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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?

    Originally posted by blogger View Post
    Well said. I wonder if builders are launching 1 crore properties without any buyers! Don't they know the market much better than us (sitting and commenting from distance). Immediately don't come to the conclusion that I'm a builder or broker .
    Builders had purchased lank bank with crazy valuations and launcehed numerous high end projects during 2006-2008 and many builders went to the verge of bankruptcy after Lehman crisis.Did they not know the market better than us at that time.

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

      Originally posted by Economist View Post
      Guys do not forget the rapid population growth and Real "INFLATION". Today 1C is equal to 10L 7-8 years ago.
      All youngsters of TN move to Chennai.
      KPO & BPO and bringing in people from other states.
      Annual inflation should be 39% if 10L 8 years ago should become 1C today.We are not living in Zimababawe.

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

        Originally posted by karthikdoss View Post
        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.
        Tell me one area where the flat costs 60 lakhs and rent is 25000 per month?

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

          Originally posted by rickyofsnow View Post
          Hi Shyame, Even if price crash 50% the same 75% of chennai people will not be able afford. That has been always the case and that will be always the case. Ask your father and grandfather,the property (with in the city limit of there time) was not affordable,That is why they went very very far away and bought in Anna nagar and Besant nagar (Middle of nowhere)
          In our Father and Grandfather age have the price increased 300% in 3 years?

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

            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 still feel property price in Chennai will increase from here why are you planning to sell your 3 grounds in Tambaram?Even if you need money you can take loan against your property as you firmly believe price will only rise much higher than 10-12% CAGR.

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

              Originally posted by BigBear View Post
              In our Father and Grandfather age have the price increased 300% in 3 years?
              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.

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

                Originally posted by Economist View Post
                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.
                Very True.1.5 ground land bought by my grandfather in late 1970's at alwarpet for Rs 10,000 is estimated at 4-5 crores today.

                RE has been a sure shot wealth creator in most cases in long term.

                Things are slightly different during our grandfathers days and ours.They were pure cash players while many of us look upto bank loans for purchases today.Our grandfathers bought when they needed and could afford entirely and didnt even look back at how much it appreciated until they wanted to sell it.

                Is that the case today?The appreciation of RE is closely tied to individuals and corporates net-worth because everyone are leveraged.The appreciation or depreciation is goint to affect the individual starting from ability in paying EMI to affecting companies solvency position.

                Another major difference one has to be aware is appreciation need not be always in monetary value.RE investment grows more in worth than in value.During a sale, the worthiness is estimated on relative basis and based on demand the price is fixed using that periods currency value.

                It really doesnt matter if you hold 10 rs today and 1000 rs after 20 years if your 1000 rs then can buy only what your 10 rs can buy today.Its a futile investment if wealth could not be created.

                10K of 1978 can not be compared to 10K of 2009, purchasing power of 10K was way higher during that time.

                In 1975-80, $1 = ~ Rs 8
                In 2009, $1 = ~ Rs 50

                Taking into account the GDP growth over the years, increase in inflation, devaluation of currency, increase in population etc It should be right only to claim that the investment has enabled the person to become around 5-10 times richer than earlier, not 300-500 times percentage as the number would suggest.Getting fixated on numbers can be very misleading.

                In a inflationary period stagnation is a loss while in a deflationary period stagnation is a profit.

                In the past, RE has seen stagnation period substitute and prevent major rise or crash.

                Even today, if one could afford to buy a piece of land at good liveable locality with basic infrastructure amenities and facilities, 10-15 years from now they would see their investment grow many times more in worth than any other avenue available.

                This is the reason why solid assets like RE, gold are deemed to insulate people against inflation and currency value fluctuations in markets.They appreciate in worth.
                Last edited October 5 2009, 04:25 PM.

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

                  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!

                  Originally posted by BigBear View Post
                  Builders had purchased lank bank with crazy valuations and launcehed numerous high end projects during 2006-2008 and many builders went to the verge of bankruptcy after Lehman crisis.Did they not know the market better than us at that time.

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

                    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.

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

                      Originally posted by BigBear View Post
                      Tell me one area where the flat costs 60 lakhs and rent is 25000 per month?
                      Sylvan county-Mahindar City ,Chennai yields that.Check it out.

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

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