Hi

In chennai the prices of plots or even a flat for that matter is going beyond the reach of a common man. Is there any chance for the prices to correct in near future?

With a salary of 15k, it is beyond the capacity of common man to buy a house or flat
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  • Originally Posted by wiseman
    Hi folks,

    If you noticed the news today, the banks are finally starting to sit on real estate companies. Basically saying, you can't borrow money from us, (over)build and then sit on the loans without paying up. And RBI is getting stern about it.

    The choice given to them (RE) is either reduce prices and increase sales (in the hope that you can repay us) OR we will sieze property and sell at any price we get to get back our money. Apparently Unitech (which has also put its corporate office on the block) is due to repay around 2500 crores. So the haste to desperately sell off their assets.

    The chairman of CREDAI came on TV and say they have asked RE companies to oblige OR ELSE.

    Guess the price reduction being recommended. 25% - 30%!

    As far as I can see, this is just the beginning. The writing is already on the wall - except for some who refuse to see iit (pun intended :D).

    Anecdotal evidence on reduction of production, buildup of overcapacity is starting to happen. Of course, people will be in denial about the duration and typically say, "this is only till Jan 2009" and so on. Basically no one really knows, though all people in positions of power know that if they go public with alarmist statements, they might just get to the head of the list to go first :).

    As I have continued to say, the beginning of serious job losses will be the time the slope will steepen. Lets see.

    cheers

    Pun on IIT haha. What was that 2nd ranked MBA college in 1985? WIll you throw light. Must be Madurai Kamaraj univ and you can claim it is #2 as per a list created in Madurai? Guys like you are the reason that logic cant stand much in TN.
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  • Haha, I think Mr. Natraj is bringing the best out of Wisemen. Mr. Natraj may i know why you expect the RE prices to remain strong without going down. In addition, what is your take on Indian economy?

    I'm asking you this question because I'm not very much comfortable with the way the market is out there. It is official now that Citi Financial is closing down their up country branches and reducing the branches in Chennai. My strong feeling is many will follow suit.

    Dunlop has closed their factories in Kolkata and Chennai indefinitely leaving nearly 2000 people with very little compensation per month until they open again.

    I happened to have a informal chat with one of the AVP of a top IT company. He said if the market does not improve in March lay off's are inevitable.

    I myself can see most of my friends fear for their jobs and keeping on applying for safer jobs. They do not expect any hikes. What they are looking for is safe jobs.

    Mr. Natraj, I would like to make this a healthy debate.

    Thanks,
    Sridhar
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  • Originally Posted by sridharchennai
    Haha, I think Mr. Natraj is bringing the best out of Wisemen. Mr. Natraj may i know why you expect the RE prices to remain strong without going down. In addition, what is your take on Indian economy?

    I'm asking you this question because I'm not very much comfortable with the way the market is out there. It is official now that Citi Financial is closing down their up country branches and reducing the branches in Chennai. My strong feeling is many will follow suit.

    Dunlop has closed their factories in Kolkata and Chennai indefinitely leaving nearly 2000 people with very little compensation per month until they open again.

    I happened to have a informal chat with one of the AVP of a top IT company. He said if the market does not improve in March lay off's are inevitable.

    I myself can see most of my friends fear for their jobs and keeping on applying for safer jobs. They do not expect any hikes. What they are looking for is safe jobs.

    Mr. Natraj, I would like to make this a healthy debate.

    Thanks,
    Sridhar

    Fair enough Sridhar. Now any market has strong and weak hands. Most argument on this board are based on the assumption that
    a. Price of RE stocks determines price of REalestate. Now a cement company can be in loss even if cement price is high, if their input cost is high. So RE companies that priced flats high with huge mark ups for their inefficiency and greed will be butchered. Land owners have turned smart not to sell so input will get costly and inefficiency will be killed. U know what. IN a secondary city like Mysore, farmers are not ready to sell an acre at 65L, they want 1.2cr and they are cartelising against govt.
    b. Buying a branded flat by the job centred SW BPO et al guys is not panacea. So one day these guys will buy land and build. WIll put efforts to act, not just outsource. So RE companies may not thrive as wellas they do now.
    c. As for pricing I did discuss it in another post the ratio of realestate to purchasing power (aka salary) in 80s to today.
    d. I am not contradicting that jobs will be lost. What you all are assuming is prices rise just because of more BPOs. THat is not fully true. Prices dont fall just because BPOs collapse. THey will have a downward pressure no doubt. For example Wiseman was questioning how I would leave SW industry in 2003 when it was shooting up. My salary had gone up at an average 30% per annum cumulative between 87 and 03 and I have had enough of it to pursue other interests. Many in SW companies today do not know what is COmputer science. So they will have to be replaced over time. Again some other knowledge industry can take over. So assuming a dip suddenly is atbest extending Kangaroo wants and Yankee results in one go. So answer why should India yet have a 4% growth atleast while US is -ve? Extensions are for the peanut brained. I dont need to say that, do I to you?
    In net there will be corrections, but most often Indian govt will reset it by killing the rupee. SO for an INdian investor he will be killed by inability to pay loans taken in 2007 at high levels but it wont necessarily make price crash. Just that folks like WIseman who sold out thinking they know the top might benefit.
    FInally if u think I am wrong, then go on waiting. Dont complain in 2010 when the same flat u aspired now at 3500 which atbest dipped to 3200 goes to 5500 and your salary hardly moved up.
    RE is not simple to understand. There are no moving average curves. It is past experience and knowledge of particular economy. So in India the game is very different from US.
    Finally tell me, why did US price rise just by two times between 2003 and 2006 for RE while in INdia it went almost 10 times. DIfferent markets have different logics. Nifty went from 1400 in 2004 may to 6300, dji did nto move more than around 2 times. So where is the logic.
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  • Originally Posted by chataara
    Friends,

    As far as I have spoken to many real estate people, for the last 10 months, real estate selling activity has come to a standstill. Frustrated sellers are quoting low price now. In choolaimedu, last year people were quoting more than 1 crore for one ground plot. But no sales. Now they are quoting between 70k and 80k. Still they are not able to sell their properties.

    I am having a CMDA approved plot near porur. As there is no increase in the rate for the last one year I decided to sell this property. I gave Advt in Hindu recently.

    To be frank with you, I got just 7 or 8 calls only. Among these, most of these calls were from brokers. So it lies unsold.

    This is the situation prevails all over chennai.

    So, there is no takers for properties. Definitely The rates will come down gradually.

    I accept Mr. wisemans arguments. Next year the situation will worsen deeply.

    Thanks
    chataara

    U r the classical example of a weak hand. WIseman certainly has instilled fear in you. So he is getting his job done. Cheers.
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  • No one can inject into every one's mind. Do you think all sellers are seeing this forum and changing their minds? No

    It is a fact now real estate prices in chennai are falling.

    I my self personally got a mail from a builder in "Iyappanthangal" whose intitial price was Rs 3200 per sqft for a new flat, is agreeing for the price of Rs 2800 per sqft.
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  • Thanks chataara and kar27us for throwing some light on the situation. Let's see what Mr.Natraj's reply for this
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  • Property prices in Chennai

    I think in the present situation, India is more vulnerable to collapse. The last 5 to 7 years saw prices of everything skyrocketting including the property. All of them had the basic belief that the investment in land and property will never fail.
    While houses in US selling for single digit dollar sign, the property prices have fallen from 30 to 50% in major economies such as US, UK, Spain, Ireland, etc. The average per capita income on all these economies are far more larger compared to per capita income in India.
    India has seen fewer percentage of people amazing quick wealth over the very recent years from IT jobs, business, shares etc which is a good thing ( make hay while the sun shine ). The US sub-prime has indicated and demonstrated, the inflated property prices cannot sustain indefinitely and is bound to collapse and when it collapses, it goes into a domino effect.
    Going to a bit of statistics, the average income of people in the economy always follows a 3 sigma curve. While India has a bit more complicated system such as lower middle class, middle middle class and upper middle class, looking at the mean, even if you assume the average yearly salary of 2.5 Lakhs, it might be assumption on the high end.
    If the average mean property prices within the economy is within 5 times the yearly salary ( 3 to 4 times is recommended ), it is a stable pricing. That is the reason, our parents in those days could not afford to have one house until their mid to late 40's.
    Now that the banks offer huge loans without much collateral and everything was based mostly on the monthly income of the individual. IT industry is seeing a big decrease in the salary structure apart from job losses. Some of the multinational companies are offloading people which might bring back lots of NRI's back to India. The automobile industry is suffering badly which not only affects the automobile industry, but also all the associated industries such as machine shops, spares parts dealers, machine importers.....This demonstrates that there is domino effect and leads to further collapse on all essential areas.
    People had been thinking that investment in the land and property is an valuable asset and these business people are releasing their property and land into the market. This is on top of the estate agents trying to sell their land and property which is currently leading to surplus.
    The cycle of price drop in property started in US and then spread to Europe and it is time in India and Canada following the same price drop trends.
    If someone in this climate closes the eyes and keeps mentioning the prices wont drop, they are in a fancy dream world.
    If people are wishing to invest, have the fingers crossed until prices hit the bottom.
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  • Chataara, why don't you sell it to the "strong" Nataraj?

    Originally Posted by chataara
    Friends,

    ...
    I am having a CMDA approved plot near porur. As there is no increase in the rate for the last one year I decided to sell this property. I gave Advt in Hindu recently.

    To be frank with you, I got just 7 or 8 calls only. Among these, most of these calls were from brokers. So it lies unsold.

    chataara


    Chataara

    Make a cool 10 lakhs bonanza as well as leave Nataraj 10 L as profit for him since he can sell at a cool 1 Cr (a 50:50 windfall sharing deal). Sell your property to the ever-ready Nataraj for 90 L and pocket a cool 10 L more. After all, according to Nataraj, there is absolutely no fall in prices. So he can sell it at 1 Cr and pocket the other 10 L.

    Taking up the challenge, Nataraj?

    I don't think so. I think he has bought one too many properties at exorbitant prices and that is why he is so ready to glibly dump that Urapakkam property for 70 L on the unsuspecting public (selling is expressly prohibited in this forum, dude and that is what you were trying to slyly do :D) when someone posts similar property for 17 L on 99Acres.

    I think he is a RE Agent and having over-extended himself by buying too much at too high prices, is terrified of falling prices and so it dumping crap on any and every one who is even mentioning the word fall.

    Keep it coming dude.

    cheers
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  • Latest catch. Crude oil falls below $50. When crude can go back to the levels of 2005. RE prices can easily retreat.
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  • Originally Posted by Natarajg007
    U r the classical example of a weak hand. WIseman certainly has instilled fear in you. So he is getting his job done. Cheers.


    Hey "Nataraj the broker"
    Come to reality and look around and see what is happening in the world. Take Wiseman's advice. If you have properties to sell, then just sell and make profit if you can.

    Otherwise you are doomed to fail and you may loose your entire wealth just like that in a very short period of time.

    Just take his advice and realize that things have changed so drastically within the last 10 months.
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  • Nataraj, I am very sorry if i am wrong

    Dear Nataraj,
    Now i seriously think that Nataraj might be affect by some kind of "phobia", may illness related to these booms. We are reading everyday about people committing suicide after loosing their life savings in stock market.

    After reading all of Nataraj's post, i think he is in illusion. I seriously sense that in Nataraj and it may trouble him later. If you are a RE broker and trying to get some deal then its ok.

    If you are a property owner and trying to offload your property to someone else for higher price, then i am sorry its too late to do that my friend.

    Be realisitic in pricing and get your property sold as quickly as possible before the real crash happens.

    Good luck to you.

    Note: Intention is not to offend Natarag. Please forgive me if my post offend you my friend.
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  • Originally Posted by strongsville
    Dear Nataraj,
    Now i seriously think that Nataraj might be affect by some kind of "phobia", may illness related to these booms. We are reading everyday about people committing suicide after loosing their life savings in stock market.

    After reading all of Nataraj's post, i think he is in illusion. I seriously sense that in Nataraj and it may trouble him later. If you are a RE broker and trying to get some deal then its ok.

    If you are a property owner and trying to offload your property to someone else for higher price, then i am sorry its too late to do that my friend.

    Be realisitic in pricing and get your property sold as quickly as possible before the real crash happens.

    Good luck to you.

    Note: Intention is not to offend Natarag. Please forgive me if my post offend you my friend.

    That is where you are absolutely lost. Tell me how many people you know of who have committed suicide in INDIA because of stock market crash? Dont tell me about some NRI who got jacked up in USA with DJI? Now that guy has once made a fortune in trading and today he loses.
    Do you know the number of farmers commiting suicide in Karnataka? I pity them. And folks like you with some silly education and can fit in a BPO expect sky high salaries and yet want subsidised food, rather controlled food from these farmers. So if someone did die out of DJI or Nasdaq crash that does not mean realestate in India has to crash.
    I think you are the sort of folk who says that Crow sat and Coconut fell. Folks like you have hijacked this forum for your own convenience and does not mean I shouldnt drive sense into the others.
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  • Originally Posted by ajijac
    I think our friend Nataraj has a fallacy about the feeling "FEAR".
    Showing your bear chest to be shot at is not bravery but stupidity and that is what is Nataraj is doing now.I don’t want my bear chest to be displayed to be shot at.

    Natraj , fear is a healthy feeling which saves lives and wealth and only wise people will feel reasonable fear based on factual analysis of the environment around them. If Wiseman could instill that fear in others means that he helped others to reflect themselves on their situation sensibly.
    Give us some rationale with numbers and historical parallels in order for us to believe you or let us agree respectfully to disagree instead of spitefulness

    Thanks Wiseman for your wisdom

    Maybe you did not exit at 6300 on Nifty and so lost your bread. I knew that top even at 5900. So I dont need your silly advice.
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  • Originally Posted by chataara
    Friends,
    Wiseman cannot change the mindset of all the property owners in chennai.
    those who are members in this forum only (may be, if they are weak) can change their mind like Mr. nataraj said.
    But, Mr. Nataraj, can you explain how all over chennai people are thinking and telling that RE prices are coming down, and they are not able to sell their properties.
    If the prices of RE are inflated to unsustainable level, certainly there will be some correction.
    That is what is happening now. The correction may be upto 50 percent or below that.
    Thanks
    Chataara

    U have a good question. Now any sale is done when one wants to sell and another wants to buy. Now if I have a property in some 12 ft road in Selaiyur Tambaram road and quote a price comparing that with price in Tiruvanmiyur then how can you sell. So why you chose that price, since somebody (la broker) told you so. Now one of the smart ways to get a price is check out in realestate sites, 99acres, Indiaproperty, Magicbricks, Sulekhaclassifieds for prices in those localities. Make a call to check out the authenticity.
    I do all that, spending STD price from bangalore to madras. For example the Foolishman (that is the better name) who said I am a broker, should imagine me dealing sitting in Bangalore on Madras lands. What a pity his brain never grew but his braggadio did. WHy do I find it? Infact to determine if I need to dispose of any of my properties. To time the market. Now the price of land can be reworked from price of flats in the locality. Unfortunately in Chennai middle men are total crooks. They try to take super duper commision. Builders are no different. They try to mark up a margin of 200% investing nothing. So they strike a deal with the landowner and pay him in installments from the flat buyer. They hardly invest a pie and make almost 2 times the price of the land if not more. Now that is what makes average Chennaite an utter idiot. In Bangalore I can accurately calculate land price from flat price and vice versa. In Chennai there are two types of folks, the gullible who sell land stupidly, the hyper gullible educated moron like some on this board who will buy flats assuming the brand matters any bit, will not know about FSI or price of land but will write stories on boards (Strong is the best example) and the conner (builder and broker) and story teller (Foolishman oh.l forgot calling himself Wise...ROTFL).
    So why cant chennaite sell, because he has DONE NO SHIT RESEARCH ON THE WORTH OF HIS LAND. To give you a final example. Maxworth Nagar in Pallikaranai. Some family member has house there. Price there used to be abyssmally lower than Chettinad ashram just across the wall. No reasons. Just that Chettinad was selling to the Hyper Gullible like Strong. Now go and buy the same land in Maxworth and maybe the road is muddy but you get a lot lot more. So if 1500sqft land with 1900sqft building cost in Chettinad an year ago around 90L, a 3000sqft land with 2000sqft building in Maxworth cost 30-40L then. Now Maxworth has come to about 80L and these are not what Strong says dumping. I know folks who bought at that price and it is not any relative of mine who was involved in the transaction.
    It is very clear. Average so called educated Chennaite is so focussed on going to office and coming home that he believes whatever the next man says and so brokers have a field day. Hope I answered your question.
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  • Chennai brokers are crooks.. 90-95% of the advertisements for property sale in all the websites are by these brokers. They are just posting the advertisements to keep the prices high.. Beware of Brokers!!!
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