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Are Chennai Property Prices Fall Going To Fall In Near Future?


Are Chennai Property Prices Fall Going To Fall In Near Future?

Last updated: January 7 2010
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  • #31


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

    I'm NRI working in USA for 8 years, returning back to India next year, I have visited India almost every year during my stay in USA, so I have seen the growth.

    I totally agree, it is unfair to compare the facilities in India with other developed countries, meantime I do agree there are still safety issues (example road construction site), others like robbery are due to unplanned sudden development in economical growth.

    It doesnt mean that because we work overseas for extended period of time to make money (visit India every 4-5 years), during that time India will magically turn into countries like Australia, in our "absence". So when we get back to India, we can enjoy same facilites as we were overseas.

    I would classify people in India, by their economical contribution,

    NRI: earn enough or more white money, save around 1 lakh per month overseas, invest in India to multiply their investments.

    Government: coming up with plans to meet foriegn standards in economy, boosting GDP, with some nonsense commercialised approach (for example, the advertisement boards in the highway medians for every 50ft, jeopradizing public safety).

    Government Employee: earn enough or less white money, some may bribe and dont delivery quality work.

    Private Companies: commercializing everything, regardless of public safety.

    Private Employee: earn less or enough white money, but to cope up with daily needs.

    So nobody is perfect except some. To make India better place for living, everybody should contribute in better way, first by stop cursing while staying abroad.

    I have visited Chennai a month back, I was impressed with infrastructure development in suburban areas like velacherry (except the dumpyard) and OMR, hopefully other places, and building over bridges in cities and making one-way traffic at right spot.

    So government is doing their job, it is public (including NRI) responsibility to follow rules maintain neat roads and facilities, for that they should be educated. Before this numerous private TV channels, there was DD channels, and they were not too commercialised, they used to bring awareness between public by slideshows. Nowadays there is no awareness at all, schools have commercialised, at home TV channels are everybody, no time to think.

    Above are my personal opinion, I dont want to hurt anybody feelings.


    • #32


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

      Its better to stay in Australia

      Originally posted by Natarajg007 View Post
      It is true that infrastructure in India does not match USA or Australia. The comparison however is that between Europe and India. We are not talking about sparsely populated area like Australia. Well as someone said in the links above a typical 3 bedroom flat in Chennai in a known area even not the hi-fi ones, like Vadapalani costs 75L to 1C. A similar area in Bangalore will cost much lesser say 35L to 50L. Reason is simple. Land price is same in both areas but FSI in chennai is low. WIth such FSI, with limited developed areas (with or without potholes) the demand for housing in Chennai will hold the prices.
      NRIs tend to take a condescending look, but well 2 years ago I had a running battle with some silly NRI about a price of land in Arcot road at 1C. He felt it was too much. TOday the same land is not available for 2C. So if u wanna buy, Buy, otherwise stay in Australia with your Marsupial friends.
      Yep I reckon it is better to buy a house in Australia where the government is trying hard for the betterment of life of people and we have medicare (free medical treatment), affordable housing ( in terms of earning here) not like India where people earn 20k per month and have 40 lakh flats (min) in remote areas. Here we can get a decent salary as well as decent house prices which are more economic than Chennai as well. And of course you cannot compare Infrastructure. I reckon only the prices crash in India it is the best time to buy houses like what happened in US now with the Credit Crunch. No offence but it is my personal feeling.


      • #33


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

        Will prices in Chennai really come down ?

        Here is my gut feeling, there are pockets in Chennai where some top politicians have huge land bank and are in collusion with the builders (mainly large flat promoters). There Large project realtors invariably launch their roadshows abroad (invariably US where India growth story blah blah sells) and then come to India with 25% of their project already sold off. I dont think there can be much disturbance in rates here unless there are some structural problems in the economy (for people with a little long term memory you can look back at the 96- mid 99 period). The impact of US recession , hike in interest rates etc may have impact in other areas which are blocked by speculators, second rung politicians, local big wigs. There could be some rejig here but no more than 15% correction from current levels but if economy turns worse (primarily Oil spikes) and US recession is worse than anticipated (> 15 months) then a further correction can be anticipated.. Chennai folks have Real Estate and Gold as primary investment avenues and there is lot of liquidity primarily from huge rents and profitable sales of earlier Real Estate investment not to mention increased salary levels and increased repatriation from US kin.

        They key here is how govt. will manage the Oil deficit , already there is atleast Rs. 25 P litre on Petrol and Rs . 15 on Diesel AFTER Oil Bonds. The govt. can max wait till next election. Imagine if the govt. had hiked petrol and diesel even by Rs. 10 what will happen to the Indian economy, what about hikes of 20 or even 30 if Oil moves up.. Can the India economy sustain ? Will IT companies on city's outskirts still provide Cabs for daily commutation ?

        Oil worldwide has been infiltrated heavily by fund flush funds creating a speculation premium of over $50 and this is only bound to increase...

        Net Net I think though India is a growth story there are simply too many events on the downside. So its better to wait and watch from the sidelines for now untill a few months from the next general election when clear signals could be available bothways..


        • #34


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

          There are some related posts in the forum that address the crippling infrastructure of India, especially the Indian cities.

          Where is this confused nation heading to?

          Look at the rising cost of living, increased taxes and 104 % tax on cars. What are we paying these taxes for?

          It's a mess everywhere. The gap between the rich and the poor is widening even more.

          People are blindly running after money with little or no civic sense.

          India was never meant to be like this. It has failed to come up as a sound nation.

          CHAOS is the MANTRA that it runs on.

          Unfortunately, we will see more and more brain drain as anyone who gets an oppurtunity to leave this country, will certainly want to leave this expensive place ASAP.

          There is no concern about a better tommorrow or the future of our children.

          With deepest Regret.


          • #35


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

            chennai prices

            are real estate prices -- apartments and plots - in Chennai in for a downward price trend ?
            I visited a prominent ad about a dupleix house, a few years old, on one ground plot in Pallikaranai- Manohar Nagar 5th street -- the owner was quoting 53 lakhs for it without any corporation water connection, a very long winded road - with the major bus stop the Velacery Vijay Nagar Bus stop - some 3 km away. No immediate faciltiies/ amenities in the vicinity. the house would have to be renovated --they had 8 feet by 8 feet rooms for bedrooms !

            I found this quite an absurd price to quote and the owner defended it saying that the nearby Kamkoti Nagar it is 70 lakhs the asking rate.

            Will someone make any analysis of the real estate trends of June- July in Chennai after the petrol price hike.


            • #36


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

              I request all you people to please rise above your limitations and look at the bigger picture first. While India may be shining according to some, we are still a very weak economy. A few years of cost advantage, which we have squandered away by doing clerical jobs, does not make us an economic superpower - yet. At the height of our economic boom, we continue to import ever higher amounts as compared to our exports. Remember, our economic boom is entirely dependent on export-led boom. And now its coming to an end - at least for the next 4-8 years; maybe for the next generation.

              Wondering why I'm not talking about RE prices in Vadapalani - or wherever? Because this whole thing is an utterly greed-led bubble due to the phenomenal stupidity of the builders, government AS WELL AS buyers. In previous generations we used to ask builders a simple question - "please explain why so much?". Is that asking too much of today's buyers - especially the youngsters? It appears so. In our days we kept our mouths shut, listened to our elders (not always wise and learnt from THEIR mistakes, unlike today. And the results show. Only the NRIs seem to be asking that question and that may be a life-saver for them!!!

              Prices are insanely high in Chennai (or Gurgaon, Bangalore, Pune or wherever) - even for Manhattan levels (I should know since I have property bought by my great-grandfather in Mylapore at 3k for 9 acres 105 years ago. Even 35 years ago this land was selling only for Rs.10 per SFt. In those days Vadapalani was a village outside Madras and Chengalpet was light-years away .

              And infrastructure abroad is from a different planet. Anyways, the gigantic credit bubble in the west is coming to an end - to be followed by 10-12 YEARS of severe recession, depression and general weakness. US, UK, Spain, Australia, Ireland and maybe the whole of EU are almost definitely headed into the most severe recession seen since your great-grandfather's time (They probably were not affected since they lived within their means - we, especially the younger generation definitely does NOT). Do you young chaps really think you will be earning ever-increasing high wages for the next 20 years so you can afford to make your builder and banker rich? Welcome to the REAL WORLD!

              I expect prices - especially in IT boom cities to come down anywhere from 50% to as high as 80% in the suburbs (especially now with price of petrol). And then I will buy because the next boom will be even bigger and crazier than this one and make me a very rich dude .

              Stock markets are excellent lead-indicators with a 6-9 month lead. The stock prices of leaders in RE - DLF, Sobha, Unitech, Ansal, etc - are a clear indication of the bloodbath to come in RE prices. Building (and Builder greed) is peaking, while demand is crashing. People who have already bought into flats they can ill-afford will realise - when they lose jobs OR their salaries crash - that the only way out is to lose their life-savings as well as sell "their" homes (actually banks own 80% of them on an average) at losses. Whats happening in US, etc WILL follow here. Don't believe me? Write to me when RE stocks are at 15% of their peak prices and RE is going at 30% of their peak prices.

              Till then, raise cash, hold off purchases and have a little more peace of mind!



              • #37


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

                Originally posted by Til View Post
                I live in Australia and recently I checked out a flat in Kilpauk for Rs.2.75 crores. It was from DOSHI housing Ltd who build flats in places like KAZHIVELI (The Garbage Dump) near VELACHERY. The funny thing was the availability status of sold in all the flats. For that money honestly you can purchase a beautiful house in Sydney. I don't think Chennai has so good infrastructure like Sydney like roads where you can lie down and no power cuts etc. etc. Im not sure if the SOLD status is real or not? If it is real I reckon the people who bought these flats are LOSERS. With respect to IT people they travel abroad & they should realise that the money they are paying for houses in Chennai or in any part of India for that matter is not worth it. They should demand all the high quality infrastructure like Western Countries from govt or should not pay that much money (purely for prestige). As Indians here say that even if you have millions of Rs in India if you go to street there is holes and problems everywhere. So the people who buy apartments in India should realise that there are other people in India who earn less than them. I am from health sector here and our salaries are high compared to IT people both in India and abroad. But we also have second thoughts about investing in Chennai for that money as we consider it is not worth it. Its only for our parents we think of getting a home in Chennai.

                hey Til,
                india is india. its a whole package. tyake it or leave it. you sit in australia and talk about things should become better and ppl should boycott etc...what planet are you on? if you dont want to buy...its your choice...but dont stop others from making sensible decisiopns by buying in madras. earning more doesnt mean common sense, which might be the lacking thing for whatever reason.


                • #38


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

                  You are right. But, Australia too is hurting!

                  Originally posted by Til View Post
                  Yep I reckon it is better to buy a house in Australia where the government is trying hard for the betterment of life of people and we have medicare (free medical treatment), affordable housing ( in terms of earning here) not like India where people earn 20k per month and have 40 lakh flats (min) in remote areas. Here we can get a decent salary as well as decent house prices which are more economic than Chennai as well. And of course you cannot compare Infrastructure. I reckon only the prices crash in India it is the best time to buy houses like what happened in US now with the Credit Crunch. No offence but it is my personal feeling.
                  Hi TIL,
                  Ignore the sidetracking, personal targeting that some of our young Indian friends resort to when they don't have much to say. I'm in India too. And have always been here (though travelled to many parts of the world and worked there from time-to-time).

                  You are absolutely right. Most of the youngsters have never seen downsides. Neither have they seen the dramatic and sustained increases in mandatory expenditure in latter life when marriage and kids come in. They have only seen a few years of wildly inflationary salary increases which are bound to go south in the near future. And many of them are also confused with all kinds of advice they get (most of them detrimental to them) like, "Buy before its too late", "Prices are running away, they will never come back to these levels", "Land is not being made anymore", etc, etc. They do not have the maturity to differentiate whats good for them from the self-serving advertising of builders. Besides, today's uncertain climate leads them to believe that, if they can manage to somehow buy a house (mostly owned by banks where they only become debt-slaves to banks) they will, rather quickly, become rich. Very few are willing to believe that long-term CAGR in RE is only between 12% to 16% - that too in good areas only.

                  Yes. Based on the last Big Bear in Indian Realty (1995-98) when the World had a much more sound economic outlook and even then prices in most places declined 50% +, I believe we are in a long and very painful decline at the bottom of which you will find RE at attractive long-term prices again.

                  But then, Australia too is in the grip of a Great Bear in RE. You guys too must be hurting there?


                  • #39


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

                    It is very clear in this forum that people who post here "cry about" increased real estate prices. This is normal for losers to do. One guy even says price will come down and he will reenter, almost justifying that since he did not enter before, price has to come down and after he enters price will go up. Wishful thinking.
                    No doubt quality of life in India is not same as among Marsupials of Australia. In India you have people and services for low prices, in Australia you can have Marsupials but not people or services. Our so called NRIs who have lost their money investing in some realesate in USA or Australia (one guy tells the prices fell for his 2004 bookings from its peak to his purchase level in USA) are now wanting to enter at the low in India, so they talk about price rise in India.
                    Well the truth is pretty simple. 5 years ago, I had money to buy large pieces of land in Bangalore. I preferred to invest them in RBI Tax Free bonds. One such investment would have resulted in 5 to 6 times easily and I know one particular land in AECS layout which was for 26 lakhs and I told the guy it was too costly as I knew 3 years before that it was costing just one third, and did not proceed with it. Today it is worth around 2 crores. Now I am talking of 3 times appreciation between 2000 to 2003 and 6 times from then to now. In simple terms it was 200/sqft in 2000, 600 in 2003 and today 3600.
                    The bluffers and hallucinists on this board are continuing to believe that prices will fall. Now this AECS plot coming to 200/sqft again is not impossible but then the salary of a fresh S/W engineer has to come to Rs 2Kp.m. then for a decent college guy not one who has some strange 50K rank and also studies in some college in TN or Karnataka and calls himself an engineer.
                    Growth is a dubious truth. It hurts. Prediction of prices is even more difficult activity. Because US realesate fell should it fall in India. US is a developed economy, so the prices oscillate there in a band. India has just grown, or rather growing. One "buddisali" talks about stock markets and RE stocks falling as if that means everything. US market take DJI did not move up any more than 90 to 100% between 2003 and 2007 peaks. NIFTY the Indian index went up 6 times in that same period. From 1000 in 2003 to 6000 in 2007-8 peak. Now will Nifty come to 1000 if DJI comes to 2003 level of 7500. I bet they are not correlated anyway.
                    Our NRI friends in this board, seem to know not about their new residences nor about their old address. They want clean villas in India, since they have one in Australia, but will yet like to get a servant to wash their clothes, while they will have to do that in their washing machine in Australia. Kangaroo thinking wont help.
                    Come to the reality. In Chennai I have lands that I have acquired way back in 1980-90s and they have probably appreciated some 100 to 200 times. Is that unusual?
                    The problem is we are imagining that salaries can go up but not prices. No doubt in India the rich are getting richer and the poor poorer, but that was true even in the 80s. So if someone is imagining price of realestate will fall to his liking because he is not able to afford it, one can at best pity him.
                    Incidentally talking about 20K salary in India and 40L flats. In 1970s my BIL bought a house for 40K rupees in Mylapore. His salary was around 1K p.m. Today a similar folk will get a salary say 30K p.m. and so should logically be able to buy for 12Lakhs. The problem is he cant buy a house and certainly not in Mylapore. So he will shift out of the city and buy a flat in say Urapakkam or SriPerumbudur. Now the funny part is even in Urapakkam flats are costing 30L. So what does he do. He finds the cheapest of the cheapest and manages a one bedroom old flat. So it is a natural spreading of reality.
                    Again there are specific issues about Chennai. ONe can only build 1.5FSI unlike Bangalore. I can get u a good flat 2 bedroom, 1000sqft within 10km radius from MG Road for 20-25L. In Urapakkam such a flat costs 30L. THis is because in BLR they can build multiple times Chennai FSI. So you might as well get your city to relax FSI.
                    Finally the funny truth is. In Urapakkam a person sells a old house 750sqft building and 900sqft land for 30L. Now to construct 750sqft is 7.5L, so 900sqft should cost 23L. Unfortunately if I had only land of 900sqft I will not get a price beyond 10-15L if I am lucky. So the builder makes a fortune in Chennai. Similar logic is not builder biassed in Bangalore. So the truth is a. Chennai folks are terribly lazy (compared to what they claim...just because they wake up at 5am due to the heat!), b. Chennai builders are inefficient in resource utilisation (typical of the Auto guys always wanting beyond the meter) and c. Cheating is common and builders cheat. So fix these issues, dont crib about high prices simplistically.
                    Finally I am a Chennaite who has moved to Bangalore in the past many years and have vested interest in both these places and I have been an NRI too at some point of time and I can tell you that REALESTATE price in Chennai or for that matter in INdia will not fall, just that it might become a bit more difficult for sellers and a bit more easier for buyers.
                    Dont be fooled by this board filled with potential buyers. They are just selling you a pipe dream on realestate price crashing!


                    • #40


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

                      I missed this in my previous note. If in 70s a house in Mylapore was a norm and today one can only afford a flat in Sriperumbudur, then it is NOT WRONG. Simple. Drive on NH4 and you will see why you have fantastic connectivity near Sri Perumbudur and you dont have to go the narrow bylanes of Mylapore. Ofcourse the old sucker generation will yet say Mylapore or TNagar is great, even though they have narrow roads, congested with traffic, infested with slums as they can say we have an MRT on top of the Covum. Now this mentality will disappear slowly and then the almost 10 to 20 times difference in price of land between Mylapore and Sriperumbudur will narrow. To give an analogy, in the US, downtown is filled with not so affluent folks though the prices are higher there while the well to do move to posh suburbs outside. So I must mention about a HP employee wanting to buy a land in Urapakkam and was measuring the distance from the railway station there. He incidentally works in some place in Chennai city. Also know of a person who takes the train from urapakkam to go to chepauk to work.
                      What it means is when cities grow so will prices? Western nations have grown differently. Marsupial Australia has vast waste lands but if that is what our friend here loves, he is welcome. Ask him to go to Europe and he will realize the pocket sized flats people live there in. Then go to US and see Bush and his 100acre ranch. Finally go and see so called Developed Singapore where 2 or 3 families share a 2 bedroom flat.
                      Comeon India is India and dont try to compare. Cheers.


                      Have any questions or thoughts about this?