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Property Price Trends in Chennai

Last updated: December 23 2019
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  • Re : Property Price Trends in Chennai

    Originally posted by wiseman View Post
    This is very interesting indeed. Someone had mentioned just that about Nariman Point - at one time the most expensive piece of land in India. 31k then and 31k now more than 2 decades later!!!

    Now you are saying the same about the same location being 4200+ then and 3800 now.

    Lesson - When locations are hyped beyond reason and prices rise steeply over short period of time, this ensures that a significant amount of future price escalation is already priced in.



    cheers
    One a lighter note, what's the takeaway? Is this good time to buy one's first flat or not ?

    Sent from my GT-I9505 using Tapatalk

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    • Re : Property Price Trends in Chennai

      Fear of missing or losing an opportunity to own, looking at the rear view mirror is what holding up the markets. Fundamentals cannot support the prices of RE at current levels - many in the upper middle class earning 15-20L pa is balking at these prices as they could not afford. Rent Vs Buy is increasingly tilting in favor of Renting but at the end of the day, emotional aspect of owning wins over.

      As the tug of war between the "fear" and "fundamental" can go on, good time to enter the market for end-use is when your affordability allows - no market sentiment can change this. For investment, one can forget it. There are select deals and pockets which may do well against the overall trend.

      I am not saying anything new here..but somehow new comers or many still think there is a holy grail of timing, knowing when is a good time to enter - nobody knows.

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      • Re : Property Price Trends in Chennai

        Originally posted by maverick007 View Post
        I am not saying anything new here..but somehow new comers or many still think there is a holy grail of timing, knowing when is a good time to enter - nobody knows.
        Well said Mav,

        I dont belive in timing the market but Time in the market is what maters.

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        • Re : Property Price Trends in Chennai

          so called punch dialogue, haan!

          Originally posted by Economist View Post
          Well said Mav,

          I dont belive in timing the market but Time in the market is what maters.

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          • Re : Property Price Trends in Chennai

            I was at Ceebros office to enquire about Ceebros Atlantic in egmore the base price is 17000 psqt the ticket size for smallest apartment 1250 soft is 2.5 cr I reckon DLF is a safer bet
            RE overpriced still fancy then 4% yield is must anything less is overpriced

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            • Re : Property Price Trends in Chennai

              GovernanceNow.com | Bad debt and NPA: making sense of banking mess

              NPA's On the Rise

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              • Re : Property Price Trends in Chennai

                Very good article. . Thanks for sharing!

                Sent from my GT-I9505 using Tapatalk

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                • Re : Property Price Trends in Chennai

                  Basic lesson--worth reading for many.

                  Harsh Roongta ---Business Standard.


                  A client called me for advice on a real estate investment. He had recently sold some old family property and wanted to invest his share of the proceeds in a commercial property. Real estate dominated his portfolio, so I told him not to put all eggs in one basket. The client shared his inherited piece of wisdom that since time immemorial, real estate has given great returns: "Invest in thousands and reap in lakhs."

                  In this case, the inherited property had been bought by his grandfather for a paltry sum of Rs 99,000 in 1959. It was sold at a stupendous price of Rs 2.50 crore this year. In fact, had it not been for some legal issues about tenancy and some family issues, the sale price would have been much higher.

                  My next question to the client was if he knew how much returns he had made. Given my tone of questioning, he became cautious. He hesitatingly said, "It is less than 11 per cent." And after taking capital gains tax into account, the returns stand at 10 per cent, I added. The return may not be bad but it's not spectacular either.

                  A simple calculation convinced him that. I told him if his grandfather had actually put the money in an asset class that could deliver 15 per cent a year, the sale price would have been Rs 19 crore. I informed him the BSE Sensex had delivered 17 per cent a year in the past 34 years, that is, since its inception. And the returns from the Sensex were tax-exempt, too.

                  I was not telling him equity was a better investment but that no one should get swayed by the large investments that real estate entails. The client was not alone in vastly overestimating the actual returns from real estate due to the long period of holdings and the huge investment values. After all, an investment that multiplied 250 times can't be anything but spectacular. What he (and most real estate investors forget) is that over long periods it is not the high returns but the power of compounding that is producing the huge sale price. In our workshops when we ask, for examples, of spectacular investments that have multiplied 100 times over long periods and then ask them to guess the actual rate of return, we find most people's guesses are way higher than the actual return. Nobody, except perhaps a Shakuntala Devi, can actually work out the compounded return in their heads without the use of an excel sheet.

                  The belief that real estate gives spectacular returns is so widespread that an investment expert I met extolled the virtue of investing in a plot on the outskirts of large cities. It is available in lakhs today and because it is illiquid you won't be able to sell it. You will reap a sale price in crores in 20-25 years, he told me. I asked him an estimate of the sale price in 25 years and his best estimate turned out to be just a good return, not a spectacular one. Add the risk of encroachment, zoning changes, compulsory acquisitions at low prices and so on. If you consider the time and effort required to manage an investment in a remotely located plot, even this good return will start looking a little inadequate.

                  I showed him our research data in six Mumbai localities (based on the ready reckoner prices from 1990 to 2013), which showed the 10-year moving average return of the best performing locality was 8.96 per cent. In fact, the best 10-year return was 15.95 per cent before tax.

                  I am not trying to argue that real estate is a bad investment. Just that it is like any other investment, with risks that require the reasonable return it provides. It should be a part of any portfolio that is big enough to accommodate the lumpy nature of its investment. And clearly, buying a house for yourself is not an investment. For most people, the psychological stability of having their own house adds tremendous value and makes this a must.

                  Let me return to my client. What did he do? The last I heard is he had bought the shop he had asked me about.

                  Clearly, my client is not the only one who continues to follow this dated advice by Mark Twain: "Buy land. They've stopped making it."

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                  • Re : Property Price Trends in Chennai

                    Buy Vs Rent - study across 8 cities in India

                    CHENNAI: The score of 55 for those earning Rs 8-19 lakh a year signifies that renting is cheaper than buying by more than 70%. Even those with an income of Rs 20 lakh a year will find renting a better option than buying.


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                    • Re : Property Price Trends in Chennai

                      Outflow of illicit funds squeezing poor nations
                      Pandurang Hegde, Dec 23, 2013, DHNS:
                      The illicit capital flows out of the developing countries are one of the major factors that accelerates poverty.

                      India ranks fifth among the countries of the world in terms of siphoning off abroad illicit money of over $343 billion between 2002 -2011. And it has secured the third position for the year 2011 for ‘exporting’ $84 billion.

                      Our archrival China has secured the first position for the decade with a whooping export of more than a trillion dollars. Russia follows suit with the second rank. These findings are the outcome of the recent study by Washington-based Global Financial Integrity (GFI). It found that the developing countries lost $6 trillion to illicit outflows in the decade with an average growth rate of 10 per cent per year outpacing the GDP growth. The most interesting aspect of these findings is that the first two rankings have gone to the communist ruled centralised economies of the world, China and Russia. Obviously, the flow of illicit money does not differentiate between a democratic and a communist regime. Even a democratically ruled pro people country like Venezuela in Latin America is also part of this illegal flow.

                      There is continental consensus in exporting the wealth acquired illegally. The top six exporting countries are from Asia, namely China, Malaysia, India, Indonesia, Thailand and Philippines. How and why such huge sums are being taken away form these countries? The main route is through misinvoicing the export-import trade and the balance of payments. Usually it is done by retaining funds abroad through under-invoicing.


                      Though macro economic policies of liberalization and deregulation are one of the main contributory factors, the GFI report underscores this factor.What is the final destination of such illicit money? The wealthy individuals, the emerging billionaires and the multinational corporations use these tax havens, which help them to hold the assents offshore beyond the reach of tax authorities. According to Tax Justice Network, the conservative estimate of the financial assets held offshore ranges around $21 to 32 trillion. Of these 55 per cent is stashed with only one offshore centre, namely the City of London Corporation. Offshore islands like Cayman and British Virgin are favourite destinations of illegal money.

                      In India we presume that the secret destinations are mainly the Swiss banks. However, in recent years new centres of tax havens have emerged in the UK, Amsterdam, USA and other parts of the globe offering secrecy services. For example Mauritius is a recent addition to this, catering to the needs of developing countries in Asia. In reality, it is linked to the financial web of City of London Corporation channelling the illegal money back to rich nations. Corrupt elites, despots and dictators from developing countries strip their countries of financial resources and relocate them to safe havens in developed nations.

                      Our leaders boast of increased FDI coming into the country after liberalisation. However, a deeper analysis of inflow shows that 43 per cent of this has come only from Mauritius.

                      Obviously, the illicit money from Indian businessmen and politicians are dressed up in Mauritius and it comes back under the disguise of FDI! The hands of Indian tax authorities are tied as they cannot take action. The illicit outflow from developing nations in 2011 was $ 950 billion that was ten times $ 94 billion that was doled out as Official Development Assistance by developed economies.

                      Raymond Baker of GFI says “for every one dollar that we have been generously handling out across the top of the table, we in the west have been taking back $10 of illicit money under the table”. Obviously the business of overseas aid brings back a windfall profit in the name of charity. The illicit capital flows out of the developing countries are one of the major factors that accelerates poverty. It enriches the coffers of rich nations creating further inequality in the world.

                      The epicentre of the financial crisis in 2008 can be traced to these offshore tax havens in the developed world. The foundation of these tax havens is based on illicit wealth from poorer nations, as well as from money laundering, tax evasion, crime, drug trafficking and state sponsored terrorism. Ironically, instead of taming such Frankenstein monster that created havoc in global financial systems, they were bailed out by the US government using the taxpayers’ money!

                      The call for international transparency in global financial systems, reforming customs and trade protocols, enforcing stringent anti money laundering regulations are few of the suggested solutions to reduce this outflow. Is it possible to rein the illicit export of capital from poorer nations? Though world leaders in G20 meetings have made feeble attempts, in reality the rich nations want to maintain the status quo, which helps them keep control over the world’s finances. The hollowness of the emerging world economies of BRIC nations need to be gauged from the outflow of illicit money that creates more inequity of wealth and poverty in the world.
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