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What is the Impact of Rising Inflation on Chennai's Real Estate?

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What is the Impact of Rising Inflation on Chennai's Real Estate?

Last updated: December 11 2009
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  • #11

    #11

    Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

    Originally posted by Economist View Post
    When Inflation is high, as you know asset price and wages goes up.
    The easiest thing to in such situation is phased/structural devaluation of currency. The price of the asset or wages will not reduce but due to currency devaluation it will still remain cheap for overseas market.

    India did that in 1990/91




    Is there any possibilty for that to happen again in near future.The reason why I am asking is I have all my hard earned money in FD since I strongly believe that RE will go down in future,so that I can buy property at right price.But I am little worried whether my saving will loose its value because of rupee loosing its value,
    Last edited November 4 2009, 09:21 PM.

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    • #12

      #12

      Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

      Its unlike stock market ;waiting for the bottom trough ...so you can make quick bucks in 2 years and sit on cash real estate is always long term investments ,you invest and your next generation sees the appreciation (sometime you yourself also) ...real estate has already showing the downtrends and i am seeing many places demand for black money has reduced substantially.In most of the places in Chennai real sellers are coming out(bloody brokers are out) and their expectation mostly at par with latest registration cost.

      Definitely its not all time high now and not all time low .Its better to invest now rather again struggling when its hot.Land cost has never gone down historically so value for your money will never come down.
      Sammy

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      • #13

        #13

        Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

        Yes it has!!!

        Originally posted by Economist View Post
        Strongville said this in July 2008, That is 1.5 years ago.
        Where was the minimum 30% fall that he was saying.
        I haven't seen that did you guys?

        He said at least 30% I wonder how much was the maximum he had in mind.
        Economist,

        Yes. As per various posts some months ago, property prices in certain areas have fallen 15% to 25%. In fact I have personal experience where, a flat in North Chennai, quoted for 41 lakhs in 2007 was now going (and still not gone) for 21 lakhs! I can give you details.

        All of this is not the main point. This is what I have to support Strongsville's views:

        Firstly, while I agree with you that prices in most places have not declined 30% yet, our own property in Radhakrishnan Salai, quoted (this is the whole problem, we are only comparing quoted prices and any argument can be made about these!) around 12k to 14k per SFt. Today, its hard to find buyers for large plots are even 9.5k. So, in my own experience, I can see a 20% to 25% fall in my own experience in a reputed area.

        Secondly, the decline is not yet over! Please do not make the mistake that recovery is going to happen. Its now almost certain that a global double-dip recession will happen in 2010 and if wrong Govt policies (bailouts, etc) are not corrected, it will most likely turn into a much longer depression (I'm not joking).

        India will see much more pain in 2010-2012. RE will face a much bigger brunt of this pain as its going to be very difficult for them to bail themselves out as they are not able to raise money anywhere at reasonable rates.

        Rates will decline and you will be surprised about the amount of decline!

        Till then, its only my word against yours and we will have to wait and see

        cheers

        Comment

        • #14

          #14

          Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

          Originally posted by sridharbabu111 View Post
          hey there(strongsville),
          you havent got much ideas about real estate right?
          you expect prices to fall 30%. how long have you known anything about real estate in india?

          Long long ago in this forum, there was a man called Nataraj007. Some say he was the orignal great grand father of Real Estate Bulls. He himself has escaped,no body knows where he is now a days, realising that Bull market theory he had been propogating was nothing but BS. So who are you? are you new? or are you the original Nataraj007 with a new avtar.

          Comment

          • #15

            #15

            Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

            Originally posted by sundardj View Post
            Long long ago in this forum, there was a man called Nataraj007. Some say he was the orignal great grand father of Real Estate Bulls. He himself has escaped,no body knows where he is now a days, realising that Bull market theory he had been propogating was nothing but BS. So who are you? are you new? or are you the original Nataraj007 with a new avtar.
            only the 'almighty' can answer this

            Comment

            • #16

              #16

              Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

              Originally posted by sammmy View Post
              Its unlike stock market ;waiting for the bottom trough ...so you can make quick bucks in 2 years and sit on cash real estate is always long term investments ,you invest and your next generation sees the appreciation (sometime you yourself also) ...real estate has already showing the downtrends and i am seeing many places demand for black money has reduced substantially.In most of the places in Chennai real sellers are coming out(bloody brokers are out) and their expectation mostly at par with latest registration cost.

              Definitely its not all time high now and not all time low .Its better to invest now rather again struggling when its hot.Land cost has never gone down historically so value for your money will never come down.
              I agree 100% with you Sammy.

              Comment

              • #17

                #17

                Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

                Originally posted by Economist View Post
                Strongville said this in July 2008, That is 1.5 years ago.
                Where was the minimum 30% fall that he was saying.
                I haven't seen that did you guys?

                He said at least 30% I wonder how much was the maximum he had in mind.
                Strongville is 100 % correct in his statement, Almost everyone has seen corrections more than 30 % even with premium builders.

                ---------Price/SQFT at peak Current Price % Decline
                ETA Star 3500---------------2425 ---------->30 %
                DLF -----3400---------------2650 -----------22 %
                L&T -----3600---------------2999 -----------16.6 %

                Just visited L&T Eden and ETA Star and infra appears to be in place in 18 months to 24 months when many of the builders handover the apartments. But there is not much takers.

                I tried to gather people for Group Purchase from my known people .. But people who showed initial interest are backing out as they still feel that the apartments are overpriced and looking for land with better price than 2008. Secondly they hesitate to go for loan > 20 Lacs.Given the huge huge availability of Land & mounting inventory in Chennai, RE prices are moving South... more than 30 %.
                Last edited November 5 2009, 06:07 PM.

                Comment

                • #18

                  #18

                  Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

                  Originally posted by sethugm View Post
                  Strongville is 100 % correct in his statement, Almost everyone has seen corrections more than 30 % even with premium builders.

                  ---------Price/SQFT at peak Current Price % Decline
                  ETA Star 3500---------------2425 ---------->30 %
                  DLF -----3400---------------2650 -----------22 %
                  L&T -----3600---------------2999 -----------16.6 %

                  Just visited L&T Eden and ETA Star and infra appears to be in place in 18 months to 24 months when many of the builders handover the apartments. But there is not much takers.

                  I tried to gather people for Group Purchase from my known people .. But people who showed initial interest are backing out as they still feel that the apartments are overpriced and looking for land with better price than 2008. Secondly they hesitate to go for loan > 20 Lacs.Given the huge huge availability of Land & mounting inventory in Chennai, RE prices are moving South... more than 30 %.
                  I can confirm the DLF price cut you have quoted is incorrect.
                  I haven't yet confirmed ETA and L&T.
                  Some DLF customers got a maximum cut of up to 18% but most got lower Most costumers got lower (10% to 18%)
                  This happened in the middle of GF Crisis in Feb 09.
                  http://www.thehindubusinessline.com/...2451031300.htm

                  In any case strongville stated minimum of 30% from what you have said ETA seems to be the only one with a maximum of 30%.

                  How is that statement correct.

                  When some says Minimum 30% I was expecting most would be around 50%.

                  We all no GFC was upon us and we all (In the finance Industry) where anticipating a major issue from 2007.

                  Now that threat has passed.

                  Comment

                  • #19

                    #19

                    Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

                    The next decade is for India to grab
                    (Todays news)


                    A decade is but a small speck on the sands of civilization’s time. But in the life of a nation born only sixty two years ago, a decade can be quite transformational. Each of the last two decades has been transformational for India, and the next one will also see dramatic changes.
                    We will see substantial economic growth, reduction in poverty, higher degree of urbanization and a virtual explosion of talent. These changes will be visible not just in living standards or aspirations of the people, but also in public policy. Future leaders will be from a generation born in the era of economic reforms. These leaders are unfamiliar with shortages, and the days of licence and permits. This is the fearless generation that will shape the next decad for us.
                    Setting the context
                    The global economic turmoil has severely tested every country. India has weathered the crisis extremely well and has emerged stronger, relative to other countries. India’s economic resilience and policy responses are positive indicators that the country’s stature in the international order will gain significantly in the coming decade. Given that an economy’s performance is perhaps the major factor determining a country’s leadership role in the global order, the relatively strong economic performance is likely to confer for India a larger global political role also.

                    Global leadership
                    I envision India’s higher international leadership along several dimensions. First, India will be, along with China and Brazil, among the worlds’ major drivers of economic growth. It is feasible that a 7-8% p.a. GDP growth over the coming decade will significantly narrow the differential in income and living standards between India and some of the emerging Asian countries.

                    The growth impetus provided by the domestic economy can easily propel us into the world league. We can become one of the manufacturing hubs for the world, in areas like automotive, metals, textiles and engineering. In IT services we can enhance our already established global status.
                    Power to influence
                    India’s leadership role will gain on other fronts too. The country’s economic strength, democratic underpinnings and credibility in a troubled neighbourhood will increase India’s role as a regional mediator and as a key player in ensuring South Asia’s stability.
                    At another level, multilateral institutions such as the World Bank and IMF will perforce have to recognize the reality of the importance of the new global economic powerhouses and will have to accord those countries a larger role and voice those institutions.
                    Likewise, I do see India getting due representation in an expanded UN Security Council. And importantly, India will, over the next decade, extend its influence to the wider South East Asian region as a full-fledged member of the ASEAN economic bloc.
                    Key drivers
                    Let me identify the key factors that will drive India’s higher global ranking, economically and in terms being able to project its influence.

                    First, I am confident that our Government will continue on the path of pragmatic liberalization, combined with improved fiscal discipline and monetary prudence. The fiscal position will improve driven by combination of higher growth leading to tax buoyancy, a rationalized tax structure leading to better compliance, and more decisive and broader push on the disinvestment front. Hopefully, the sounder fiscal position should lead to globally competitive interest rates.
                    Second, I think the reduced involvement in running businesses will enable the Government to free resources and focus more sharply on those areas where it has to take the lead. Such as building the country’s lagging physical and social infrastructure. Providing a wide range of critical social goods, among them education, health care, drinking water, sanitation, law and order and also providing an economic safety net to those who are inevitably affected and disrupted by change.
                    A third decisive trend that will play out over the next decade will be a significant strengthening and globalization of India’s corporate sector. Although this is a process that has been on for almost two decades now, we still have a lot of ground to cover. The reinforcing of corporate sector will be evident in areas such as stronger balance sheets, larger scale of operations, focused business portfolios, the emergence of global Indian brands, heightened global M&A activity, stronger corporate governance and greater engagement with society. Be it by way of higher standards of environmental compliance or taking on a larger role in the development of communities around them.
                    Raring to go
                    I do believe that India is set for rapid growth and progress over the next decade. Even so, I believe that we have to scale up the boldness of our dreams. The time has come to shift from small, incremental moves to taking big leaps even if it means taking on greater risks.

                    As the world economy slowly takes to the upswing, we must be ahead of the curve in terms of growth and value creation, so that we are able to supplement the domestic growth momentum with the global push, when it come. High economic growth is a prerequisite to achieve inclusive growth. The next decade is for India to grab.

                    DO NOT MISS THE BOAT.

                    Comment

                    • #20

                      #20

                      Re : What is the Impact of Rising Inflation on Chennai's Real Estate?

                      Missing the boat

                      Originally posted by Economist View Post
                      The next decade is for India to grab
                      (Todays news)


                      A decade is but a small speck on the sands of civilization’s time. But in the life of a nation born only sixty two years ago, a decade can be quite transformational. Each of the last two decades has been transformational for India, and the next one will also see dramatic changes.
                      We will see substantial economic growth, reduction in poverty, higher degree of urbanization and a virtual explosion of talent. These changes will be visible not just in living standards or aspirations of the people, but also in public policy. Future leaders will be from a generation born in the era of economic reforms. These leaders are unfamiliar with shortages, and the days of licence and permits. This is the fearless generation that will shape the next decad for us.
                      Setting the context
                      The global economic turmoil has severely tested every country. India has weathered the crisis extremely well and has emerged stronger, relative to other countries. India’s economic resilience and policy responses are positive indicators that the country’s stature in the international order will gain significantly in the coming decade. Given that an economy’s performance is perhaps the major factor determining a country’s leadership role in the global order, the relatively strong economic performance is likely to confer for India a larger global political role also.
                      Global leadership
                      I envision India’s higher international leadership along several dimensions. First, India will be, along with China and Brazil, among the worlds’ major drivers of economic growth. It is feasible that a 7-8% p.a. GDP growth over the coming decade will significantly narrow the differential in income and living standards between India and some of the emerging Asian countries.
                      The growth impetus provided by the domestic economy can easily propel us into the world league. We can become one of the manufacturing hubs for the world, in areas like automotive, metals, textiles and engineering. In IT services we can enhance our already established global status.
                      Power to influence
                      India’s leadership role will gain on other fronts too. The country’s economic strength, democratic underpinnings and credibility in a troubled neighbourhood will increase India’s role as a regional mediator and as a key player in ensuring South Asia’s stability.
                      At another level, multilateral institutions such as the World Bank and IMF will perforce have to recognize the reality of the importance of the new global economic powerhouses and will have to accord those countries a larger role and voice those institutions.
                      Likewise, I do see India getting due representation in an expanded UN Security Council. And importantly, India will, over the next decade, extend its influence to the wider South East Asian region as a full-fledged member of the ASEAN economic bloc.
                      Key drivers
                      Let me identify the key factors that will drive India’s higher global ranking, economically and in terms being able to project its influence.
                      First, I am confident that our Government will continue on the path of pragmatic liberalization, combined with improved fiscal discipline and monetary prudence. The fiscal position will improve driven by combination of higher growth leading to tax buoyancy, a rationalized tax structure leading to better compliance, and more decisive and broader push on the disinvestment front. Hopefully, the sounder fiscal position should lead to globally competitive interest rates.
                      Second, I think the reduced involvement in running businesses will enable the Government to free resources and focus more sharply on those areas where it has to take the lead. Such as building the country’s lagging physical and social infrastructure. Providing a wide range of critical social goods, among them education, health care, drinking water, sanitation, law and order and also providing an economic safety net to those who are inevitably affected and disrupted by change.
                      A third decisive trend that will play out over the next decade will be a significant strengthening and globalization of India’s corporate sector. Although this is a process that has been on for almost two decades now, we still have a lot of ground to cover. The reinforcing of corporate sector will be evident in areas such as stronger balance sheets, larger scale of operations, focused business portfolios, the emergence of global Indian brands, heightened global M&A activity, stronger corporate governance and greater engagement with society. Be it by way of higher standards of environmental compliance or taking on a larger role in the development of communities around them.
                      Raring to go
                      I do believe that India is set for rapid growth and progress over the next decade. Even so, I believe that we have to scale up the boldness of our dreams. The time has come to shift from small, incremental moves to taking big leaps even if it means taking on greater risks.

                      As the world economy slowly takes to the upswing, we must be ahead of the curve in terms of growth and value creation, so that we are able to supplement the domestic growth momentum with the global push, when it come. High economic growth is a prerequisite to achieve inclusive growth. The next decade is for India to grab.

                      DO NOT MISS THE BOAT.
                      It is proud to see how well India is placed on the global arena and extent of focus India is receiving from more developed countries. India is presently the biggest economy with good percentage of youngsters where still many people are still hungry to grow and prosper. Cost of production is the major attraction for India presently but there are talks of our cost of production climbing steadily. On the whole, India is presently a greener country to invest and get optimum returns.

                      On the present scenario, like other readers have mentioned, we are not living in normal circumstances but under extraordinary circumstances where government is encouraging people to spend money and get out of recession. While people blame easy loans from banks as the prime culprit for escalation of land and property prices to exorbitant rates, the same scenario cannot hold good for long when banks will start to tighten their belts and make getting loans more difficult and also increase the mortgage percentage.

                      While we consider India as a growing economy compared to other grown economies just for example United States. While we had our property boom from 2001 to 2007, they also had a property boom from 2000 until 2007. Much was because of easy credit available ( compared to India, many got 100% mortgage ) for their property. When it all went beyond proportions and when a stage achieved that a common man was unable to get to the property ladder, the whole bubble burst and needless to say what state is the property in US.

                      From the great old ages until now, there is something that holds good when respect to appreciation of property / land prices. Maybe one can find the following statistics from 30’s. The average price increase per year in a particular economy is between 2 to 3% taking into consideration the inflation and increase in salaries. We have seen statistics posted in one of the discussions that the prices of property have doubled and tripled within the last 5 years and according to standards, it is not sustainable. If people consider India is super power and exception to all global phenomenon, they are free to think so, while I am not. One can decide for them which way to go but need to remember the damage will be very high falling from greater heights. I don’t accept the concept that one missed the property ladder in 2002 and cannot get back. Property and land sales and transactions have been going for centuries and there is nothing called missed the bus. Otherwise the younger generation will never be able to get on it.

                      Comment

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