheers

                    Comment


                    • Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

                      Latest catch. Crude oil falls below $50. When crude can go back to the levels of 2005. RE prices can easily retreat.

                      Comment

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