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Property Price Trends in Chennai

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  • Re : Property Price Trends in Chennai

    Originally posted by wiseman View Post
    Abishek. Long time no hear from you.

    As usual very balanced, comprehensive, data-rich posts!

    Will we be seeing more frequency from you going forward?

    cheers
    Hi Wise,

    Where were you all these years.

    Abishek has been contribution good stuff as usual.

    But you were the one who was missing for years.

    I think you are smelling a bear market again.

    You could be lucky this time around and get you bear moving in this time.

    Comment


    • Re : Property Price Trends in Chennai

      Originally posted by nabishek View Post
      SR - The primary reason I think is..most of them are cash buyers and since the layouts are very old in those region you mentioned, it gives the buyers ample scope to strike deals. Layout promoters like Abi Estates, BLB, VGN, Motherland etc have to be blamed..5-6 years back they camped and did several property shows in middle east and sold many plots..many who bought land with them have profitted a lot. This has created a impression on the people's mind that its the best place to buy. Many of the middle east people who I know also buy in porur,kundrathur vicinity.

      Also..the sudden spurt in demand can be attributed to new nitaqat law in saudi arabia. It seems all over tamilnadu and kerala people are anxious to know whats going to happen and how its going to affect them.

      Several NRI groups also buy at sriperambathur and GST. Areas in the north like tiruvallur, avadi, redhills are all preferred by people who have resided and are from that place. I may be wrong..but I havent seen anyone buy a land there just for diversification purpose.

      Local chennaites give lots of importance to schools and train/bus connectivity. They tend to buy in Medavakkam/Tambaram/GST areas surroundings.

      For an outsider looking for just investment, he would read only about OMR, VK Stretch in the news..It is so over-hyped, so naturally the interest is more and entry cost is very high. People from IT who intend to move there or investors who can afford are the only ones buying in that stretch. End users interest in plots are very less, its more of GC's and townships.We can find lots of other state buyers/sellers in OMR-ECR stretch.
      Abishek -
      ME folks never keep money in ME they always transfer monthly basis to india, whether nitaqat or not, but this new law is a scar tactic and it can cause issues
      Secondly i have a feel there are few folks ( i call them triggers to herd) who had worked in orgadam sriperumbdur walajabad manufacturing corridor who know the value of these ares in ME who bought eaarly on, on mouthspread, it catches up and causes a lot of following
      True Porur projects are showcased in property expo my cousin bough from Allianz porur in one such expo - deep trouble now -
      vrey true about North/west , only folks who lived in anna nagar look at thirumazhisai, puzhal, ponamalle etc
      Different country/ NRIs have diffferent prefernces which by itself is an interesting pattern to follow.
      i recently saw several pics /videos / progress info about ORR being floated and discussed heavily in ME dominated online forums ever since i have seen high activity in
      Kundrathur, Thirumudivakkam erandam kattalai thirumazhisai west tamabaram mudichur mannivakkam padappai orathur etc
      lot of activity and discussion which is leading to transactions --
      speaking to local brokers / traders reveals the same - no IT guy no US nri is even looking in these areas much except new launches
      sad part is lot of these ME buyers are gullible so brokers take them for a ride as well

      Comment


      • Re : Property Price Trends in Chennai

        Originally posted by wiseman View Post
        Abishek. Long time no hear from you.

        As usual very balanced, comprehensive, data-rich posts!

        Will we be seeing more frequency from you going forward?

        cheers
        Nice to hear from you wiseman. I try to write as frequently as I can. I recently got promoted to senior member sometimes I feel my views have become so repetitive that I feel I will bore others and myself writing same thing all over again . I still follow your posts in Pune forum..Please do come to chennai forum often..It seems you have dedciated yourself to Pune Forum..have you moved your house to Pune too?

        Originally posted by SRaj001 View Post
        Abishek -
        ME folks never keep money in ME they always transfer monthly basis to india, whether nitaqat or not, but this new law is a scar tactic and it can cause issues
        Secondly i have a feel there are few folks ( i call them triggers to herd) who had worked in orgadam sriperumbdur walajabad manufacturing corridor who know the value of these ares in ME who bought eaarly on, on mouthspread, it catches up and causes a lot of following
        True Porur projects are showcased in property expo my cousin bough from Allianz porur in one such expo - deep trouble now -
        vrey true about North/west , only folks who lived in anna nagar look at thirumazhisai, puzhal, ponamalle etc
        Different country/ NRIs have diffferent prefernces which by itself is an interesting pattern to follow.
        i recently saw several pics /videos / progress info about ORR being floated and discussed heavily in ME dominated online forums ever since i have seen high activity in
        Kundrathur, Thirumudivakkam erandam kattalai thirumazhisai west tamabaram mudichur mannivakkam padappai orathur etc
        lot of activity and discussion which is leading to transactions --
        speaking to local brokers / traders reveals the same - no IT guy no US nri is even looking in these areas much except new launches
        sad part is lot of these ME buyers are gullible so brokers take them for a ride as well
        RE is generally sentiment driven..market forces just act as a catalyst/deterrent, not as a price mover. Many of us buy due to societal reasons than actual necessity..you were mentioning about Triggers making NRI's to buy..I would say they are just a mouth-piece in their circle. The real trigger are the senior citizen fathers/mothers who live in good status by saying my son/daughter is in abroad and discuss RE with others. They are the people who do the ground-work in identifying good locations and plots for their children. We can find so many such people everyday morning at parks and restaurants. Invariably they end up talking RE. Sometimes when we overhear them , it is surprising the way they talk as if they have gone into the future and seen how the outskirts have developed. They are so convincing, their gray hair and wise demeanour has such influence that we dont question them out of respect.

        Indian parents, esp in Tamilnadu are very conservative and protective. They treat their children's success as their own. They are paranoid when their kid (yes, 30+ year old is also a kid to them ) earn a lot. They fear the money will be blown and become useless. The belief that RE is a safe-haven is unshaken. Stockt/MF's are a big no..youngsters are encouraged to buy a flat on loan as early as they can and invest in plots when they earn surplus..Indirectly when one is forced to save and pay EMI, they become financially disciplined and cannot splurge..It results in wealth creation is their belief.

        Personally, I dont think its wise to focus too much on one asset class.

        Regarding affordability, I think we will see more builders adopting the forgotten motto - Price it right, size it right.

        Regarding buying patterns, have anyone of you identified where the local IAS/IPS/Politicians/government officers are buying in layouts? Looks they have totally boycotted it and started focussing on buying acres of patta/agricultural land..in chennai they are confining themselves to some extent in ECR. Primary reason is colored money, but I am trying to figure out which area can become posh in future?have not got any clear indication yet.
        Last edited July 5 2013, 12:25 AM.

        Comment


        • Re : Property Price Trends in Chennai

          Good thoughts - very true about parental paranoia
          I have the opposite of the problem you mentioned, my family is very slow and not interested in RE nor do my siblings, they still beleive in equity, fixed instruments, debt, mutual funds, post office, FD etc , Im the big RE proponent more by accident since i started doing RE as a part-time business in US and hence my interest drove in that field

          Reg the following of IAS/IPS etc, its not a worthwhile effort IMHO , the class of such in 70/80 when they settle in a location used power to get stuff done for their community
          But today those retireds are flushed with color money that they want to hide, in most cases they dont want to be known that they live there, i have a few examples of such near my properties in ECR, infact i speak to a wife of one sr IPS (retd) when i drive by, she does part-time real estate/broker work, so she has interest asking when im going to sell, but beyond that their kids are well settled they are having fun half the year they travel, they really dont want to be known.

          The middle east pattern i called out does not fall in the category of parental influence you explained. The parents of such folks are still in villages near chennai or in south trichy madurai thanjavur area. They buy purely because of peer influence and some times pressure.
          they dont know any other asset class than Land, they dont even buy flats, i have been observing such groups for last couple of years, they all buy in group in a area, for example padapai , a large group in saudi went and bought in padappai near amma distellery, once known all the near by layouts were bought by friends , family etc. its very widespread and it spreads very fast. Its interesting to watch it
          Also another observation they dont come to IREF that much at all,
          a recent video by a ME member posted the ORR update
          they are really big into this corridor --

          Chennai Outer Ring Road - YouTube

          Comment


          • Re : Property Price Trends in Chennai

            Originally posted by SRaj001 View Post
            Good thoughts - very true about parental paranoia
            I have the opposite of the problem you mentioned, my family is very slow and not interested in RE nor do my siblings, they still beleive in equity, fixed instruments, debt, mutual funds, post office, FD etc , Im the big RE proponent more by accident since i started doing RE as a part-time business in US and hence my interest drove in that field

            Reg the following of IAS/IPS etc, its not a worthwhile effort IMHO , the class of such in 70/80 when they settle in a location used power to get stuff done for their community
            But today those retireds are flushed with color money that they want to hide, in most cases they dont want to be known that they live there, i have a few examples of such near my properties in ECR, infact i speak to a wife of one sr IPS (retd) when i drive by, she does part-time real estate/broker work, so she has interest asking when im going to sell, but beyond that their kids are well settled they are having fun half the year they travel, they really dont want to be known.

            The middle east pattern i called out does not fall in the category of parental influence you explained. The parents of such folks are still in villages near chennai or in south trichy madurai thanjavur area. They buy purely because of peer influence and some times pressure.
            they dont know any other asset class than Land, they dont even buy flats, i have been observing such groups for last couple of years, they all buy in group in a area, for example padapai , a large group in saudi went and bought in padappai near amma distellery, once known all the near by layouts were bought by friends , family etc. its very widespread and it spreads very fast. Its interesting to watch it
            Also another observation they dont come to IREF that much at all,
            a recent video by a ME member posted the ORR update
            they are really big into this corridor --

            Chennai Outer Ring Road - YouTube
            Thanks SR..I have also been hearing from my friends that there are many people in US,ME who take loans locally because of low interest rates and buy properties in India. Many it seems dont have the idea of repaying it at all..they intend to return to india in 6-10 years..make as much as money as they can and never go back so are thinking they need not pay any obligation. Banking is becoming computerized and world over sharing data with each other..I know a person who took personal loan in private bank and didnt pay..he shifted states..phone number etc..but guess what?they traced his new bank account in public bank and froze it..he had to pay immediately..otherwise would have lost his new job too..they used the PAN number he gave for salary account to track him. Similarly such behaviour could catch you unaware in future..hamper your childrens prospect to visit the foreign countries forever..I am surprised how greed makes people blind to such risk that can have far fetching implications on generations. It is not feasible to live invisibly anymore. NRI's? can you confirm..This seems to be a very dangerous trend.

            Comment


            • Re : Property Price Trends in Chennai

              Originally posted by SRaj001 View Post
              she does part-time real estate/broker work, so she has interest asking when im going to sell, but beyond that their kids are well settled they are having fun half the year they travel, they really dont want to be known.
              Has she come out of Jail?

              I thought her bail petition was rejected a few months back.

              Comment


              • Re : Property Price Trends in Chennai

                Originally posted by Economist View Post
                Has she come out of Jail?

                I thought her bail petition was rejected a few months back.
                I think the person you are referring to is S / wife of T , not her , but she was in the area in December 2012 too when i was making my visit, apparently she had just gotten out and there was a lot of folks outside of her panayur modern builder house layout house when i went there.
                the person i referred to is another but fairly low profile only not like Subbu

                Comment


                • Re : Property Price Trends in Chennai

                  I see the same trend in RE prediction as one predicts using macros/micros like in other markets and asset classes. Going through the several the posts below, it may appear to many that there is a correlation between crash and bubble and after seeing a bubble, crash is imminent. Never works that way. If the so-called experts can hardly predict the direction of markets, one can guess how can one predict the crash.

                  Seasoned investors do not manage risks that comes from the crash of an asset class from analyzing the macros and micros - it is a losing game and waste of time. Only through diversification.

                  For ages, even before allocation and diversification was talked as a formal science, our ancestors have let the clue wide open: Keep a third in Soil, Keep another third in Gold, and the rest in a business. Above may be crude but drives a lesson and is a only definitive way to manage the risks, crashes and depression and any calamity.

                  I understand that besides RE, people have very little choices. Expand your awareness to explore other classes. If you do not want to, don't keep all your RE in chennai and around. Just for the sake of diversification, do not go and invest in a place alien to you - you are adding more risk to yourself. If you are bent on staying invested in Chennai: Avoid CBD only or suburb only cults. Even among suburbs, diversify across areas. This will help much more than reading the macros and predicting directions and crashes. You may be right on reasoning and conviction, markets do not listen to you. Remember this saying: Market may remain irrational longer than you can remain solvent.

                  Indian RE has a funny component called color money and it needs a place and no matter what you bring in terms of price/GDP ratio, average people being priced out, it won't come out. It can't and hardly leave the shores. Despite all the odds, if Chennai or other areas have only remain stagnant, it is not about the theories what we bring is wrong, it shows the strength, size and scale of color money and they stand to lose much more coming out than staying in.

                  Mav
                  Last edited July 5 2013, 09:21 AM.

                  Comment


                  • Re : Property Price Trends in Chennai

                    RE stagnation could happen due to a variety of factors such as weakening end use flat sales, less demand, slower salary rise etc
                    These are causes, when such happens the builder or the developers go through prolonged period of negative cashflow if they are not properly funded
                    This is where color money plays a very very big role
                    Understand Color money in chennai can be bigger than the FED creating bailouts when we had a liquidity crisis, this happened in 2008-2009 and will happen again
                    When i say bigger than FED, i mean not in magnitude $ terms but from an impact stand point, there is much more color money in sidelines waiting to be deployed than the need is , of course the terms wont favorable but there is liquidity to keep projects going on
                    also this is what keeps the LAND market thriving , plot market where the market price and GV are widely variant ( in chennai there are still many markets where GV is half of Market price) becomes a very good place for color money to chase deals _ ECR is a classic example, when market slows down, color money transaction increases in ECR -( ex a layout in corp limit at 2500 gv is trading at 4000 to 5000)
                    So the standard macro micro indicators cannot be applied to a market like chennai, if its as easy as predicting sub prime lending risks as that in US, we would have all predicted the crash in chennai or stagnation long time back
                    I strongly beleive last administration has accumulated a significant amount of color money and the best place to hide it is in RE transactions, first 2-3 years in the new rule there is strong vigilance around it and when dust settles and focus goes to national election the color money will have to come out which will be a big favor to RE in chennai and other cities.
                    Like MAV pointed crossing shores via mauritius or caymans or other sources is very very risky now

                    Comment


                    • Re : Property Price Trends in Chennai

                      Adding to #1408:

                      I did not mean to say that color money will provide the floor, so keep investing in Chennai RE.

                      It is one factor that could make it stagnant rather than outright crash. Any action on color money front, in any form, can be a trigger for a crash. It is one theory that politicians will not allow any thing on that front to happen because of vested interest. While it could be true, I will not have that single premise driving an investment conviction.

                      Comment

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