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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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  • #21

    #21

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

    Originally posted by shyame2 View Post
    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.


    Keep in mind the following figures. GDP (Gross Domestic Product) of India is just over a trillion dollars. Where it is more than 4 trillion dollars for China and more than 14 trillion dollars for USA. If economy expands by 1% it will be equal to 14% growth rate for India. So India has a long long way to go. Please don't carried over by the hype. India still has the highest number of poor people . Development is on small pockets and India as a whole is one of the most backward nations in the world. This is the fact. go and research for yourself of all the per capita consumption and you will realise this.

    Germany and Japan and in fact the whole of europe was destroyed during second world war. They rebuilt every thing in matter of two three decades . India after 60 yearrs never faced any war but still not come to a bare miniumum leverl. I seriously doubt about Indias future.

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    • #22

      #22

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

      Originally posted by Economist View Post
      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/2009/02/24/stories/2009022451031300.htm[/url]

      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.
      I have visited ETA Star's model house on last week and confirm the price.

      L&T have quotd this price for group purchase and even for the individual buy it has brought down from 3600 to 3350 with possible negotiation.

      DLF story everyone knows and the price I can confirm with the quote in a recent property show.

      Worst is over claim is not a best claim as the repercussions are still to be felt in India & elsewhere.Secondly the there will be an end to the pumbing of Govt's money.

      With the easy credits getting tightened soon and Companies doing salary normalization(Wipro and IBM have started doing so) ... we can all see the end of easy money inflating the asset prices.

      Your republication of Kumar Mangalam Birla's article was good and its a typical business man's claim and he cant be in business if does not even talk like this ..leave alone what happens...

      ]www.moneycontrol.com/mc10/leadership/article.php?autono=422897[/url]

      Comment

      • #23

        #23

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

        Where is the minimum 30% fall????

        RESIDEX is world most popular index for real estate (Including in my country)


        National Housing Bank (Wholly owned by Reserve Bank of India) Residex India report (India's first and only housing index) can be seen on:

        http://www.nhb.org.in/Residex/CHENNAIres.php

        CHENNAI
        Zones
        Localities
        2007
        2008 Jan-Jun
        2008 July - Dec
        2009 Jan-Jun
        Zone 1
        Dr Radhakrishnan Nagar
        100
        120
        130
        120
        Zone 2
        Tondiarpet; Narayanappa Garden
        100
        90
        85
        159
        Zone 3
        Perambur; Choolai; Edapalayam
        100
        107
        97
        135
        Zone 4
        Ayanavaram; Purasawalkam;Kolathur
        100
        130
        155
        187
        Zone 5
        Virugambakkam; Anna Nagar; Kilpauk; Nungambakkam
        100
        101
        94
        117
        Zone 6
        Nehru Nagar; Chepauk; Marina
        100
        180
        125
        115
        Zone 7
        Chetpet; Egmore
        100
        82
        76
        115
        Zone 8
        Ashok Nagar; Thiyagaraya Nagar;Salilgramam
        100
        102
        99
        137
        Zone 9
        Kodambakkam; Guindy; Chroempet
        100
        75
        69
        91
        Zone 10
        Mylapore; Adyar; Velacherry; Thriuvanmiyur
        100
        84
        77
        94
        Chennai

        100
        104
        95
        120



        Last edited November 9 2009, 03:40 PM.

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        • #24

          #24

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

          Indians buying property in US

          Forget Mumbai and its high property prices, Indians are looking for better (and cheaper!) options in New York. After the meltdown in the US property market, house prices there seem to be within the range of Indians as can be evinced from the fact that Indians now account for close to 20% of all realty sales in Manhattan and 30% of all enquiries made.

          In fact, India and China are replacing the buyers from Eastern Europe. To put things into perspective, as reported in a leading business daily, average price per sq ft for a Manhattan East side condo is US$ 1,249, while that for a South Central Mumbai apartment is US$ 1,319. This is proof enough that property prices in India are still high at the current levels and there is enough room for them to fall further. But the builders in India just don't want to get the hint!

          ]http://www.equitymaster.com/5MinWrapUp/detail.asp?date=11/9/2009&story=4[/URL]

          Comment

          • #25

            #25

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

            Originally posted by Economist View Post
            Where is the minimum 30% fall????

            RESIDEX is world most popular index for real estate (Including in my country)


            National Housing Bank (Wholly owned by Reserve Bank of India) Residex India report (India's first and only housing index) can be seen on:

            ]http://www.nhb.org.in/Residex/CHENNAIres.php[/url]

            CHENNAI


            Zones









            Localities







            2007







            2008 Jan-Jun







            2008 July - Dec







            2009 Jan-Jun





            Zone 1
            Dr Radhakrishnan Nagar


            100






            120






            130






            120




            Zone 2
            Tondiarpet; Narayanappa Garden


            100






            90






            85






            159




            Zone 3
            Perambur; Choolai; Edapalayam


            100






            107






            97






            135




            Zone 4
            Ayanavaram; Purasawalkam;Kolathur


            100






            130






            155






            187




            Zone 5
            Virugambakkam; Anna Nagar; Kilpauk; Nungambakkam


            100






            101






            94






            117




            Zone 6
            Nehru Nagar; Chepauk; Marina


            100






            180






            125






            115




            Zone 7
            Chetpet; Egmore


            100






            82






            76






            115




            Zone 8
            Ashok Nagar; Thiyagaraya Nagar;Salilgramam


            100






            102






            99






            137




            Zone 9
            Kodambakkam; Guindy; Chroempet


            100






            75






            69






            91




            Zone 10
            Mylapore; Adyar; Velacherry; Thriuvanmiyur


            100






            84






            77






            94




            Chennai



            100






            104






            95






            120







            The real data is in the details.

            The jump in the Residex indices is mainly in North & Central Madras like perambur, tondiarpet, choolai (north madras) and kodambakkam, nungambakkam, egmore (central madras). These areas are non-IT areas located far away from IT corridor. So the buyers here were End-users or Long term residents of Chennai. These areas were laggards during the Real Estate boom (which was primarily along south madras IT corridor) and hence were starting from a low base.

            During Jan-June 2009, with overall market in south madras IT corridor down (due to uncertainty in IT sector and global recession) Banks particularly government banks and conservative private banks like HDFC Bank suddenly stepped in with liquidity and easy credit (in the absense of big daddy ICICI Bank which had burnt its fingers badly after good times ended).

            This sudden availability of credit from government banks and HDFC bank benefitted people like end users and long term residents of Chennai who were waiting in the sidelines. These people primarily prefer North and Central Madras, hence sudden jump in those areas.

            It would be interesting to know the correct indices in Velachery, OMR, Mylapore - a big dent or drop will be clearly visible.

            Comment

            • #26

              #26

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

              This may sound far fetched, but ...

              Folks,

              I have a big problem! I'm, always talking about something in 2010-2012 and everyone responding is asking me why it has still not happened in 2009!

              Please consider the following evidence:

              At least 6 US states are technically bankrupt - and this includes California, which is the 6th largest economy in the world!!! Just today the NY FED has stated that they would be technically bankrupt early next year!

              Lets face it. Slowly its becoming apparent that the US is bankrupt and headed for a financial disaster of monumental proportions! No country in the world is safe when this happens because every single country is dependent heavily in the fiscal health of US, UK, EU and Japan (thats 80% of the World's economy friends - for all the big talk w create a rather small footprint in the world economy). And all of these are headed for the rocks! SIMULTANEOUSLY!!!

              The Stimulus program, both in US and in China (as well as India) do not seem to have made any kind of impact in generating REAL growth in the REAL economy. What they have done is temporarily pumped up volumes in the categories that were helped with free money. This free is going to be very costly to the general public in the coming years!!!

              US, China, UK, India and most other countries who have resorted to Stimulus programs are in a lose-lose situation now. They have run out of leeway to provide further stimulus without triggering deep deficits and runaway inflation (in case you have not noticed, check out most commodity prices in the market - it has already started). They are desperately holding on to low interest rates because increasing interest to keep inflation under control will almost instantly reverse all the dubious effects of stimulus and bring on depression rapidly.

              But one day, very soon, inflation is going to start rising rapidly. And then Central banks are going to have to start ramping up interest rates quickly. While demand deflation continues in most products and services.

              When this happens, there will be hell to pay. Also prices will seriously start crashing when deflation rises steeply and jobs are lost at an increasing pace - even in India!!!

              In Q2 2009, toplines were flat, bottomlines were up (attributed largely to cost cutting, which has been one time largely). What will happen in Q3 and Q4 when toplines either stay flat or come down a bit as stimulus effects are now over and bottomlines do not improve as extrapolated based on Q2 data. Besides, as the low base effect of 2008-09 disappears, even base-effect will turn neutral and not help growth calculations. And, Agriculture is a danger lurking around the corner and as per my information foodgrain outout may be down anywhere from 25% - 35% and these guys are in this business. Simultaneously, global grain stocks are low and prices remain high. LArge imports at this stage will send deficits climbing uncomfortably from an already high level. Govt dows not have much room to maneuvre and play around this time!

              Patience till Q3, Q4 and next Eonomic Survey.

              cheers
              Last edited November 10 2009, 03:01 PM.

              Comment

              • #27

                #27

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

                Originally posted by Navina
                wiseman,

                Do you think the Chennai RE prices will also go down in Q3 , Q4 just like how you had said for Pune?
                Navina, I am surprised that you even bother to ask the question.If you have been in the form long enough you would know the dooms dayers and what te answer would be.

                Even you asked the same question in 2012 the answer will be same - Hell is going to break loose next quarter or two.

                Comment

                • #28

                  #28

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

                  Originally posted by Navina
                  wiseman,

                  Do you think the Chennai RE prices will also go down in Q3 , Q4 just like how you had said for Pune?
                  Some of us do have a CRYSTAL BALL in possession.
                  If one can have such specific information that person would be the richest man in the world.

                  Comment

                  • #29

                    #29

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

                    Originally posted by contra View Post
                    The real data is in the details.

                    The jump in the Residex indices is mainly in North & Central Madras like perambur, tondiarpet, choolai (north madras) and kodambakkam, nungambakkam, egmore (central madras). These areas are non-IT areas located far away from IT corridor. So the buyers here were End-users or Long term residents of Chennai. These areas were laggards during the Real Estate boom (which was primarily along south madras IT corridor) and hence were starting from a low base.

                    During Jan-June 2009, with overall market in south madras IT corridor down (due to uncertainty in IT sector and global recession) Banks particularly government banks and conservative private banks like HDFC Bank suddenly stepped in with liquidity and easy credit (in the absense of big daddy ICICI Bank which had burnt its fingers badly after good times ended).

                    This sudden availability of credit from government banks and HDFC bank benefitted people like end users and long term residents of Chennai who were waiting in the sidelines. These people primarily prefer North and Central Madras, hence sudden jump in those areas.

                    It would be interesting to know the correct indices in Velachery, OMR, Mylapore - a big dent or drop will be clearly visible.
                    I thought we were discussing Chennai Real estate not Just OMR belt or apartments in certain pockets. When I mean Chenai RE I mean all area in Greater Chennai and all type of properties (appartment, Plots, Acerages,Houses etc)

                    Now you are rubbishing Residex report (RBI owned NHB backed).

                    Any way LOOK: ]http://www.nhb.org.in/Residex/CHENNAIres.php[/URL]

                    You will find Velachery and Mylapore as well.

                    Your HDFC and north chennai preference story line is hilarious.
                    Last edited November 10 2009, 04:44 PM.

                    Comment

                    • #30

                      #30

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

                      For and against

                      I think everyone have a right to their own views and that is what is a forum. If one thinks buying a property is bright and he believes, only time will say whether the decision is right or wrong. Few of us feel things arent the right time looking into the global economy and what has happened around the world. Some may argue India is far superior not to follow any trait from other countries and if so, at the end of the cycle we will accept India is really an exception. While all countries go through the cycle and it is proved again and again, I think India will behave same as any other developed and developing country. I dont know in what way we think we are far superior to already rich and developed nations like UK, Germany, US etc.
                      So, instead of attacking individuals it is better good to differ on the issues and why someone things they prediction is right. End of the day, what a person loses or gains is for the individual itself.

                      Comment

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