During 2003 nobody expected realestate to go up especially folks in Chennai. Having seen the super boom in late 2003 I advised relatives in Chennai to buy realestate in 2004. That is the reason my close relative has a house to live today with his retirement savings. Today for that money 20L he wont get a flat in the outskirts of Chennai. When prices went up people went mad in 2007.
That was irrational exuberance. Now folks on this board are talking bearish day in and day out. Their reason is comparison of US with India as if they are TIGHTLY COUPLED. This is exuberance on the bear side. This can be equally dangerous.
As far as I have seen realestate price in Chennai has gone up regularly every decade. The first rise in my memory was in late 70s between 78 and 82. Then there was a boom in 85s. In one such occasion my family could triple their investment in a plot on the sides of Mount road in just 1.5years. The next round of upmove was in 94-98. The current trend is 2003 till now.
After all these rises never did the price fall to the old low. Not even to half the rise, not even by 30% from the peak. The price of land in Abhiramapuram in 1996 at the peak was around 80L to a crore. In 2000 the prices were quoted around 60L but that was desperate sales. In reality nobody was selling then unless they were in trouble.
I am not stating that prices cant fall. All I want to tell you is dont assume prices are going to fall just because somebody tells you so. Did the same folks tell you to buy in 2004? If they did, then listen to them, not otherwise.
I think most of the bear thought and negativism for realestate on this board is because NRIs who sold out in 2007 and those of them who never entered before 2006 are left high and dry both in their countries and in India as they thought they knew everything when they probably knew nothing. Their advice based on USA is nothing but worthless. Talk to the local Chennaite who stayed in Adayar, talk to the Chennaite who will say ECR is far away, not to these new bees who know not what Chennai is. Finally such a person is going to say Madras not Chennai.
In net, if you have the money better buy worthwhile property to live. I am not bothered about speculators and traders. I am talking about genuine buyers. Folks who want a place to live. Go and buy before you are caught in the next upmove. In 2003 nobody wanted to buy a flat in Mylapore for Rs 1000psft. Suddenly in 2007 they were buying flat in Urapakkam for Rs 3500psft. So be careful before you take the advice of NRIs and NRI spokespersons on this board like Wiseman. They know not what they are saying.
Cheers.
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  • oops that earlier reply was to Manzb. I think there should be a way to tell whose post one is replying to without quote option which occupies too much space. Is the mod listening!?
    CommentQuote
  • Originally Posted by nabishek
    The properties priced at 3.2 cr and 15000 Rs/sqft all are premium properties.They are for the elite and for those who flaunt their wealth.

    There will be always sellers and buyers for these kind of properties.

    Please note - The owners bought this property with their own money.

    It has to be understood that today the crore's worth of property is not being bought by crorepathis, but by average office going middle class who is taking huge loans and is gambling against so many uncertainities that life may throw at them.

    When affordability has reduced, people defaulting on EMI's, Huge bank loan interest, Global Financial Meltdown, risk of losing job and facing the worst crisis the world has ever seen.It doesnt harm to be prepared for any adversity, and making well informed decisions and taking calculated risk.

    When you laugh, the whole world laugh's with you. when you cry, you cry alone.

    While Natraj and Wiseman both agree flat prices will have to fall.The reasons they are attributing is different.Wiseman says it will be due to the impact of global financial meltdown and RE bubble burst.Natraj says it will be due to increase in FSI and reduced builders profit margin.

    People who are aware of the RE Scenario are realistically expecting reduction of land prices only in the lines of 10-15% within the city limits and 30-40% in the suburbs.Reduction in Flats prices is expected between 30-40%.Which seems very possible.

    What u said elite are yday's middle class. Countries go through cycles not just markets. So when to enter or exit is a private decision. In my view in Chennai builders are making super fortune and they will not mind dropping prices a bit to keep cash flow. Other than that RE wont go down. Those investing in flats and expecting long term growth are incorrect right at the beginning. If they buy flats to live then it is fine.
    So
    1. If u want to invest, do that only on land.
    2. If u buy flat to live it does not matter much if the price changes some 10%, it is not as if that will change ur life in the long run of 20years. Buy the right place at the affordable price.
    3. If u r a punter on flats, u r a fool and I dont care if u lose.
    Finally 1cr properties are not about flaunting. It is just what u r worth. Nothing is big, nothing is small, just what u r worth u can do and what u aint worth is not for u to try. If u fail after trying beyond ur worth, I can show no pity to u.
    CommentQuote
  • Originally Posted by Natarajg007
    What u said elite are yday's middle class. Countries go through cycles not just markets. So when to enter or exit is a private decision. In my view in Chennai builders are making super fortune and they will not mind dropping prices a bit to keep cash flow. Other than that RE wont go down. Those investing in flats and expecting long term growth are incorrect right at the beginning. If they buy flats to live then it is fine.
    So
    1. If u want to invest, do that only on land.
    2. If u buy flat to live it does not matter much if the price changes some 10%, it is not as if that will change ur life in the long run of 20years. Buy the right place at the affordable price.
    3. If u r a punter on flats, u r a fool and I dont care if u lose.
    Finally 1cr properties are not about flaunting. It is just what u r worth. Nothing is big, nothing is small, just what u r worth u can do and what u aint worth is not for u to try. If u fail after trying beyond ur worth, I can show no pity to u.

    People buy flats taking huge loans hoping to get huge returns of investment later in life.

    I feel flats should be bought only for self use and for saving on the rent and for a better living.Not as an investment.Investing in land and holding onto it seems a better option.

    It doesnt make sense buying crores worth flats for self use taking loans because the pain and anguish of paying back the loan for 20 years is far more than renting a house now, investing in different portfolios and buying a home in our own money after 20 years.We are not going to be less richer like that.

    Even for self use, Flats have become unaffordable for the middle class.I saw an advertisement today from TNHB offering flats in sholingnallur.Please note this is LIG flats of arnd 450 sqft at 2230 rs/sqft.
    CommentQuote
  • Originally Posted by wiseman
    ks,

    When you buy a single ground from a shark and a scoundrel (like some guys we know who try to palm off their land at exorbitant prices to unsuspecting people), you only deserve what you get ...

    Well, here is what you are up for if you do so!

    Assume you bought a 1200 SFt for half that price and you put up 20% down payment - thats 24 lakhs. For the remainder 96 lakhs, you took a loan for a 20 year period at an average of 10% pa.

    Well, you are on the hook for Rs 115800 every month which is from your salary after tax. So, pre-tax (of 30% at that kind of income) the amount you will be putting away is Rs 150540 every month! Any tax breaks look marginal / piddly at this level of payment, so ignore it.

    Now you would have paid the owner of the land Rs 12000000. And then, you would have paid the Banker another Rs 15800000 (over 20 years as interest)!!! For a total of Rs 27800000 post-tax. The sum of money paid by you over 20 years Pre-tax will be Rs 36100000 (3.61 Crores).

    So, you will spend 20 years, every year and every month wondering how stupid you were to simply work, work, work to give away Rs 1.50 lakhs of your income because some scoundrel and his banker-partner gyped you of all this money. And if you were to believe this knave who sold it to you cheerfully at 1.2 crores for half a ground, to get the best returns you must hold it for a long period of 20 years and get a 25% CAGR (and not, like the IT people sell it in a short period).

    And, let me see what that will put the price of land to be, 20 years from now if you are to believe this thief and get a 25% pa CAGR.

    You should be able to find another sucker to buy it off you for Rs 104,00,00,000 (yes, thats right 104 crores! If you hope to find a bigger sucker 20 years later to shell out 104 crores, all the best. And at 35% CAGR as this joker insists, you must find an even bigger sucker to buy it off you for Rs 485 crores - yes you heard it right!!!).

    Power of compounding!

    Now, your dear clever Nats did not tell you that hard part, did he? He just told you that in the past 20 years he got 25% CAGR and now he is selling it to you, giving you the idea that you too will get the same 25% for the next 20 years. Then, he compounds the problem for you by telling you that you need to hold it for 20 full years so that you will get that fancy 25% ROI.

    Let me see what return this land will get you in the next 20 years for which you would have paid a total of Rs 3.61 Crores which has a present value of Rs 15730000 (1.57 Crores of today's rupees; to the Seller, Banker, Taxman) . Can you find a buyer for 1200 SFt for ??? crores?

    If you get Rs 10 Crores then your CAGR is just under 10 %!

    If you get Rs 12 Crores then your CAGR is 10.70 %!

    If you get Rs 15 Crores then your CAGR is just under 12 %!

    Even If you get Rs 20 Crores, your CAGR is only 13.6 %!


    So, now after slogging for 20 years and giving away 1.50 lakhs every month for 240 months, you get anywhere from 10% to 13.6% max?

    Well. For all you suckers who want to believe that shameless man, make my day!!! :D. Buy that property from him today - and become a debt-slave for the rest of your life!!! Seriously.

    Don't believe me? Check with your auditor or any half-decent CA or accountant!!! Even a first year Accounts graduate will validate the computations.

    Do you know of anybody who earns so much that he can shell out 1.50 lakhs per month every month for the next 20 years without missing a beat?

    Even if you tell me that there are 30 year loans, at the same rate you will still be paying 1.05 lakhs post-tax and 1.37 lakhs pre-tax. But this for 30 years!!!

    Nats was right about LOL and ROTFL. But the laugh will be at your expense, people, who believe him and buy property off him at the usurious rates he is quoting!

    Do you see why prices must stagnate for a long time OR decline and then rise slowly for salaries to catch up so that these prices actually become affordable. (actually it will be value of rupee falling so much that your employer will need to pay you bushels of cash every month)

    Everybody is playing with fire hoping that, buying at these prices, the music will continue to play, party will continue to go on and you will forever find a bigger fool. Good luck to all those kind of buyers. :)

    cheers

    Dear wiseman sir,

    I am not into RE business at all as a broker or a promoter or an agent or a trader who would does buying and selling. I was looking for a decent 3 bed flat of around 1300 sq. ft. since Jan.08 and have visited a number of localities like Vandalur, Perungalathur, Urappakkam, Madipakkam, Selayur, Pallavaram, Chrompet, Tambaram West, Chitlapakkam, Camp Road, Medavakkam, Vandalur-Kelambakkam Road, Maraimalai Nagar, Guduvanchery, Saidapet, KK Nagar, Manapakkam, Porur etc. etc. for only a flat, not for land or independent house, which are beyond my reach/budget. My budget was within Rs. 40 lakhs. all inclusive. Having spent over 8 months in the process, I finally went in for a 3 bed flat in Tambaram East close to Sanatorium Station. The rate was a little high at Rs. 3500/sq. ft. when people told the rate in this area is around Rs. 3000-3250, but the location was very good, most suited for my son and my coming new daughter-in-law for their commuting to their offices, one at Mahindra City and the other to be at Guindy. The recent rains also proved to us that the site was not affected by water logging. The builder did not reduce the rates since I met him first time in May 08. Having gone round for almost 5 months to different places and builders, I ultimately went to him in September 08 to finalise the flat, one in the I floor of 2 blocks, each block with 4 flats each, 2 in the GF and 2 in th I floor. The finalised flat is 3 beds with 3 toilets and 3 balconies which remained unsold due to higher area for these 5 months. I felt this is the best flat in the whole lot of 8 flats. I had to book the flat at the price indicated with very marginal peanut discount. I was 3 rd buyer to book the flat and thought subsequently, the balance 5 flats will not be sold at least for now at their rate. But to my surprise, as of yesterday, 6 flats have been sold and only 2 remain to be sold. I now feel, these 2 also will be sold shortly, at the price what the builder quotes. The progress is fast and will be ready for occupation by early March 09. I was expecting, the builder will not be able to sell and may offer the unsold flats at discounted prices. To my surprise, this has not happened as I could gather from a recent buyer whom I came across by chance and did even look at the agreement papers.
    So, as far as the Chennai RE is concerned, there are Builders reducing the rates, there a few sticking on to the prices, there are some more who do not even start the project after announcing the project but book the flats at differental rates , there are also many big ones who may start now and hand over the flats with delay after 24 or even 36 months. For people like me, who is not considering the purchase from pure investment angle but from the utility angle and personal usage, any time is right time. He should not regret the decision once taken, if one has selected a good builder, a decent locality, fast and uninterrupted progress, quality construction, no water problem in the summer, no water logging in the winter/rainy season, better go for that even at a little premium. This is the lesson I have learnt in my limited period search for flat in Chennai South. May be the so called higher appreciation may not be there in the short period of 2 or 3 years, but the flat can fetch a price, say after 5 years or so if one has to sell due to any compulsion, which may give the appreciation of atleast 10 % per annum like an FD.
    In the case of large projects, let us not forget the high maintanence charges of about Rs. 2/sq.ft, high deposit charges, for a 1300 sq. ft. this alone will come to Rs. 2600 per month, leave alone the club house deposit, 4 % service charges ( please correct me if I am not correct ) etc. etc. In some areas, the rental value will be low, in the order of Rs. 4000 only and how can one take the maintancne charge of Rs. 2600 PM also. For high rise flats, or flats with lifts, the ground floor tenent also should bear the share of electricity charges for the common use especialy lift consuming large power as well as the large lift maintanence charges. To people like me, the swimming pool, club house, super market ( the prices will be very high here as the tenents in the project only will use the shop with limited sales) are upper middle/high class luxuries and I just cannot think of spending for these, out of my hard earned money now or in future. Members may forgive me for the views expressed in this para if I am wrong.

    This is how I look at this and not worried much by the so called downstrend or uptrend in the economy/market/RE scene. I have heard about the torture, If I am permitted to use this word, the flat/house owners give to their humble tenents, atleast we do not want to be caught with any such owner and lose my mental and physical health ultimately. I do not know if I have done the correct and fair thing by sharing very frankly my mind here in this forum. Regards.

    ks2071746:p
    CommentQuote
  • Originally Posted by ks2071746


    My budget was within Rs. 40 lakhs. all inclusive. Having spent over 8 months in the process, I finally went in for a 3 bed flat in Tambaram East close to Sanatorium Station. The rate was a little high at Rs. 3500/sq. ft. when people told the rate in this area is around Rs. 3000-3250, but the location was very good, most suited for my son and my coming new daughter-in-law for their commuting to their offices, one at Mahindra City and the other to be at Guindy.

    ks2071746:p


    KS,

    It seems your expectation was 1300 SF within a budget of 40L. With the rate 3500 PSFT and budget 40L, how did you manage to purchase an apartment of 1300 PSFT? What is the total cost of the apartment?

    I personally feel you should have waited until the slowdown to take its full course for a better price as the falldown is just in the initial phase. Anyhow, best wishes on your new home.
    CommentQuote
  • I'm not trying to be offensive here, but :)

    Originally Posted by ks2071746
    Dear wiseman sir,

    I am not into RE business at all as a broker or a promoter or an agent or a trader who would does buying and selling.

    This is how I look at this and not worried much by the so called downstrend or uptrend in the economy/market/RE scene. I have heard about the torture, If I am permitted to use this word, the flat/house owners give to their humble tenents, atleast we do not want to be caught with any such owner and lose my mental and physical health ultimately. I do not know if I have done the correct and fair thing by sharing very frankly my mind here in this forum. Regards.

    ks2071746:p



    ks,

    In an earlier post you told Nats and me that you were sick of our long posts. Now, on this post, you yourself inserted a loooong post. :D

    Just an observation. No offense. Also, I will try my best to post short ones with the same level information:).

    Also, I would request Nats to please ignore my comments that use bad language. From now on we will all post and agree or disagree politely only!

    Thats my promise.

    As regards Nats offer to meet me in bangalore in one post, let me inform everyone that I live in Bangalore. I'm not an NRI. I have been in Bangalore for last 23 years and I'm what you might call an IT guy. Lately my work has taken my to IT related fields, but at the heart of it, I'm an IT guy only (in the past I have been for a while in Equity Analysis and continue to do it seriously for some high networth people on a friendly basis only).

    Nats, in case this interests you, I'm in the business of applying very high funda Math-based Pattern Recognition algorithms (obviously created by someone who is a high-funda Mathematician; not me :)) to all kinds of problems in text, image and other types data. Applications are in Medicine, Lifesciences, Engineering, Financial sector, BPO/KPO/LPO, you name it, there is an application there ;). We believe that this is the next wave in IT/ITES and so do a lot of ous clients who are going ga-ga about it!

    So guys, while I do not have a job I do have a very profitable company of my own!!! :D

    Maybe I've said too much?

    cheers
    CommentQuote
  • I agree to some extent to keep the messages short and sweet. The devil is in the details.

    1. This forum brings people from all walks of life, from the financial planning context, novice to experts. If you assume that you are writing to experts, some who don't understand posts (no fault of their own), might miss the points.

    2. Often, you will also have to back your arguments with data or supporting links from websites, otherwise, it will raise more questions than answers.

    I would leave it for the author to decide.

    Thanks,
    Salim.
    CommentQuote
  • Originally Posted by wiseman
    ks,

    In an earlier post you told Nats and me that you were sick of our long posts. Now, on this post, you yourself inserted a loooong post. :D

    Just an observation. No offense. Also, I will try my best to post short ones with the same level information:).

    Also, I would request Nats to please ignore my comments that use bad language. From now on we will all post and agree or disagree politely only!

    Thats my promise.

    As regards Nats offer to meet me in bangalore in one post, let me inform everyone that I live in Bangalore. I'm not an NRI. I have been in Bangalore for last 23 years and I'm what you might call an IT guy. Lately my work has taken my to IT related fields, but at the heart of it, I'm an IT guy only (in the past I have been for a while in Equity Analysis and continue to do it seriously for some high networth people on a friendly basis only).

    Nats, in case this interests you, I'm in the business of applying very high funda Math-based Pattern Recognition algorithms (obviously created by someone who is a high-funda Mathematician; not me :)) to all kinds of problems in text, image and other types data. Applications are in Medicine, Lifesciences, Engineering, Financial sector, BPO/KPO/LPO, you name it, there is an application there ;). We believe that this is the next wave in IT/ITES and so do a lot of ous clients who are going ga-ga about it!

    So guys, while I do not have a job I do have a very profitable company of my own!!! :D

    Maybe I've said too much? cheers(/quote)


    Dear wiseman and natarajg007,

    I am very happy seeing your above message, you have mentioned both your ids, to me it means, you both are becoming more friendly than ever. Good. I agree, I have given a long message, sorry for such a long one. But I could not make it shorter as I wanted to communicate my mind plainly and frankly, with the intention that it will benefit atleast a few members/guests. Hence forth, I will try to give shorter comments/messages pl. I will not make the readers to take the help of a dictionary often to find the meaning of some really difficult words you and natarajg007 (original friend and not the new one - nataraajg007 ) often use, as my vacabulary is really short of such difficult words, but only the day to day use words. I hope, you will agree, my intention here is not to kindle you both, but to appreciate your vacabulary.

    ks2071746:D I do have a very profitable company of my own!!! :D

    Maybe I've said too much? cheers(/quote)


    Dear wiseman and natarajg007,

    I am very happy seeing your above message, you have mentioned both your ids, to me it means, you both are becoming more friendly than ever. Good. I agree, I have given a long message, sorry for such a long one. But I could not make it shorter as I wanted to communicate my mind plainly and frankly, with the intention that it will benefit atleast a few members/guests. Hence forth, I will try to give shorter comments/messages pl. I will not make the readers to take the help of a dictionary often to find the meaning of some really difficult words you and natarajg007 (original friend and not the new one - nataraajg007 ) often use, as my vacabulary is really short of such difficult words, but only the day to day use words. I hope, you will agree, my intention here is not to kindle you both, but to appreciate your vacabulary.

    ks2071746:D
    CommentQuote
  • Originally Posted by wiseman
    ks,

    In an earlier post you told Nats and me that you were sick of our long posts. Now, on this post, you yourself inserted a loooong post. :D

    Just an observation. No offense. Also, I will try my best to post short ones with the same level information:).

    Also, I would request Nats to please ignore my comments that use bad language. From now on we will all post and agree or disagree politely only!

    Thats my promise.

    As regards Nats offer to meet me in bangalore in one post, let me inform everyone that I live in Bangalore. I'm not an NRI. I have been in Bangalore for last 23 years and I'm what you might call an IT guy. Lately my work has taken my to IT related fields, but at the heart of it, I'm an IT guy only (in the past I have been for a while in Equity Analysis and continue to do it seriously for some high networth people on a friendly basis only).

    Nats, in case this interests you, I'm in the business of applying very high funda Math-based Pattern Recognition algorithms (obviously created by someone who is a high-funda Mathematician; not me :)) to all kinds of problems in text, image and other types data. Applications are in Medicine, Lifesciences, Engineering, Financial sector, BPO/KPO/LPO, you name it, there is an application there ;). We believe that this is the next wave in IT/ITES and so do a lot of ous clients who are going ga-ga about it!

    So guys, while I do not have a job I do have a very profitable company of my own!!! :D

    Maybe I've said too much?

    cheers

    Well well you have said atleast something about yourself. I am yet to get to that University of yours! Anyway take care.
    CommentQuote
  • Originally Posted by ks2071746
    Originally Posted by wiseman
    ks,

    In an earlier post you told Nats and me that you were sick of our long posts. Now, on this post, you yourself inserted a loooong post. :D

    Just an observation. No offense. Also, I will try my best to post short ones with the same level information:).

    Also, I would request Nats to please ignore my comments that use bad language. From now on we will all post and agree or disagree politely only!

    Thats my promise.

    As regards Nats offer to meet me in bangalore in one post, let me inform everyone that I live in Bangalore. I'm not an NRI. I have been in Bangalore for last 23 years and I'm what you might call an IT guy. Lately my work has taken my to IT related fields, but at the heart of it, I'm an IT guy only (in the past I have been for a while in Equity Analysis and continue to do it seriously for some high networth people on a friendly basis only).

    Nats, in case this interests you, I'm in the business of applying very high funda Math-based Pattern Recognition algorithms (obviously created by someone who is a high-funda Mathematician; not me :)) to all kinds of problems in text, image and other types data. Applications are in Medicine, Lifesciences, Engineering, Financial sector, BPO/KPO/LPO, you name it, there is an application there ;). We believe that this is the next wave in IT/ITES and so do a lot of ous clients who are going ga-ga about it!

    So guys, while I do not have a job I do have a very profitable company of my own!!! :D

    Maybe I've said too much? cheers(/quote)


    Dear wiseman and natarajg007,

    I am very happy seeing your above message, you have mentioned both your ids, to me it means, you both are becoming more friendly than ever. Good. I agree, I have given a long message, sorry for such a long one. But I could not make it shorter as I wanted to communicate my mind plainly and frankly, with the intention that it will benefit atleast a few members/guests. Hence forth, I will try to give shorter comments/messages pl. I will not make the readers to take the help of a dictionary often to find the meaning of some really difficult words you and natarajg007 (original friend and not the new one - nataraajg007 ) often use, as my vacabulary is really short of such difficult words, but only the day to day use words. I hope, you will agree, my intention here is not to kindle you both, but to appreciate your vacabulary.

    ks2071746:D

    You cant explain much in short. If you talk long without matter nobody will listen. U decide which u want! LOL!
    You cant explain much in short. If you talk long without matter nobody will listen. U decide which u want! LOL!
    CommentQuote
  • Originally Posted by manzb
    I think u r on eof those who believes an asset class like RE will never come down.. in any case, u seems is even bullish then the real estate developers who themselves are saying that the prices will come down (recent request by CREDAI and other associations) ... in any case, my dear sir, pls go around and ask all these developers and they are ready to negotiate.. now talking of independent plots and bungalows.. well unlike a developer who is bound by cash flow for running his business a lot of these are individiual owners who has higher holding capacity and like u believes that it is a sin to quote lower.. but as RE is a low liquidity asset, in case of some one in distress, he will start selling at a huge discount.. in any case, the ROI u r mentioning in the forum r absurd, and no asset class gives that kind of return for a prolonged period of 15-20 years.. the best is about 18-20% by stocks.. followed by RE at about 10-12% and followed by Gold .. which actually just follows the inflation with a positive bias.. In any case all asset class go thru cycle and RE is no exception... hence starting this year it looks like that RE is getting into downturn and will retract in most likelyhood to 50% and at minimum level of 30%.. looking at the earlier cycles it shall take anywhere between 5-10 years for the upturn to start again... in any case, as long as u r happy with ur investment, all is fine.. but in reality what wiseman is saying is true to some extent but not entirely.. as if u start today with a 40% outgo of ur salry for RE, in next few years it will come down to 30% then 20% and so... as value of money will go down due to inflation and also there is likelyhood of one getting into higher position as time goes by with higher income.. but that does not justify paying the abnormal RE prices of today.. and hence it is better that one shall wait and let sanity come into RE market.

    Cheeeeeeeeeeeeeers :)

    Nice discussion. U have brought out lots of points however I dont think u have put all the puzzles together. Spend time to put them together and u will find
    a. If RE really crashes as you said by 50% it will actually be a deadly collapse for all INdians. This spiral can actually cause a Civil war! Think of those who will be bankrupt and INdians hardly know how to take job losses, where can they take "king to beggar" or going to "car houses as in California".
    b. On the other hand RE may actually go up because the recession is hardly anything in INdia. ACtually I dont even feel it around beyond a few jobs going for mostly useless folks. Now the fellow who unfairly got a 50K job when he deserved only 20K will fall back to the 20K option and things will stabilise.
    c. Indian RE is managed by big hands and black money. SW engineers are just a way of expressing HIFI feeling like NRIs were some years back. ACtually they dont support the market beyond those large apartment complexes by DLFs and the like. In other words land and house will be much more difficult to get in the future than now and with our USELESS infrastructure high rise buildings will anyway be doomed.
    Hope u got it.
    CommentQuote
  • Originally Posted by ks2071746
    Dear wiseman sir,

    I am not into RE business at all as a broker or a promoter or an agent or a trader who would does buying and selling. I was looking for a decent 3 bed flat of around 1300 sq. ft. since Jan.08 and have visited a number of localities like Vandalur, Perungalathur, Urappakkam, Madipakkam, Selayur, Pallavaram, Chrompet, Tambaram West, Chitlapakkam, Camp Road, Medavakkam, Vandalur-Kelambakkam Road, Maraimalai Nagar, Guduvanchery, Saidapet, KK Nagar, Manapakkam, Porur etc. etc. for only a flat, not for land or independent house, which are beyond my reach/budget. My budget was within Rs. 40 lakhs. all inclusive. Having spent over 8 months in the process, I finally went in for a 3 bed flat in Tambaram East close to Sanatorium Station. The rate was a little high at Rs. 3500/sq. ft. when people told the rate in this area is around Rs. 3000-3250, but the location was very good, most suited for my son and my coming new daughter-in-law for their commuting to their offices, one at Mahindra City and the other to be at Guindy. The recent rains also proved to us that the site was not affected by water logging. The builder did not reduce the rates since I met him first time in May 08. Having gone round for almost 5 months to different places and builders, I ultimately went to him in September 08 to finalise the flat, one in the I floor of 2 blocks, each block with 4 flats each, 2 in the GF and 2 in th I floor. The finalised flat is 3 beds with 3 toilets and 3 balconies which remained unsold due to higher area for these 5 months. I felt this is the best flat in the whole lot of 8 flats. I had to book the flat at the price indicated with very marginal peanut discount. I was 3 rd buyer to book the flat and thought subsequently, the balance 5 flats will not be sold at least for now at their rate. But to my surprise, as of yesterday, 6 flats have been sold and only 2 remain to be sold. I now feel, these 2 also will be sold shortly, at the price what the builder quotes. The progress is fast and will be ready for occupation by early March 09. I was expecting, the builder will not be able to sell and may offer the unsold flats at discounted prices. To my surprise, this has not happened as I could gather from a recent buyer whom I came across by chance and did even look at the agreement papers.
    So, as far as the Chennai RE is concerned, there are Builders reducing the rates, there a few sticking on to the prices, there are some more who do not even start the project after announcing the project but book the flats at differental rates , there are also many big ones who may start now and hand over the flats with delay after 24 or even 36 months. For people like me, who is not considering the purchase from pure investment angle but from the utility angle and personal usage, any time is right time. He should not regret the decision once taken, if one has selected a good builder, a decent locality, fast and uninterrupted progress, quality construction, no water problem in the summer, no water logging in the winter/rainy season, better go for that even at a little premium. This is the lesson I have learnt in my limited period search for flat in Chennai South. May be the so called higher appreciation may not be there in the short period of 2 or 3 years, but the flat can fetch a price, say after 5 years or so if one has to sell due to any compulsion, which may give the appreciation of atleast 10 % per annum like an FD.
    In the case of large projects, let us not forget the high maintanence charges of about Rs. 2/sq.ft, high deposit charges, for a 1300 sq. ft. this alone will come to Rs. 2600 per month, leave alone the club house deposit, 4 % service charges ( please correct me if I am not correct ) etc. etc. In some areas, the rental value will be low, in the order of Rs. 4000 only and how can one take the maintancne charge of Rs. 2600 PM also. For high rise flats, or flats with lifts, the ground floor tenent also should bear the share of electricity charges for the common use especialy lift consuming large power as well as the large lift maintanence charges. To people like me, the swimming pool, club house, super market ( the prices will be very high here as the tenents in the project only will use the shop with limited sales) are upper middle/high class luxuries and I just cannot think of spending for these, out of my hard earned money now or in future. Members may forgive me for the views expressed in this para if I am wrong.

    This is how I look at this and not worried much by the so called downstrend or uptrend in the economy/market/RE scene. I have heard about the torture, If I am permitted to use this word, the flat/house owners give to their humble tenents, atleast we do not want to be caught with any such owner and lose my mental and physical health ultimately. I do not know if I have done the correct and fair thing by sharing very frankly my mind here in this forum. Regards.

    ks2071746:p

    That was well written KS.
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  • Originally Posted by manzb
    I think u r on eof those who believes an asset class like RE will never come down.. in any case, u seems is even bullish then the real estate developers who themselves are saying that the prices will come down (recent request by CREDAI and other associations) ... in any case, my dear sir, pls go around and ask all these developers and they are ready to negotiate.. now talking of independent plots and bungalows.. well unlike a developer who is bound by cash flow for running his business a lot of these are individiual owners who has higher holding capacity and like u believes that it is a sin to quote lower.. but as RE is a low liquidity asset, in case of some one in distress, he will start selling at a huge discount.. in any case, the ROI u r mentioning in the forum r absurd, and no asset class gives that kind of return for a prolonged period of 15-20 years.. the best is about 18-20% by stocks.. followed by RE at about 10-12% and followed by Gold .. which actually just follows the inflation with a positive bias.. In any case all asset class go thru cycle and RE is no exception... hence starting this year it looks like that RE is getting into downturn and will retract in most likelyhood to 50% and at minimum level of 30%.. looking at the earlier cycles it shall take anywhere between 5-10 years for the upturn to start again... in any case, as long as u r happy with ur investment, all is fine.. but in reality what wiseman is saying is true to some extent but not entirely.. as if u start today with a 40% outgo of ur salry for RE, in next few years it will come down to 30% then 20% and so... as value of money will go down due to inflation and also there is likelyhood of one getting into higher position as time goes by with higher income.. but that does not justify paying the abnormal RE prices of today.. and hence it is better that one shall wait and let sanity come into RE market.

    Cheeeeeeeeeeeeeers :)

    Incidentally regarding rate of return and YOUR BELIEF THAT STOCK MARKETS alone return high. U are highly mistaken. I have spent time explaining prices of lands I hold and their returns in another message in this board. Just to quote, one land I have was 5K in 1966, 3L in 1993 and 2C today. U can find the CAGR and it varies over time. Incidentally in the last 15 years the rate is 32% cumulative. Dont tell me I am wrong as these are quotes I have from prospective buyers not off the head. Finally I may not sell the land yet as I have no reason to whatsoever!
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