Dear friends
I used to see Free Ads paper to know the price quotings in RE section.
In june 2008 one person has quoted price for 2200 sq.ft land with 1800 sq.ft building with all amenities Rs.85 lacs. This house is not sold for the last 7 months.In january 2009 1st week he quoted Rs.82 lacs. This week he has quoted Rs.80 lacs.
Moreover, i can see many advertisement repeating for the last 7 months. From this we can know that property sales has come to standstill. And there is considerable price correction. Even though sellers are reducing the price slowly there are not any takers.
Thanks
chataara
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  • Originally Posted by nabishek
    Hi abk,

    How should FSI be factored in a transaction by the buyer and the seller?

    I shall explain my understanding on how it is done

    Seller

    If a Seller A owns 2400 sqft land where the guideline value is 1000/sqft and market price is 2000/sqft.

    That person would be pegging an asking rate of 1.5(FSI allowed) * 2000/sqft = 3000/sqft.

    If this transaction happens, then the market value becomes 3000/sqft and a new Seller B will use this to peg a new value 4500/sqft and Seller C using the value sold by Seller B would ask 6750/sqft and so on and so forth.

    This spiralling of prices would continue till the prices reach a saturation level..Till there are no buyers for the asking rate.

    Buyer

    So rate/sqft for a 3600 sqft built up and construction charge of 1200/sqft should be

    Buyer of Seller A = 3000/1.5 + 1200 = 2000 + 1200 = 3200/sqft
    Buyer of Seller B = 4500/1.5 + 1200 = 3000 + 1200 = 4200/sqft
    Buyer of Seller C = 6750/1.5 + 1200 = 3000 + 1200 = 5700/sqft

    The Buyer knows that FSI has already been factored in the purchase.

    If the Buyer is a builder,

    Builder who bought of Seller A will conveniently manipulate by not applying FSI on the rate 3000/sqft at which the land was bought, but against the market price in the locality at that time.

    Therefore,If the asking price in the market is 6750/sqft a builder would quote

    6750/1.5 + 1200 = 5700/sqft

    I feel this is one of the major reasons how the price rose by 200-400% in the span of just 3-4 years.

    With your vast knowledge in the sector and having witnessed many transactions and constructions personally.I was hoping you could clarify and explain both the buyers and sellers standpoint.

    Thanks in advance.

    Interesting Nabhishek!! WHy well the Seller of land whose market price is 2000/sqft ask for 1.5 times that price? What is the logic?
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  • Originally Posted by Natarajg007
    Interesting Nabhishek!! WHy well the Seller of land whose market price is 2000/sqft ask for 1.5 times that price? What is the logic?


    Have tried to clarify in the post below

    https://www.indianrealestateforum.com/forum/city-forums/chennai-real-estate/3521-property-price-trends-in-chennai?p=123461&postcount=50#post123461
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  • Originally Posted by Nataraajg007
    Who gives medical seat for Rs 10-15 L? Perhaps B.Pharm seat?


    Dear friend

    In (Kundrathur) Nandambakkam one seller has finally agreed to sell his CMDA appd. plot for just Rs.300. In nearest layout which is promoted by Sairam engg. college they are quoting Rs.895 per sq.ft. (I donot whether they are selling anything at that price there)

    Why i am telling this is, Its all urgency which makes the seller to sell at desperate rate.

    thanks

    chataara
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  • Originally Posted by REGuru
    Yes, thats what happened without sense from 2003 - 2008.
    As per your logic Buyer B,C are losers, if they are buying while guideline value still remains the same @ 1000/sqft.

    Residential Market Rate should be within 1.5-3 times the guidline value depending on the location, with some exception, otherwise its like stock market. For ex RIL touched 3000+ during the Boom and touched bottom of 950 within the 52wk period.


    Completely agree with you.

    1.5 times the guideline value for the market price would be the maximum I would pitch in.

    The guideline values can be checked using the following url

    http://www.tnreginet.net/igregn/guideline_value.htm

    One can compare the 2003 guideline values to the 2007 guideline values to understand the steepness of the increase.
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  • From Economic times-
    TCS Managing Director S Ramadorai said "there would be no hike in salaries in the forthcoming year" and added that "job cuts are possible if the situation worsens". HCL Tech had fired 450 employees.

    Only few layoffs are reported in the media and many large IT companies are firing people silently and this just a trailer.Actual movie is yet to come.Feeling really bad about these people who would have bought RE,falling in to the hype created by brokers.
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  • Optimal Values

    For New Flats,

    (UDS*Guideline*X*(Max Allowed FSI/Actual FSI)) +
    (Carpet Area*1.25*Construction cost) + Registration + Others

    X varies between 1.22(Min) to 1.73(Max) with optimal value @ 1.5

    For Unconstructed Land,

    Land Area * Guideline * Y
    Y varies between 1.5(Min) to 3.0(Max) with optimal value @ 2.25
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  • Originally Posted by BigBear
    From Economic times-
    TCS Managing Director S Ramadorai said "there would be no hike in salaries in the forthcoming year" and added that "job cuts are possible if the situation worsens". HCL Tech had fired 450 employees.

    Only few layoffs are reported in the media and many large IT companies are firing people silently and this just a trailer.Actual movie is yet to come.Feeling really bad about these people who would have bought RE,falling in to the hype created by brokers.



    Dear friend

    Have a look at this news from TOI

    http://economictimes.indiatimes.com/Realty-cos-recast-debt-to-beat-liquidity-crunch/articleshow/4197859.cms

    Thanks

    chataara
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  • Originally Posted by Nataraajg007
    Who gives medical seat for Rs 10-15 L? Perhaps B.Pharm seat?


    Dear friend,

    Next year the Engineering seats will command no premium or less premium. Thanks to the downtrend, people may prefer Mechanical or Civil branches rather than IT or CS. Such was the case about 9-10 years back and the cycle is repeating. However, IT or CS chaps coming out of the engineering colleges now need not have to lose heart. The cycle will repeat again and they may have to wait for an year or maximum two years for the pick up and boom time to start. They should keep going, in the meantime, to get into some job to get experience or go for higher studies selectively.

    ks2071746
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  • Originally Posted by BigBear
    From Economic times-
    TCS Managing Director S Ramadorai said "there would be no hike in salaries in the forthcoming year" and added that "job cuts are possible if the situation worsens". HCL Tech had fired 450 employees.

    Only few layoffs are reported in the media and many large IT companies are firing people silently and this just a trailer.Actual movie is yet to come.Feeling really bad about these people who would have bought RE,falling in to the hype created by brokers.


    You are right.

    Most of the small IT/ITES Companies have laid of 50% of their workforce.

    But you can see many ignorants here stating IT/ITES slowdown does not affect RE & to the height of the stupidity they are claiming 15-20 % CAGR on RE .

    Market will teach them good lesson .

    Lets watch the fun.
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  • Originally Posted by sethugm
    You are right.

    Most of the small IT/ITES Companies have laid of 50% of their workforce.

    But you can see many ignorants here stating IT/ITES slowdown does not affect RE & to the height of the stupidity they are claiming 15-20 % CAGR on RE .

    Market will teach them good lesson .

    Lets watch the fun.


    Dear friend,

    IT slowdown has definitely contributed to the downtrend in RE, in as much as it has also contributed to the upswing in the RE in the recent years.

    I remember, 15 years back, to get a loan from the Banks or Housing finance companies was not easy. They always looked into the salary slips, the bank statements and took into consideration of what was the take home pay, not even considering some repayment of breif period temporary loans like festival advance etc. They did not even consider the likely rental income from the house property to arrive at the loan amount possible. Hence the applicants were constrained to go for property which they can afford. Whereas, in subsequent years, say in the last 5 years or so , after the IT boom, the lending agencies started luring the propestive buyers with higher loan eligibilty even considering the likely hefty salary increases in the future years, more than possible rental income from the property in picture and the buyers were induced to go in for very high loan amounts. This has resulted in the very fast increase in the properties. This has also simultaneously put the people into real problems in servicing the hefty loans taken by them at high interest. The lending agencies are also to blamed equally like the RE players, may be to a slightly lesser extent then the RE players.

    ks2071746
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  • Guideline value criteria

    I went through the guideline values list. I noticed that there are basically 4 categories such as residential area class 1, II, III and backward area. My question is what are the criterias used to determine in which class a plot or land fall into. Pls advise.
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  • Unless te guideline values are re-evaluated the prices of land and flats will not come down. There has been substantial increase in guideline value between 2003 and 2007, which has fueled the so called boom.

    Prices will stagnate and will not increase for years or even decades to come.
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  • Prices always depends on supply and demand.If there is no demand price has to decrease like what happened in oil,steel,stock,aluminium and others.So could not agree that price of RE will only stagnate .
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  • Originally Posted by REGuru
    Unless te guideline values are re-evaluated the prices of land and flats will not come down. There has been substantial increase in guideline value between 2003 and 2007, which has fueled the so called boom.

    Prices will stagnate and will not increase for years or even decades to come.


    Re-valaution of the guieline values is a long process and are very unlikely to happen.

    True, the guideine values may stagnate for years now, but that doesnt mean a sale cannot happen below the price and that the prices cant come down or crash.

    The market price which is being quoted 1.5-3 times the guideline value, can very well crash to the guideline value and lower when demand diminishes.

    chataara said in a post above that there is a qoute for rs 300 when the adjoining leo housing plot is being sold for Rs.895.

    Leo housing advertises stating the guideline value is Rs 900.

    Also Abk, once pointed out that it is possible to complete a sale by taking power of attorney instead of registering the land.
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  • Originally Posted by nabishek
    Re-valaution of the guieline values is a long process and are very unlikely to happen.

    True, the guideine values may stagnate for years now, but that doesnt mean a sale cannot happen below the price and that the prices cant come down or crash.

    The market price which is being quoted 1.5-3 times the guideline value, can very well crash to the guideline value and lower when demand diminishes.

    chataara said in a post above that there is a qoute for rs 300 when the adjoining leo housing plot is being sold for Rs.895.

    Leo housing advertises stating the guideline value is Rs 900.

    Also Abk, once pointed out that it is possible to complete a sale by taking power of attorney instead of registering the land.


    Dear friend,

    In some areas, especially in East Tambaram, the guidleline value is Rs. 300/sq. ft and the sale is happening at Rs. 2000/sq. ft. i.e. almost at 7 times?

    ks2071746
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