Hi

In chennai the prices of plots or even a flat for that matter is going beyond the reach of a common man. Is there any chance for the prices to correct in near future?

With a salary of 15k, it is beyond the capacity of common man to buy a house or flat
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  • Originally Posted by yeskrish
    Good one. I agree to disagree.

    But RE and GOLD are te most unproductive and illiquid assets.
    The risk premium is almost nil and so returns can never compensate another asset class that has it - for eg stocks. Stocks have risks and have to return higher. Also stocks are used to produce economic worth and have to return more +ve return.

    Agree that Gold is inflation hedge and hedge against natural disasters and manmade disasters (war etc). Other than that in theory it cannot provide any more retur. RE in theory is even worse, historically.
    Inefficient markets and/or bubble periods are exceptions to RE more as compared to gold.
    Bot of these give a feeling of possession though as compared to other investment classes.


    Agreed that RE is illiquid, but I would like to ask how often do you want to liquadate a RE investment?

    As an end user, most likely its going to be a long term investment and in most cases a one time investment which you may want to liquadate sometime in the later ages of your life or pass onto your heirs.

    Unlike the high risk avenues where losing the capital is also high at critical time when you are in dire need of cash owing to market volatility.The worst case in RE is that the property maynot find any buyers, but that doesnt necessarily mean the property value has become zero.At attractive discount to market price as a distress sale, properties get sold immediately at liveable places.

    Please note, I emphasized the word "worth" not value when talking about appreciation.

    Tell your relatives and friends you bought 2 grounds in prime area of the city or 100 soveriegns of gold against that you bought 1000 shares of xyz company you will know immediately which commands more respect and makes you feel more worthy and richer.

    RE and Gold still works in the Indian context and works really well in people's mind.You dont even have to sell such assets, just passing on or bartering them would suffice.

    Investment in assets like RE, Gold are for people who dont understand the markets and cannot predict well the high's and low to properly time the entry and exit but can hold it long enough to see it appreciate in worth and value averaging the top and bottoms over 2-3 cycles.
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  • nabishek,thanks.
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  • Gold over the last 40 years!

    Originally Posted by nabishek
    Agreed that RE is illiquid, but I would like to ask how often do you want to liquadate a RE investment?

    RE and Gold still works in the Indian context and works really well in people's mind.You dont even have to sell such assets, just passing on or bartering them would suffice.

    Investment in assets like RE, Gold are for people who dont understand the markets and cannot predict well the high's and low to properly time the entry and exit but can hold it long enough to see it appreciate in worth and value averaging the top and bottoms over 2-3 cycles.



    Here is a chart of Gold prices in Rupees (per ounce) from 1971 till today.

    Though being a "dead" asset in terms of not providing interest (which is nothing but an adjustment for inflation), Gold has given an almost 15% compounded return on investment over this period!!! Thats a fantastic return.

    And assuming that Gold is the only asset that is considered REAL money (i.e, one that holds its value across time), you can safely assume that the REAL inflation rate over this period for the Rupee is almost 15%. In other words, if you have had returns below this rate over the last 38 years, you have lost money in real terms - which means most of us have actually lost and are losing money in our 8% and 12% fixed investments!!!

    cheers
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  • Originally Posted by karthikdoss
    Sylvan county-Mahindar City ,Chennai yields that.Check it out.

    Thats for normal rental...Some corporate deals are yielding Rs 35000 Rental .

    From 99 acres price per sqft-4581,rent per sqft- 6 in Sylvan county-Mahindar City.So rent for 60 lakhs comes around to only Rs.7858.You were quoting rs 25000 for 60 lakhs!!!!!!!!!!!
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  • Originally Posted by Economist
    Yes it did Big bear from 1980 to 1983 - Much more than 300%.
    My father bought 2 G land in Sastri Nagar for Rs 80,000 in 1981 from a private sale, valued at 25 Lakhs in 1985 (For a bank loan purpouse) and again valued at 1C in 1991-92.
    Currently valued around 4C - Do your Maths.

    You mean to say from 1981 -85 RE gave cagr of 136% .Would be nice if some people in this forum who had invested during that time can confirm it.
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  • Originally Posted by blogger
    Predicting the market slump or boom is different from predicting the size, specs and potential customers for the price tag dude! If people are able to predict slump and boom half of world population would be millionaires now!

    Thats what exactly I am saying.Builders cant predict future demand.
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  • Originally Posted by BigBear
    You mean to say from 1981 -85 RE gave cagr of 136% .Would be nice if some people in this forum who had invested during that time can confirm it.


    Please do your research (Talk to senior chennai residents) Looks like you are not originally from Chennai - If you were you would have known this.
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  • Originally Posted by BigBear
    Thats what exactly I am saying.Builders cant predict future demand.


    Nobody can time the market (Vendors or buyers of any asset).Great timing may happen by luck. When one plans to time the market,mostly it ends up in failure. Being an financial investment professional (Not RE) I have learnt he following:


      Do not try to time the market.
      Do not sell when the market is down or don't sell at loss (Unless you have no choice).
      Sell when you have made reasonable profit (That you are happy with) and reinvest on depressed assets (you may be wrong but you have to do it).

      Trying to time the market ends in pain (I.e. It will go up or down in 6 months by X percentage and I can save or Gain Rs X).

      Investing in Real Estate the key is:



        Good property at good location that is affordable by the buyer/Investor (even if you pay a bit more).
        Give the RE assets time to grow (I.e:10 years)
        Real estate is not for short term speculators,It is for wealth builders.
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  • Originally Posted by BigBear
    Thats what exactly I am saying.Builders cant predict future demand.


    Nobody can time the market (Vendors or buyers of any asset).Great timing may happen by luck. When one plans to time the market,mostly it ends up in failure. Being an financial investment professional (Not RE) I have learnt he following:


      Do not try to time the market.
      Do not sell when the market is down or don't sell at loss (Unless you have no choice).
      Sell when you have made reasonable profit (That you are happy with) and reinvest on depressed assets (you may be wrong but you have to do it).

      Trying to time the market ends in pain (I.e. It will go up or down in 6 months by X percentage and I can save or Gain Rs X).

      Investing in Real Estate the key is:



        Good property at good location that is affordable by the buyer/Investor (even if you pay a bit more).
        Give the RE assets time to grow (I.e:10 years)
        Real estate is not for short term speculators,It is for wealth builders.
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  • Originally Posted by BigBear
    From 99 acres price per sqft-4581,rent per sqft- 6 in Sylvan county-Mahindar City.So rent for 60 lakhs comes around to only Rs.7858.You were quoting rs 25000 for 60 lakhs!!!!!!!!!!!

    Dear Big Bear,
    Your figures are incorrect.Mine is 1810 sq ft apartment , if you calculate the rent per sq ft is approx Rs 14.I am not here to promote Sylvan county.Just passing the information as I am the owner and I am earning the rental as stated.
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  • I am hearing in last 2 months that real estate market is recovering, however on the ground not sure what is the situation. Can some one through light on the following

      Actual transactions in august and september
      Average purchase value (Rs.25 lacs, Rs.35 lacs, Rs.55 lacs etc) in august and september
      Most of the transactions seem to be in affordable housing sector and average purchase value is around miniscule Rs.15 lacs (which is clearly affordable housing sector).

      Is this really recovery?? Still no buyers are coming forward for above Rs.50 lacs transactions.Most of the transactions seem to be in affordable housing sector and average purchase value is around miniscule Rs.15 lacs (which is clearly affordable housing sector).

      Is this really recovery?? Still no buyers are coming forward for above Rs.50 lacs transactions.Most of the transactions seem to be in affordable housing sector and average purchase value is around miniscule Rs.15 lacs (which is clearly affordable housing sector).

      Is this really recovery?? Still no buyers are coming forward for above Rs.50 lacs transactions.Most of the transactions seem to be in affordable housing sector and average purchase value is around miniscule Rs.15 lacs (which is clearly affordable housing sector).

      Is this really recovery?? Still no buyers are coming forward for above Rs.50 lacs transactions.Most of the transactions seem to be in affordable housing sector and average purchase value is around miniscule Rs.15 lacs (which is clearly affordable housing sector).

      Is this really recovery?? Still no buyers are coming forward for above Rs.50 lacs transactions.
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  • Originally Posted by contra
    I am hearing in last 2 months that real estate market is recovering, however on the ground not sure what is the situation. Can some one through light on the following

      Actual transactions in august and september
      Average purchase value (Rs.25 lacs, Rs.35 lacs, Rs.55 lacs etc) in august and september

      Most of the transactions seem to be in affordable housing sector and average purchase value is around miniscule Rs.15 lacs (which is clearly affordable housing sector).

      Is this really recovery?? Still no buyers are coming forward for above Rs.50 lacs transactions.

      Contra They are talking about recovery not sky rocketing.

      Recovery can be moderate.
      By the way you are asking for average and median sales figures,They are as accurate as "Indian per capita Income" is Rs 37,000 p/a (Rs 3,000 p/m) is that what you earn?

      Contra They are talking about recovery not sky rocketing.

      Recovery can be moderate.
      By the way you are asking for average and median sales figures,They are as accurate as "Indian per capita Income" is Rs 37,000 p/a (Rs 3,000 p/m) is that what you earn?

      Contra They are talking about recovery not sky rocketing.

      Recovery can be moderate.
      By the way you are asking for average and median sales figures,They are as accurate as "Indian per capita Income" is Rs 37,000 p/a (Rs 3,000 p/m) is that what you earn?

      Contra They are talking about recovery not sky rocketing.

      Recovery can be moderate.
      By the way you are asking for average and median sales figures,They are as accurate as "Indian per capita Income" is Rs 37,000 p/a (Rs 3,000 p/m) is that what you earn?

      Contra They are talking about recovery not sky rocketing.

      Recovery can be moderate.
      By the way you are asking for average and median sales figures,They are as accurate as "Indian per capita Income" is Rs 37,000 p/a (Rs 3,000 p/m) is that what you earn?

      Contra They are talking about recovery not sky rocketing.

      Recovery can be moderate.
      By the way you are asking for average and median sales figures,They are as accurate as "Indian per capita Income" is Rs 37,000 p/a (Rs 3,000 p/m) is that what you earn?

      Contra They are talking about recovery not sky rocketing.

      Recovery can be moderate.
      By the way you are asking for average and median sales figures,They are as accurate as "Indian per capita Income" is Rs 37,000 p/a (Rs 3,000 p/m) is that what you earn?
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  • Want to know the reason why price have not reduced as expected(more than 50%) read the below link
    ]http://www.equitymaster.com/ht/detail.asp?date=10/8/2009&story=2
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  • Sell when you have made reasonable profit (That you are happy with) and reinvest on depressed assets (you may be wrong but you have to do it).




    Is this not timing the market and by the way is chennai RE a depressed asset now.As per your logic we need to sell chennai Re and buy in small towns where price has not increased that much.Dont contradict yourself.

    Timing is the key in any investment if you get your timing wrong and buy at the peak of bubble sure you will lose your shirt and financial advisors will not be around to rescue you.They will be busy counting the commision.

    Is this not timing the market and by the way is chennai RE a depressed asset now.As per your logic we need to sell chennai Re and buy in small towns where price has not increased that much.Dont contradict yourself.

    Timing is the key in any investment if you get your timing wrong and buy at the peak of bubble sure you will lose your shirt and financial advisors will not be around to rescue you.They will be busy counting the commision.
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  • Here is one more article ...

    Originally Posted by BigBear
    Sell when you have made reasonable profit (That you are happy with) and reinvest on depressed assets (you may be wrong but you have to do it).




    Is this not timing the market and by the way is chennai RE a depressed asset now.Dont contradict yourself.

    Timing is the key in any investment if you get your timing wrong and buy at the peak of bubble sure you will lose your shirt and financial advisors will not be around to rescue you.They will be busy counting the commision.


    Contra, Economist, BigBear,

    Here is an article in EcoTimes today that gives some data that so many of us are seeking to get a grip on the situation...
    Homes still out of reach, price fall a mirage

    http://economictimes.indiatimes.com/markets/real-estate/news-/Buyers-realise-homes-still-out-of-reach/articleshow/5095684.cms

    As the article says, North Chennai registrations are still at 19834 down from 39331 in the same period last year, which is almost a 50% decline from an already low base of 2008 figures (I bet 2007 was way higher than 2008 data!!!).

    And builders are raising prices on the basis of feel-good data and the enormous pressure due to their debt and necessity to sell their existing inventory.

    Please note that their debt levels are geared for much higher sales levels as well as much higher price/profit levels and current registration levels show that this is not happening. By raising prices prematurely and trying to pressurise people into buying at higher prices or opt out builders are playing a high-stakes game of who-blinks-first.

    BigBear, my own feeling is that, given the current turn towards safety and increasing risk averseness amongst people, many will walk away from higher prices and post-Diwali, builders will be the first to blink! :D

    Btw, in my opinion, Chennai prices are still well in bubble mode and need to come down significantly (when is anybody's guess) before volumes pick up. And without volumes, its coma or death for the builders!!!

    cheers builders are playing a high-stakes game of who-blinks-first.

    BigBear, my own feeling is that, given the current turn towards safety and increasing risk averseness amongst people, many will walk away from higher prices and post-Diwali, builders will be the first to blink! :D

    Btw, in my opinion, Chennai prices are still well in bubble mode and need to come down significantly (when is anybody's guess) before volumes pick up. And without volumes, its coma or death for the builders!!!

    cheers
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