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

      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
      1. Actual transactions in august and september
      2. 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.

      Comment


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

        Originally posted by contra View Post
        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
        1. Actual transactions in august and september
        2. 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?

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

          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[/URL]

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

            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).


            [/quote]

            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.
            Last edited October 9 2009, 09:58 AM.

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

              Here is one more article ...

              Originally posted by BigBear View Post
              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.[/quote]


              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/...ow/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!

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

                Bigbear, Wiseman, Economist

                If the income levels rise, then unaffordable prices might become affordable suddenly.

                Will the rise in stock prices and successful IPOs we are seeing in recent times make the companies to raise the salaries of employees.

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

                  [/quote]


                  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.[/quote]
                  ------------------------------------------------------------------------------------------------
                  Timing the market is not possible.IF it was possible every one will be a millionaire.
                  Markets will never go up over 5% or down below 5% every every one can time.

                  The fact is:

                  When things go up we are greedy and hold on for more gain and downturn set in - Seller has missed good time to sell.

                  When things go down Buyers wait and wait for more discount by the time the upturn sets in and the buyer has missed good buying opportunities.
                  Last edited October 10 2009, 02:54 AM.

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

                    All shadow-boxing and window-dressing ...

                    Originally posted by contra View Post
                    Bigbear, Wiseman, Economist

                    If the income levels rise, then unaffordable prices might become affordable suddenly.

                    Will the rise in stock prices and successful IPOs we are seeing in recent times make the companies to raise the salaries of employees.

                    Contra,

                    In a world thrashed by the Bear last nearly 2 years, there is a desperate urge to take any small positive news and spin it into something big, so that people can remain in that pre-2008 boom comfort zone or go back to it!

                    While nothing ever goes straight down to zero and only does so in waves, so also with our markets. Since you mentioned IPOs and salaries, let me provide more information about these 2 so we can get the correct perpective ...

                    *******************
                    "Real estate could be the lynchpin for the equity markets and a failure of a large initial public offering could start a correction in the market."

                    Cut back to late 2007/early 2008 and one can recall large real estate players seeking billions of rupees from the IPO markets on the basis of the valuation of their 'land banks'. Ignorant investors were cajoled into subscribing to these issues on the hopes of supernormal listing gains. Many investors fell into the trap without a careful analysis of their leveraged balance sheets. However, by late 2008, most of these real estate players were struggling to carry the weight of their debt and all the euphoria around their land banks had fizzled out. But as they say - Old habits die hard!

                    Real estate companies are back at it again seeking billions from the IPO markets, hoping that investors have a short memory. Thanks to veterans like Mr. Parekh, you can get to see the 'real' picture!


                    Indeed, if greedy real estate developers, instead of getting punished for their misdemeanors, are being rescued by banks, they will not change their stripes in a hurry. And they are back to doing what they do best, bid up home prices.
                    *******************

                    Check out the graph I'm attaching which provides 2009 Vs 2008 P/E ratios to give a real view about where we stand today in terms of any real imprivement in corporate performance. Look closely at RE. Current P/Es are at 38 times and are pricing the market beyond perfection!!!

                    In fact, going by this chart, any Sep result below ahready high expectations will see the market take the stock to task. Check out Reliance today. After all the media bytes about "What a surprise!" and so on, the stock went up precisely by the amount of the Dividend declared. Shows me that the bulls and bears are currently evenly matched in motivation. Any shortfall in results will see the bulls give way.

                    So watch the RE FPO market carefully. This is the current feel in the market among potential buyers and this does not bode well for builders who think they can act unilaterally!!!

                    Whenever someone comes to me and says salaries are increasing, I tell to them to check 2 things. The longevity of the hike (for how long will you keep getting it) and what proportion of the populaton is getting it.

                    Third, of course is the difference between actually seeing the raise in your payslip as against media speculation. When we have these pieces of data, we will see real increase in spendable surplus. In my opinion, there is a shift among general population towards risk-averseness and therefore savings will keep increasing and unnecessary spending less. This may rven compensate for the increase in salaries wherever they may happen.

                    Rest assured. RE is not running away anywhere in the near future ...

                    cheers
                    Attached Files
                    Last edited October 8 2009, 10:01 PM.

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


                      Housing demand to rise by up to 30% in next three months.
                      (Economic times of India - today)
                      Housing demand, which has been hit by the economic slowdown, is expected to rise up to 30 per cent by the end of this year with maximum demand being seen in the price bracket of Rs 5-25 lakh, says a Ficci survey.

                      "Affordable housing seems to be flavour of the day. Not just among the political class, but among the real players at the ground," Ficci said in a statement.

                      "Although the real estate sector has started to show signs of revival a majority of the industry experts expect the residential segment to recover by the end of 2009 with a 25-30 per cent renewal in demand," the survey said.

                      The survey found out that 34 per cent of the demand in the residential segment was in the price range of Rs 5-15 lakh and 26 per cent was in the bracket of Rs 15-25 lakh.

                      As much as 22 per cent demand is in the range of Rs 25-40 lakh, 12 per cent in the range of Rs 35-50 lakh and a mere six per cent for properties priced above Rs 50 lakh, the study revealed.

                      "Parking ="http://economictimes.indiatimes.com/markets/real-estate/realty-trends/Housing-demand-to-rise-by-up-to-30-in-next-three-months/articleshow/5102981.cms"][/URL] funds in affordable housing projects has emerged as the safest bet for the developers followed by developing demand based commercial spaces," it said.

                      According to the survey, industry experts believe that demand in retail segment would rise by 10-12 per cent during the next three months and will recover only by the last quarter of 2010. The commercial segment is expected to pick up after the third quarter of 2010.

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