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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 BigBear View Post
    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.
    i sell one to buy another,the tambaram property is in my fathers name and he wants to settle the family share and hence the need to sell.
    anyways i do RE as a business not as an investment.

    Comment


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

      Originally posted by yeskrish View Post
      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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      • Re : Are Chennai Property Prices Fall Going To Fall In Near Future?

        nabishek,thanks.

        Comment


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

          Gold over the last 40 years!

          Originally posted by nabishek View Post
          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
          Attached Files

          Comment


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

            Originally posted by karthikdoss View Post
            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!!!!!!!!!!!

            Comment


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

                Originally posted by blogger View Post
                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.

                Comment


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

                  Originally posted by BigBear View Post
                  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.

                  Comment


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

                    Originally posted by BigBear View Post
                    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:
                    1. Do not try to time the market.
                    2. Do not sell when the market is down or don't sell at loss (Unless you have no choice).
                    3. 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.

                    Comment


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

                      Originally posted by BigBear View Post
                      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:
                      1. Do not try to time the market.
                      2. Do not sell when the market is down or don't sell at loss (Unless you have no choice).
                      3. 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.

                      Comment

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