Hi,

I heard through my friends that property price is chennai is going down drastically. Does any one have an idea about this. I am a NRI. I recently bought a flat in Velacherry. Will the price go down more?

Thanks.
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  • You are bang on target again !!!.

    Wise man,

    You are bang on target again !!!.

    The link here has 1996 realty correction, it sayss.
    http://www.moneycontrol.com/india/news/business/lessons1996-realty-correction/367709

    "Property prices increased 70% in three years to peak in 1996 and corrected 40% in three years to trough after 1996. In effect, prices fell back to the same levels from where the boom started. At present, prices have risen 80% in three years before the marginal correction."

    But that happened for a not so steep rise in prices.

    Given this time that price rise is steep, it may take less than 3 years to fall back to where it started.
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  • Though, therez no denying the fact that property prizes are crashing down, I believe the infrastructure growth is being discounted too much!

    For example, villages along OMR were an inaccessible lot before the boom time. But infra improvements along OMR have brought in many developments (New residential complexes, restaurants, Office buildings, wide and good roads, Hospitals).

    So the new developments should be factored in before assuming/concluding that the prices should return to where they have begun (i.e 2002, 2003 period). So places where infra growth has happened, prices would NEVER return to 2002-2003 levels!
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  • Hi Sovi,

    I just read your blog. Your post here contradicts your blog ! During the boom days, no body cares whether the infrastructure is in place. Because they factored in and said, it will be in place in a couple of years. So just BUY ! When things go bust, the reverse happens, people *assume* that infrastructure is a must before they decide to buy property. They are essentially looking for a such a place and at an *affordable* price. I am not sure what the price was during 2002-03 but it will go down. But it will take anywhere between 18-24 months or may be more for that to happen.

    Note : I was chucked out of the forum as a_salim_99 and I have registered as connect2sam.

    Thanks,
    Salim.
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  • Salim,
    Thanks for asking.
    I am convinced that property prices are all set for a crash, no doubt about that. It’s the same I’ve mentioned in my blogs, as well as here. But, while we all accept that property prices can rise and sustain only as long as it’s supported by value, why don’t we accept that its converse could also be true?

    That is, price of a property cannot fall and sustain below the level where it was making sense! Because when it starts making sense, people will start buying it! Let me share an example. In 2002, one of my acquaintances wanted to sell his 40x60 plot in Thuraipakkam. At that time, Thuraipakkam was considered ‘way outside’ and it had no basic facilities and even the access was shabby. He was ready to sell it for 2 lacs, but found no taker. In April, 2002, he finally sold it for 1.75 lacs.

    Enter 2008. You got offices, banks, restaurants all within walking distance and the teething access issues were sorted out by the widened road! Now, if you think this downturn will make the plot available for 2.34lacs (adjusted for an average 5% inflation), then its pure FANTACY! Because, when the price drops and reaches even 3 lacs, constructing a 1000sqft building and renting it out becomes much more attractive! It’ll be better than any other investment with good cash flow!

    So, the property prices will fall, but will fall (and sustain) only till it starts making economic sense! Hope this helps!
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  • God save these doomsdayers of realestate. With buyers yet having money and WISHING that prices fall, market wont fall and in Chennai that is what is happening. Anyway I will let these bears keep screaming. However if you have land in Chennai and want to foolishly sell it, even God cant save you. Prices of land have another 200% to go up in the next couple of years.
    PS. Wiseman is continuing to try his best to confuse people here! LOL!
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  • 200% . I think Natraj is going to mint money and supply to the public
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  • Why don't you buy my land off me?

    Originally Posted by Natarajg007
    God save these doomsdayers of realestate. With buyers yet having money and WISHING that prices fall, market wont fall and in Chennai that is what is happening. Anyway I will let these bears keep screaming. However if you have land in Chennai and want to foolishly sell it, even God cant save you. Prices of land have another 200% to go up in the next couple of years.
    PS. Wiseman is continuing to try his best to confuse people here! LOL!


    Natraj,

    No confusion. Here is an offer to help you make a bonanza - 200% to be precise - in the next 2 years.

    I have land I want to sell. You are a hyper-bull on land (none of this silly flats for you).

    Why don't you do yourself a BIG FAVOR? Arrange for a few crores and take this land off my hands.

    In two years, after you make that 200%, I can then buy back that land off your hands at 50% of today's price!!! :D

    Fair deal?

    cheers
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  • Originally Posted by wiseman
    Natraj,

    No confusion. Here is an offer to help you make a bonanza - 200% to be precise - in the next 2 years.

    I have land I want to sell. You are a hyper-bull on land (none of this silly flats for you).

    Why don't you do yourself a BIG FAVOR? Arrange for a few crores and take this land off my hands.

    In two years, after you make that 200%, I can then buy back that land off your hands at 50% of today's price!!! :D

    Fair deal?

    cheers


    appadi podu!!! Good one there
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  • Natrajg007,

    Can you let us know how you calculate the land price?

    By reading your previous posts, I find that you take into account the allowed FSI for the building.Subsequent to increase in FSI as per the second master plan, You also agree that apartment/flat prices can reduce.

    Something thats been bothering me is purchasing at 3000 Rs/sqft when the guideline value is only 1500 Rs/sqft.How is the high premium over the guideline justified and protected?Is there any other reasons apart from citing FSI and demand?What protects the asset against devalution back to the guideline value when the demand/affordability diminishes?

    I understand that registering a property above or less than the guideline value is not encouraged by the registrars and is a huge process, even if one likes to do so.

    You seem to be very convinced that land prices have a long way to go before crashing again.I am sure you must have strong reasons to be motivated so.Please share the same for the benefit of the readers, it will be very useful.
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  • Something thats been bothering me is purchasing at 3000 Rs/sqft when the guideline value is only 1500 Rs/sqft.How is the high premium over the guideline justified and protected?Is there any other reasons apart from citing FSI and demand?What protects the asset against devalution back to the guideline value when the demand/affordability diminishes?


    Guideline value is highly misleading someplaces it is very low compared to the market price eg indra gandhi road,pallavaram ,chennai the guideline value is 1000/sqft whereas people are in queue(i am one) to buy at 5000/sqft. 2) i purchased a plot 60 km from chennai at 1.5 lacs/ground and the guideline value is 7.2 lacs /gnd(300/sqft) i had no other choice but to take an power of attorney only.

    As far as "price crash debate" is concerned there is no doubt that there is a correction.but it will not be @ same rate across geographies.i put it in a simple sentence (chennai specific). where land is available in acres(OMR,sripermbendur,oragadam) it will be 30% or more
    and where land is avaiable only in grounds 'between buildings'(established localities like kknagar,chromepet,velachery etc) it would be 10-15%at the most. the higher end properties >1 C will face resistance in the short term and a subsequent fall too.
    "if all the experts and there theories were right we would'nt be discussing this"
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  • Originally Posted by nabishek
    Natrajg007,

    Can you let us know how you calculate the land price?

    By reading your previous posts, I find that you take into account the allowed FSI for the building.Subsequent to increase in FSI as per the second master plan, You also agree that apartment/flat prices can reduce.

    Something thats been bothering me is purchasing at 3000 Rs/sqft when the guideline value is only 1500 Rs/sqft.How is the high premium over the guideline justified and protected?Is there any other reasons apart from citing FSI and demand?What protects the asset against devalution back to the guideline value when the demand/affordability diminishes?

    I understand that registering a property above or less than the guideline value is not encouraged by the registrars and is a huge process, even if one likes to do so.

    You seem to be very convinced that land prices have a long way to go before crashing again.I am sure you must have strong reasons to be motivated so.Please share the same for the benefit of the readers, it will be very useful.


    This is what we have been asking him for so long. He never came up with any numbers or data to support his belief.
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  • Originally Posted by strongsville
    This is what we have been asking him for so long. He never came up with any numbers or data to support his belief.


    i hope the land prices will appreciate 600% in next 1 year
    LOL
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  • Anyone still saying RE wont come down even after seeing Dugar's OMR project @Rs.4000, in the same locality?
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  • RE prices

    As long as there is huge black money in this country, the RE at places like Chennai may not come down appreciably. Some corrections here and there may be there. Projects would be delayed, even the lower prices being quoted will not be attrtactive in case the projects are delayed. One should go for good no-water logging areas nearer to Railway stations if the flats are in advanced stage of construction or ready to occupy from good builders. Whaterver rate comes down may go up in the next few years and in the matter of few years none would have lost in RE, but their rate of return may be reasonable than very high. None looses in RE in Chennai, especially in good construction flats in the long run.
    :D ks2071746
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  • Dugar's is worth only that much

    Originally Posted by Sovi
    Anyone still saying RE wont come down even after seeing Dugar's OMR project @Rs.4000, in the same locality?


    DUGAR'S project is near thiruporur,which is too far and does not even have a decent coffeshop. OMR is not a 3 km stretch. it extends till mahabalipuram(obviously). property rates decline as you move from perungudi to painur(quite a distance).DO NOT COMPARE PROPERTIES AND RATES TILL YOU VISIT BOTH THE SITES PERSONALLY.
    check todays hindu(1st page) CEEDEEYES advt which says about COMMON AREA and other charges.
    again to tell you the obvious the price of property on OMR(road facing) is twice the price of the property behind it(side road).
    What Dugar is giving is only worth that much it is way too far.
    an auto will charge you minimum of 300/- one way
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