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

    Business man are making money as there are drip down effect from large companies/investments.

    A guy who to do odd furniture and carpeting job in our street 8 yrs ago now supply's office furniture and maintains Huyndai car factory.
    He has grown from TVS50 to second hand Zen to now brand new Ford in 8 yrs. He is also building his first own home. Is India Shining?

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

      CHeck out the rents in the city.My property yields rent of 3 lakhs per Annum[Rs 25000 per month].So approximately the value is 3x20= 60 lakhs.So the price is logical.CAn the rent drop from the curent Rs 25000 per month to 2001 levels of 5000 per month? Never.

      Comment


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

        A view of present and future

        Majority of the peoples pocket is comparatively more in Chennai economy compared to 90’s. I think it is all part of the boom in businesses, establishments due to huge FDI in India and specifically in and around Chennai on and auto Industries and most of population get a share in the growth either directly or indirectly. I think the governments of Tamil Nadu has been doing well on these grounds.

        To be in the right place and in right time makes a big difference and so is the case of students who graduated by end of 90’s, beginning of 00 and also the active work force under the present climate in Chennai. While it was hard to get decent jobs in 70’s, 80’s, 90’s for competent people, it became quite simple for majority of the population due to high manpower demand. People start to flock into the city thereby increasing population density and increasing prices. Look at China what happened in the last 5 years and what is happening now where people are moving back to their villages to do their good old jobs

        While in 90’s, a server in the restaurant will be happy with a 1 or 2 re tip, now the same people expect 5 or 10 re tip. Looking around in Chennai, there are lots of people from other states taking over these jobs. Even look at the cost of commodities, restaurant bill, bus charges, water charges, electricity bill etc, there is multiple times increase in all of them from 90’s. One of the reasons is inflation ( not a major player ) and secondly peoples affordability index has increased and more people have moved into the middle class cader ( it is observation on the global level ). The number of 2 wheelers and cars on road have increased multiple times and as an Indian am happy and proud.

        These all looks good for the current local economy as long as we are able to attract more FDI and retain our competitiveness in the market and keep the share between the people. The businessmen already complain that cost of doing business is high in Chennai as compared to running a company in Kualalumpur. So, it is all looks good news presently and only time in future will say whether we will remain as competitive and prospective in future.

        Just looking into a global side of things and comparing it with Chennai. 1 crore rupees is about 150,000 Euros, 210,000 dollars, 300,000 Singapore dollars and 720,000 Malaysian Ringgits. One can compare the quality of house / apartment / land that will be available in these countries for the cost of 1 crore apart from living standards, quality of life etc. compared to life in Chennai with all pollution, drainage, quality drinking water etc. ( I am not complaining, just stating facts ).

        At the present juncture, India is booming and is shining and it all depends in future whether the selfish MNC companies will still continue to stay in India and support our people or move to low cost destinations. My take is we have become / becoming more expensive to throw the MNC’s to other low cost economies

        Comment


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

          It is extended, but for some reasons. Not toooo extended!

          Originally posted by abk View Post
          this is what everyone said about the sen when it reached 8000 mark today it is double that,
          it is far too exteeeeeeeeeeeeeeeended for a extended bear rally.
          Abk,

          If you go back to 1987-88 onwards, all deep bear markets have had rallies back which have been 100%. So this is not unusual.

          But this time around, we are not in a regular bear market, but a once in a lifetime bear (last time it came in the decade my father was born 1930s). Some analysts also record this as a once in 300 years phenomenon, which they call a Grand Super Cycle.

          This is largely a US-led phenomenon and our country will be swept along for a while after which we may chart a separate and more bullish course, so lucky we are in India now.

          Yesterday was probably the signal given by US markets that this exteeeeended rally might be over and we may be in for a large and steep fall. Still too early for confirmation, but watch today's US market performance. Our markets may remain uppish and flat for still some time, probably Diwali.

          I still believe we had a strong bear market rally and should see 9800-10500 again!

          cheers

          Comment


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

            Economic gloom gone, but it's not boom yet: IMF

            The International Monitory Fund said the global economy is recovering faster than expected.

            The positive report card from IMF yesterday.

            And our Wiseman is talking about a great depression Mark II.

            Guys get over it, The GFC was no way near bad as it was first thought to be.

            Like it or not the global economy is well on the recovery path - even if you are in denial.

            Comment


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

              Originally posted by wiseman View Post
              Abk,

              If you go back to 1987-88 onwards, all deep bear markets have had rallies back which have been 100%. So this is not unusual.

              But this time around, we are not in a regular bear market, but a once in a lifetime bear (last time it came in the decade my father was born 1930s). Some analysts also record this as a once in 300 years phenomenon, which they call a Grand Super Cycle.

              This is largely a US-led phenomenon and our country will be swept along for a while after which we may chart a separate and more bullish course, so lucky we are in India now.

              Yesterday was probably the signal given by US markets that this exteeeeended rally might be over and we may be in for a large and steep fall. Still too early for confirmation, but watch today's US market performance. Our markets may remain uppish and flat for still some time, probably Diwali.

              I still believe we had a strong bear market rally and should see 9800-10500 again!

              cheers
              wiseman it is not going to happen in atleast 3yrs.
              the world is changing so fast that predicting beyond three years is 'insane' in any scenario.

              Comment


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

                I'm always surprised by this attitude!

                Originally posted by Economist View Post
                Economic gloom gone, but it's not boom yet: IMF

                The International Monitory Fund said the global economy is recovering faster than expected.

                The positive report card from IMF yesterday.

                And our Wiseman is talking about a great depression Mark II.

                Guys get over it, The GFC was no way near bad as it was first thought to be.

                Like it or not the global economy is well on the recovery path - even if you are in denial.

                Economist and Abk,

                If you go back to the 2007 timeframe, remember what the IMF was saying? That World will grow over 5% and all is well and blue-skies with the world. Just a few months before the cliff-dive.

                Then fast forward to early-2009 and you find the IMF talking about World Economy (the very same economy that was to grow 5-6%), to initially decline by around 1% this year, before growing.

                Now, they are talking 2.4% - 3% growth.

                As you can see, they are either
                1. Clueless about the economy, OR
                2. Talking with a forked tongue to support someone else's agenda

                Most importantly, did the IMF report tell you why the recovery is faster than expected? And in any case, what was the expected rate? The whole thing is hidden in the why! This recovery, for what its worth, is not by natural cause. It is because of artificial stimulus push.

                So,
                1. the cash-for-clunkers program saw more cars being bought, but it ended in Aug and Sept saw a renewal of a crash in car sales

                2. The Home buyers incentive ($8000) was utilised in a full 80% of all new home purchases since its inception. Who knows how many of those homes might not have been bought otherwise? This is ending in Nov/Dec when the US pulls its program.

                3. The $ 1.4 Trillion soaking up of toxic mortgage-backed securities is coming to a close. Who will soak up the many trillions more lying in bank vaults and getting lower in value every day as more mortgage defaults happen.

                4. Govt has been the only steady increase in job creation. What happens when this ends as it will soon as most state Govts are unable to make ends meet due to reducing revenues from falling taxes due to - surprise! rising unemployment and falling asset values!!!

                So, the problem is not running away. Only growing under us while we are not looking.

                Please understand that the entire cause of the problem - excess credit - has only been worsened by the major Govts of the world throwing even more credit to keep the economies afloat. And the problem has only been worsened because, now we have an even bigger debt problem to resolve with an even weaker world!!!

                I urge you to continue to believe the spin that we are fast coming out of the recession (since it is always easy to be in the comfort zone). This is a strange rally, one in which insiders have been selling massively while retail investors have been lapping it up! Is there something that retail investors (normally the ones to be taken to the cleaners first) know that insiders and managements do not?

                In my opinion, we are probably on the verge of the next leg down, since the markets have speculated themselves far away from reality.

                Most normal Bull Markets end when P/E is around 22 times (empirical evidence). Blow-out market rallies like 2007 end with P/E of around 28 times (remember that as late as March 2007, sensx was only 14000 and a P/E around 20 and in 6-8 short months it shot up by 50% to 21000, so it was all over in a jiffy and this is called a blow-out).

                We are today at a P/E of just over 22. And never has a blow-out year been followed by another blow-out - generally it take around 7-8 years to form another blow-out (recall 1986 ??? blowout, 1992 Harshad Blow-out, 2000 ***-com Blow-out, 2008 Credit bomb blow-out - Btw, I have seen and been in all of these blow-outs!!!).

                If 2008 was the year of the Perfect Financial Storm, it just got postponed by FED action to 2010 by liquidity injection on a masive, unprecendented scale bigger than anything ever seen before, as well as fixing the rule-book to keep the rotten, stinking credit defaults hidden from public scrutiny and action. But it has to (and will) end when they run out of credit injections to keep the economy afloat - which is around December of this year. Then things should unwind in the real economy. But as the Stock market is 6-9 months ahead, it should start the decline around now ...

                As it was said, it has been an over-exteeeeended rally, but in the US it has kept pace with the way the 1930 rally happened after the 1929 fall, in an uncannily similar fashion, with a 45% rally to the decline. Almost all indicators and charts are eerily similar. So are Govt actions like the recent protectionist moves against China similar to the Smoot-Hawley Act, which is now seen as the real reason to take a deep rercession and convert it into a Great Depression.

                The only argument worth arguing now is whether the US will go the 1930s GD way or the 1990-2000s Japan Deflationary way!

                And how far the emerging economies will continue to be coupled and when and how they will decouple!!!

                Let us see which way the wind blows ... we will know within October, for sure ...

                cheers
                Last edited October 3 2009, 01:57 PM.

                Comment


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

                  Bangalore, Chennai to lead realty revival: Report

                  Bangalore, Chennai to lead realty revival: Report
                  Chennai/ Bangalore: Bangalore has emerged as a clear preference for sectors like office and retail, while coming a close third in the residential and hospitality according to Cushman & Wakefield, a retail estate research firm.

                  In its report Cushman & Wakefield GRI India Real Estate Investment report 2009: 'Survival to Revival - Indian realty sector on the path to recovery,' the firm said that Bangalore is expected to see the highest demand for office space in the period 2009 - 2013 with approximately 34 million sq.ft.

                  The expected recovery in the IT/ITeS sector would have a positive effect on the demand in Bangalore, the preferred location for many IT/ ITeS companies. The demand for retail sector is also expected to be the highest in Bangalore with approximately 7 million sq. ft. while demand for residential is expected to be approximately 570,000 units over 2009 - 2013, with the highest compounded annual growth rate at 14 per cent.

                  The hospitality sector in Bangalore too is forecast to register the highest compounded annual growth of about 26 per cent in demand, followed by NCR at 24 per cent and Pune at 23 per cent.

                  Chennai to witness second highest demand

                  The city of Chennai is expected to witness the second highest demand for office space in India between 2009 to 2013 with a projected cumulative 27.2 million sq ft and the city also holds the fifth largest demand share for retail and hospitality space demand in India.

                  Anurag Mathur, managing director, India, Cushman & Wakefield said that the office market in Chennai has seen a renewed interest from the corporate sector, post the economic crisis. While demand will be visibly affected this year, "We expect the five-year horizon (up to 2013) to be upbeat for the commercial markets in the city. The retail and hospitality segments are also likely to see considerable demand in the coming years."

                  Chennai is likely to witness the second highest demand for office space after Bangalore of approximately 27.2 million sq.ft. by 2013. Good infrastructure, high quality construction and competitive pricing would be the key reasons for the location to see high demand from corporate sector.


                  Hyderabad is expected to witness office demand of 16.6 million sq. ft. over a five year horizon and records the highest compounded annual growth of approximately 28 per cent during 2009 - 2013 in the office sector along with Pune and Kolkata. The residential demand for Hyderabad is expected to be 290,000 units with the highest compounded annual growth of 14 per cent in the next five years akin to Bangalore.

                  Mathur, further added that though the high growth trajectory of the previous years saw a setback during the global economic slowdown, the inherent strong economic fundamentals, low exposure to debt and state intervention, would help the sector to gradually return to the path of recovery and witness robust demand for real estate across sectors.

                  Comment


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

                    Where to park the money?

                    Originally posted by wiseman View Post
                    Economist and Abk,

                    If you go back to the 2007 timeframe, remember what the IMF was saying? That World will grow over 5% and all is well and blue-skies with the world. Just a few months before the cliff-dive.

                    Then fast forward to early-2009 and you find the IMF talking about World Economy (the very same economy that was to grow 5-6%), to initially decline by around 1% this year, before growing.

                    Now, they are talking 2.4% - 3% growth.

                    As you can see, they are either
                    1. Clueless about the economy, OR
                    2. Talking with a forked tongue to support someone else's agenda

                    Most importantly, did the IMF report tell you why the recovery is faster than expected? And in any case, what was the expected rate? The whole thing is hidden in the why! This recovery, for what its worth, is not by natural cause. It is because of artificial stimulus push.

                    So,
                    1. the cash-for-clunkers program saw more cars being bought, but it ended in Aug and Sept saw a renewal of a crash in car sales

                    2. The Home buyers incentive ($8000) was utilised in a full 80% of all new home purchases since its inception. Who knows how many of those homes might not have been bought otherwise? This is ending in Nov/Dec when the US pulls its program.

                    3. The $ 1.4 Trillion soaking up of toxic mortgage-backed securities is coming to a close. Who will soak up the many trillions more lying in bank vaults and getting lower in value every day as more mortgage defaults happen.

                    4. Govt has been the only steady increase in job creation. What happens when this ends as it will soon as most state Govts are unable to make ends meet due to reducing revenues from falling taxes due to - surprise! rising unemployment and falling asset values!!!

                    So, the problem is not running away. Only growing under us while we are not looking.

                    Please understand that the entire cause of the problem - excess credit - has only been worsened by the major Govts of the world throwing even more credit to keep the economies afloat. And the problem has only been worsened because, now we have an even bigger debt problem to resolve with an even weaker world!!!

                    I urge you to continue to believe the spin that we are fast coming out of the recession (since it is always easy to be in the comfort zone). This is a strange rally, one in which insiders have been selling massively while retail investors have been lapping it up! Is there something that retail investors (normally the ones to be taken to the cleaners first) know that insiders and managements do not?

                    In my opinion, we are probably on the verge of the next leg down, since the markets have speculated themselves far away from reality.

                    Most normal Bull Markets end when P/E is around 22 times (empirical evidence). Blow-out market rallies like 2007 end with P/E of around 28 times (remember that as late as March 2007, sensx was only 14000 and a P/E around 20 and in 6-8 short months it shot up by 50% to 21000, so it was all over in a jiffy and this is called a blow-out).

                    We are today at a P/E of just over 22. And never has a blow-out year been followed by another blow-out - generally it take around 7-8 years to form another blow-out (recall 1986 ??? blowout, 1992 Harshad Blow-out, 2000 ***-com Blow-out, 2008 Credit bomb blow-out - Btw, I have seen and been in all of these blow-outs!!!).

                    If 2008 was the year of the Perfect Financial Storm, it just got postponed by FED action to 2010 by liquidity injection on a masive, unprecendented scale bigger than anything ever seen before, as well as fixing the rule-book to keep the rotten, stinking credit defaults hidden from public scrutiny and action. But it has to (and will) end when they run out of credit injections to keep the economy afloat - which is around December of this year. Then things should unwind in the real economy. But as the Stock market is 6-9 months ahead, it should start the decline around now ...

                    As it was said, it has been an over-exteeeeended rally, but in the US it has kept pace with the way the 1930 rally happened after the 1929 fall, in an uncannily similar fashion, with a 45% rally to the decline. Almost all indicators and charts are eerily similar. So are Govt actions like the recent protectionist moves against China similar to the Smoot-Hawley Act, which is now seen as the real reason to take a deep rercession and convert it into a Great Depression.

                    The only argument worth arguing now is whether the US will go the 1930s GD way or the 1990-2000s Japan Deflationary way!

                    And how far the emerging economies will continue to be coupled and when and how they will decouple!!!

                    Let us see which way the wind blows ... we will know within October, for sure ...

                    cheers

                    Wise Man ,

                    I completely agree with you. So what is the safe way to keep the money.?

                    FDs or Gold ?

                    These countries are pushing the economy using the printed money.Generally Money value will go down If we print money.Then what will happen to the money which we put on the FDs?

                    Comment


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

                      The terrible forecasting record of the IMF

                      Originally posted by Economist View Post
                      Economic gloom gone, but it's not boom yet: IMF

                      The International Monitory Fund said the global economy is recovering faster than expected.

                      The positive report card from IMF yesterday.

                      And our Wiseman is talking about a great depression Mark II.

                      Guys get over it, The GFC was no way near bad as it was first thought to be.

                      Like it or not the global economy is well on the recovery path - even if you are in denial.
                      Hi Economist,

                      Here is a link to an article by SA Aiyar. ]http://economictimes.indiatimes.com/The-terrible-forecasting-record-of-the-IMF-Swaminathan-Anklesaria-Aiyar/articleshow/5085321.cms[/URL]. It tells you what IMF is capable of. Never believe the government institutions or any financial institutions forecast after all they have their money in the market and they speak for their survival.

                      Regards,
                      Sridhar

                      Comment

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