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Property Price Trends in Chennai

Last updated: July 14 2020
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  • Re : Property Price Trends in Chennai

    Dont beleive Firstpost, i am seeing same kind of news in that from 2010, but never seen price correction. May be they are relatively correct because prices are getting stagnant.

    Chennai, is an end user market unlike mumbai,NCR which are investor driven markets. So defenitely the correction in chn will be less compared to them. But resale may become very very tough in coming days.

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    • Re : Property Price Trends in Chennai

      R.A.Puram rent for commercial space

      I am just bouncing off ideas for now. We live in a ground+3 apartment complex (15 flats and a few covered garages) on a 30' road off Greenways road (now DGS Dinakaran Salai) on a 3grounds land. The building is over 25 years old and there is no lift. Will any commercial establishment be interested in taking up the whole building for rent of lease? If so, what is the rent we can expect? The main advantage is the location.

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      • Re : Property Price Trends in Chennai

        Hi Friends,

        It has been a while since I updated this thread.

        Let me start by posting the prices for 2012-2013

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        A Brief history of this thread

        Chennai RE market had a bull run from 2003/2004 onwards and peaking during 2007/2008..The apartment and land price had reach unsustainable levels riding on the availability of liquidity in the market and good sentiments. Then We had 2008..sentiments became bad, noone was interested in RE..people were more worried about retaining their job first. We saw prices crashing as much as 30-40% in many places from the peak 2008 price in 2009/2010 (https://www.indianrealestateforum.co...486#post116486). Many of us had expected the trend to continue for couple of more years, but that wasnt to be..Government infused liquidity in the already over-leveraged market and inflation fuelled the slowing RE wheel to rotate again. Coupled with the revision of guideline value and easing of FSI rules, Chennai RE witnessed a bounceback of sorts. We are now in a situation where the prices have recovered and in some places are 15-20% more than the earlier peak price and in many places unaffordable even to local popualtion. In short we have come full circle and are in exact situation when I had started this thread. But we are at a different time and different price point. Though the fundamentals have not changed..the situation has.

        I would like to hear your opinions on future trend of Chennai RE prices.Do you expect the cycle to repeat?or will the prices normalize towards the median income by correction or stagnation against inflation? Please share your views.Thank you.

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        • Re : Property Price Trends in Chennai

          It will stagnate for next two years and again it might go up but it will be minimum growth only. Only if economy grows more than 9% then we can expect double digit jump which I dont think can happen before 2020.

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          • Re : Property Price Trends in Chennai

            I do not think it ever crashed. Prob in suburbs, but not in city.

            I would say city prices stagnated, some developers gave 5-10% discount thats it.
            It was not on firesale in 2009-10, as far Chennai goes.

            OMR bubble popped defenitely during the downturn, even ECR, Mogappair and some other suburbs came down to earth in the 2009-10 period.

            In Chennai city, prices have steadily grown. We are nearly triple the 2008 price today.
            City has outperformed suburbs like crazy.

            Suburban apt values have gone up today primarily driven by increase in construction cost. not so much by increase in demand.

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            • Re : Property Price Trends in Chennai

              Originally posted by nabishek View Post
              I would like to hear your opinions on future trend of Chennai RE prices.Do you expect the cycle to repeat?or will the prices normalize towards the median income by correction or stagnation against inflation? Please share your views.Thank you.
              Nabishek
              I was actually thinking about this very hard and deep this weekend.
              In every asset / trade / investment product that i try to deal with i look for the long and the short trade and was trying to pull parallels to Chennai RE.
              what is the short trade on the chennai RE be it flat, land, plot in city or suburbs. All has as you understand and have quoted correlation to prices per sqft of liveable space sold ( could be house or flats ).
              The organized trade in this sector is long, there is no shorts as i can see.
              The biggest risk i see is the odds of indian real estate customers foreclosing on their loans due to underwater properties, which is a common thing for indians and migrants in the US as you all know.
              The loan and housing system is set in such a way the equity of a home owner in any property is roughly around 25+% thats a pretty sound safe downpayment by a buyer.
              So if the properties dont fall 25% in a year or a short duration the customer is not going to default, even if it falls 25% over 2 years, the erosion in value will be so slow the customer / owner will get used to it and will hope again for the ETERNAL LONG trade that RE will go up
              Now combine other factors
              Devaluing INR, appreciating USD, AUD,EUR this causes all those affordables, NRIs, Residents who do the onsite trips and all those who have exposure to liquidity in a stronger currency may it be Singapore, Dirhams etc.
              Urban migration - power cuts leading more people moving to chennai
              Chennai/TN getting its act together - investing in OMR, ORR, IRR, overpasses, metro etc - MORE infrastructure investments
              Strong Employment prospects -IT , BPO and other industrial segments
              Stable State govt - as compared to Unstable political Karnataka , communist kerala, Fradulent Andhra Pradesh / Telungana, HYD
              Commercial Bangalore mumbai builders coming to chennai and delivering high quality good projects - making public to beleive in builders
              Springing VILLA projects - Villa lifestyle in gated communities
              Maturing Colleges, universities , foreign schools setting up JVs in chennai along VK, GST, OMR and Bangalore HWY
              ( there was a time when we all went to Coimbatore to do our undergrad- now most chennai folks go to colleges in Chennai only)
              More Medical colleges in pipeline 3-4 new permits are underway of approval

              These are some positive developments there are a lot of negative developments i can list as well.
              But as we witness folks from north india, Middle east, SING/MALAY, AUS/NZ, US / Canada, EUR consider chennai's stability in the post 2008 stagnation as a sign for durable long term destination for investment
              I bought an ECR land in that period from a GUJARATI doctor settled Urologist in Southern California - i was surprised he had holdings, he has more in manapakkam and near greenfield airport.

              So my theory is as much as i feel supply is just way over in Flats market in chennai now particularly in OMR, and a stagnation is imminent, the counter forces will step up to lift from the stagnation levels over period of 24 to 48 months

              When such a thing happens - Chennai has more opportunities and odds to recover than BLR or HYD , hence chennai IMO is stable place to get in

              there was BEARS BALL BUSTER called NATRAJ/ZEENN , as much as he was abrasive , he was spot on in his theory around behaviorial bears and it applied to many in the forum including me as recently as in the S&P run from my predict peaks of 1500 to 1650
              Last edited June 3 2013, 09:01 AM.

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              • Re : Property Price Trends in Chennai

                Originally posted by k11 View Post
                I do not think it ever crashed. Prob in suburbs, but not in city.

                I would say city prices stagnated, some developers gave 5-10% discount thats it.
                It was not on firesale in 2009-10, as far Chennai goes.

                OMR bubble popped defenitely during the downturn, even ECR, Mogappair and some other suburbs came down to earth in the 2009-10 period.

                In Chennai city, prices have steadily grown. We are nearly triple the 2008 price today.
                City has outperformed suburbs like crazy.

                Suburban apt values have gone up today primarily driven by increase in construction cost. not so much by increase in demand.
                this is very common as you compare to famous crashes in the world in tokyo, boston re crash in 80s, as recently the 2006-8 crash all across the US, areas close to Wash DC like Vienna, Mclean, Arlington in Virginia never really crashed and are over 10-15% of the July 2006 PEAK prices.
                Such properties will always have demand due to a lot of external market forces that some times can never be computed . calculated nor predicted

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                • Re : Property Price Trends in Chennai

                  K11- The prices did drop, not by means of slashing of prices in new projects but by offering near-launch prices on ongoing projects. There were no interest in new projects at the price quoted, and they had to be either scrapped or postponed. If you have time please go through this thread, I would have given many instances in t.nagar, nungambakkan, anna/shenoy nagar and even suburbs like velachery/thoraipakkam. I agree land prices were unaffected. Even during then the flat prices had no correlation to land prices in the locality. I used to justify that flat prices will correct because land is selling for X and after construction it should be Y and not 2Y. I learnt it the hardway that in chennai increase in apartment price is pre-cursor to increase in land price and not the other way round which we assume is a fact. Stagnation affects apartment prices more than land.

                  SR- Very true.Chennai has a solid footing compared to other cities. Regarding RE shorting,It is a risky proposition. It should be attempted only if you are willing to hold for long-term as a fail-safe if things dont go as planned. For land it can be rewarding..but for flat one can only hope to cut losses and exit ASAP. I personally feel comfortable only while investing in a rising market..I have the sense of having my bases/support level covered doing so and its easier to pick and identify the gems. In a falling market like the saying goes..dont attempt to catch a falling knive you never know when you would get caught on the wrong foot. Thats a dilemma most investors face..when to make a call..I didnt go ahead in 2009 because the properties that I liked were still unaffordable.People who did have reaped profits. But would that have been a case if the market didnt turnaround? I think No. I personally know people who cursed themselves to have bought a flat at peak price after they lost their job. As per the recent NHB residex, chennai witnessed a fall in absorption. Our economy is losing steam, We are unable to compete in the world market and our foreign policy isnt helping either. We live in uncertain times and from my limited understanding of RE market. The forces thats controlling the swings are beyond our grasp and are not well-defined to prepare. Almost the whole industry is heavily dependent on rising-valuation starting from the project being funded to buyers leveraging through loan. No-one knows how to deal when that does not happen. The only solution we are seeing is artifically sustain the levels and keep raising it using inflation and rupee depreciation. The damage is going to cripple a generation and widen the gap between have and have-nots even more. I can understand America printing currency as USD is the reserve currency, but fail to understand why in india. Maybe our government thinks soon America will figure out how to get out of the mess and we can mimic them in toto.
                  Last edited June 3 2013, 10:25 AM.

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                  • Re : Property Price Trends in Chennai

                    Chennai RE as a broader market may have done about 100-120% since mid 2008.

                    For those who are looking at Chennai RE as an investment: Law of large numbers will have its effect - sooner or later. Those that are priced in 5500-6500 psft or higher, will suffer from flatulence, regardless of the area. Further, 3000-6000 price point is a much easier slope to ascend for affordability reasons as well (of the past). Stay away from apartments/GC in suburbs thinking infra will catch up and barring few lucky exceptions, which is hard to foresee now, much will languish.

                    Chennai as an RE destination is becoming a very picky market to make decent returns (at retail level). Much of the disappointment will come from the rest of the market looking at those isolated bets and chasing the broader market.

                    Mav
                    Last edited June 3 2013, 11:35 AM.

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                    • Re : Property Price Trends in Chennai

                      Originally posted by k11 View Post
                      In Chennai city, prices have steadily grown. We are nearly triple the 2008 price today.
                      .
                      Not so. May be doubled or even less. In 5 years doubling is not extra ordinary.

                      In Anna nagar/Kilpauk price was 7000 to 9000 per sqft in 2008 and now it is around 12,000 to 15,000

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