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Property Price Trends in Chennai

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  • Re : Property Price Trends in Chennai

    Originally posted by subramania View Post
    waiting to
    got the answer

    also explain the tier 1 tier 2 tier 3.....

    every area gets upgraded in mean coarse of time.

    velachery and guindy too tier 3 before some years.

    dont just oppose city hunters work

    its too good according to him and many other who had given likes

    still no facts.. try better luck next time.. if you think history is fact.. please change your mind.. likes given are for the efforts of City Hunter who has spent his personal time to share his strategy in a presentable format.. if you have seen post's that deny the rates as well right..


    The RE now will not see a growth what it has seen in the past decade.. past decade is kind of 'superman' stuff, whomever played had profitted a lot. if some one thinks to play the same strategy "buy anywhere, any price.. it will apprciate after 2 years" they will be in a sorry state later.

    remember many areas are hyperrated(not over rated) without good fundamentals.. they will have to seea downtime..

    Comment


    • Re : Property Price Trends in Chennai

      Originally posted by subramania View Post
      waiting to
      got the answer

      also explain the tier 1 tier 2 tier 3.....

      every area gets upgraded in mean coarse of time.

      velachery and guindy too tier 3 before some years.

      dont just oppose city hunters work

      its too good according to him and many other who had given likes
      Just think RE as a commodity and remember "All that goes up has to come down". Things are going up by mere hype and correction is not far off. When is an question mark?

      Also housing market in western countries where base rate are near zero is struggling to maintain it's growth think about the base rates we are paying. I am still surprised we came this far as prices are not tallying with fundamentals.

      If someone is taking history as a benchmark for future appreciation then think twice going forward is my caution.

      Comment


      • Re : Property Price Trends in Chennai

        Originally posted by srivat
        If someone is taking history as a benchmark for future appreciation then think twice going forward is my caution.
        Historically, RE appreciation in the developed markets such as US is expected to maintain inflation at the best. This is from 112 year housing index history from Robert Shiller. Data may be far from perfect, as Shiller himself confides. But, the trend and the direction is something most come to agree on.

        Closest equivalent to developed markets is well-developed areas in India. One may argue that our growth is much better - true, but our inflation is no less, it is at least 2-2.5 times that of US. But, then why doesn't it reflect in proportionate rise in rentals - that is a true reflection of growth and overall lifestyle improvement. How can a 2500 psft Apt in Alwarpet in 2000 goes to 20000 psft in 2013 where the rentals are not up more than 400-500% during similar duration? Working backwards, one may say land cost has shot up and hence these prices. Land cost is not going to come down. True. For it to sustain, it has to make sense from top-down.

        100 year Housing Index from US

        "You might be more interested to know that the average annual home price increase for the U.S. during the whole 1900 - 2012 period was only 3.1%/year -- just a shade better than the inflation rate of 3.0%/year."

        Longer term, RE as an asset will toe the line of how it performs globally. It is very clear that our RE is being hoarded as there are no invest-able assets in the country. Technically speaking, our core developed CBDs cannot rise faster than inflation over time but suburbs can, as it becomes developed - such transitions are not without precedence and more logical to boot. Due to lack of initiatives from Govt on infrastructure, people hoard even more on those with infrastructure leading to price bubble.
        Last edited September 24 2013, 07:18 AM.

        Comment


        • RE King
          RE King commented
          Editing a comment
          Hmm, one who does not understand Chennai RE now dragging US figures. Brilliant! Do we see Beggars in the traffic junctions in the US! Just curious?

      • Re : Property Price Trends in Chennai

        Mav, I agree with most of what you say. However CBD has a limited suppy, but the demand is growing(more people are able to afford more so today than say 10-20 years before). I'm just making a guess here on affordability. But purchasing power of many residents have increased thru overseas earnings and investments from NRIs. Purchasing power is increasing across many sections of the society but land area is not. I suspect along with black money, money earned abroad(NRIs or residents) is a big factor and will continue to be more so in future. US has a huge supply (of land) and good infra, so there is really no need to get hungup on a specific location unlike in Chennai. Also the rate of growth of incomes in India is more than that of US (of course inflation plays a big role too).
        This may continue to keep the prices in the upward direction. Just my 2c.
        Last edited September 24 2013, 07:34 AM.

        Comment


        • Re : Property Price Trends in Chennai

          Originally posted by randomguy
          But purchasing power of many residents have increased thru overseas earnings and investments from NRIs. Purchasing power is increasing across many sections of the society but land area is not. I suspect along with black money, money earned abroad(NRIs or residents) is a big factor and will continue to be more so in future.
          I do get the rationale on why prices keep going up in CBD. But, the point is, you are overpaying for the asset because of the above factors. Are you paying the fair price for the asset is the question? Demand/supply based asset price support is unsustainable. All of your reasons in your post is predicated on demand/money power chasing those assets - they are not the only drivers for asset prices. If people can throw that kind of mind in buying an asset - why are they not throwing it on rentals in the same area? Rental yield tell a different story. If land availability is scarce, people should pay more for usage, right?

          Above is very analogous to how IPO shares with limited float are traded post listing. Moon is the limit and every incremental news with limited supply will have magnifying effect. When more supply comes in, say after 6 mos, it falls. Why?

          Comment


          • Re : Property Price Trends in Chennai

            Originally posted by randomguy View Post
            Purchasing power is increasing across many sections of the society but land area is not. I suspect along with black money, money earned abroad(NRIs or residents) is a big factor and will continue to be more so in future.
            you touched two real facts.. black money and NRI money only these stuffs played a major role in real estate hike.the average pay hike of a resident is good but again was eaten away by rise in inflation..

            ok here is another fact, assume an US NRI investing in india for 5 years, let us assume that he invested exactly 5 years back when INR was trading at 40 per dollor. in a 2000 psft(i.e $50 psqft) apartment, now the rate has doubled, say it is 4000 psft now

            when he wants to realise his profit now INR is trading at 64.. so 4000 is $ 62.5 psqft.

            let us assume he has paid an interest of 7% pa..which is 3.5 $ per year and for 5 years it is 17.5 $..so now reduce this interest to calculate actual return 62.5-17.5= $ 45.

            so investing 50$ he got 45$ after 5 years realising a loss. so even if the rates are more than doubled, the returns are no attarctive for an NRI.. so whats happening now, all the money invested is going back..

            my conclusion is a wise NRI wouldnt expect the property prices will triple in 5 years from now..so he woudnt invest with risks on Rs. vs $.

            so NRI money will not help the indian properties rise anymore..

            now it is only black money.. i dont have any idea on this.. what i see is 2G, 3G thank god 4G is not in india yet,CG-coal gate..etc etc i dont think it will stop even if govt changes..but i guess black money will eventually find its way to swiss as investing in india would be a risk when govt changes.

            with lack of infrastructure and poor economic conditions do anyone think the property prices will double in india in next 5 years? if so please explain i would like to understand.

            Comment


            • Re : Property Price Trends in Chennai

              One way to pop the bubble is increase in property taxes. In developed countries like US, UK, etc, property tax is 2-5% of the market value per year. Once they start levying it, it will automatically correct. Another one is a vacant land tax, might not be easy to implement.

              We might already be seeing some type of correction. Biggest impact.
              The overbuilding in the suburbs is keeping the supply wide open and thus been able to meet the demand.
              Keeping a flat locked is a waste of money, so owner has to rent bringing rentals down.
              Rental market is not going up because of this. Many flats few renters.
              So rental market is undervalued and skewed, not necessarily a bad thing. It might appear that there is an imbalance.
              As long as the supply exist I do not think there is a big issue for property prices.
              Once the supply gets over, prices will shoot up.

              In my view, govt should always make sure builders get land for development.
              Competition and supply should help prices in check. Whenever there is opportunity they should acquire vacant land, auction it off to builders putting condition that they have to build immediately.

              I do not think we are in a big bubble.
              Prices are bit high but not crazy high. It is still affordable.

              Supply is the key.
              Plentiful housing for buyers who can afford and cheap housing for renters who cannot afford.

              Now that is hitting two mangoes with one stone.
              Last edited September 24 2013, 08:40 AM.

              Comment


              • Re : Property Price Trends in Chennai

                http://matrix.millersamuel.com/wp-co...0yearsNYre.jpg
                Originally posted by maverick007 View Post
                Historically, RE appreciation in the developed markets such as US is expected to maintain inflation at the best. This is from 112 year housing index history from Robert Shiller. Data may be far from perfect, as Shiller himself confides. But, the trend and the direction is something most come to agree on.

                Closest equivalent to developed markets is well-developed areas in India. One may argue that our growth is much better - true, but our inflation is no less, it is at least 2-2.5 times that of US. But, then why doesn't it reflect in proportionate rise in rentals - that is a true reflection of growth and overall lifestyle improvement. How can a 2500 psft Apt in Alwarpet in 2000 goes to 20000 psft in 2013 where the rentals are not up more than 400-500% during similar duration? Working backwards, one may say land cost has shot up and hence these prices. Land cost is not going to come down. True. For it to sustain, it has to make sense from top-down.

                "You might be more interested to know that the average annual home price increase for the U.S. during the whole 1900 - 2012 period was only 3.1%/year -- just a shade better than the inflation rate of 3.0%/year."

                Longer term, RE as an asset will toe the line of how it performs globally. It is very clear that our RE is being hoarded as there are no invest-able assets in the country. Technically speaking, our core developed CBDs cannot rise faster than inflation over time but suburbs can, as it becomes developed - such transitions are not without precedence and more logical to boot. Due to lack of initiatives from Govt on infrastructure, people hoard even more on those with infrastructure leading to price bubble.
                Mav,

                I was just cautioning on the timing of investment. It is more important for someone as I agree RE is expected to go grow and may beat inflation.

                Below is the 100 years history of NY city. Rental yield falling down with appreciation. I know we are not in the same scenario like the 20's mentioned in chart.



                But as I mentioned IMO the fundamentals are not really kept to the extent of price appreciation and if we take the period of stagnation/correction it is pretty huge in above case and not worth locking the investment.

                It is better to be cautious was my note.

                Comment


                • Re : Property Price Trends in Chennai

                  Originally posted by srivats
                  But as I mentioned IMO the fundamentals are not really kept to the extent of price appreciation
                  What are those fundamentals in your view and how?

                  Comment


                  • Re : Property Price Trends in Chennai

                    Originally posted by subramania View Post

                    also explain the tier 1 tier 2 tier 3.....

                    every area gets upgraded in mean coarse of time.

                    velachery and guindy too tier 3 before some years.

                    dont just oppose city hunters work

                    its too good according to him and many other who had given likes

                    i am as expected.

                    just look at the crap list of reasons for a property to be quoted 1.5 crores per ground.

                    the reasons u have quoted r there in every city and every village in the nook and corner of our country. does it mean that they can be quoted 1.5cr per ground ?
                    its absolutely ridiculous or shameless to give reasons for such skewed valuations.
                    hope u r not a RE broker having huge unsold land banks in south chennai.

                    u have not given any of the areas specific reasons.

                    who is opposing city hunter's analysis. just that many areas have been overvalued is being highlighted.

                    Comment

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