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Property Price Trends in Chennai

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  • Re : Property Price Trends in Chennai

    Originally posted by propbuy1 View Post
    Hello i am a first time buyer and looking to get an apartment within the city , one of the projects that came to my attention was the The Atlantic by Ceebros .

    Believe the prices are still to be finalized , from what i hear the company seems to deliver on time , what should i expect in terms of price also given their recent article with regards to reducing price would they be selling this as well at the reduced price compared to rest in that area . given that i am hoping it would be more realistically priced around 16,000 or lower per sq ft .what do you guys think

    Appreciate any help on this
    I thought of responding earlier but I forgot.
    Anyway here is my take.

    DLF CC is a luxury project, one of a kind in Chennai. Google for the threads.
    I have been following this project right from when it was prelaunched at 7.5K with low downpayment. I considered it but then I favored older flat.

    Remember DLF project comes with centralized VRF AC with piping, Modular Kitchen, Appliances, etc. That itself is worth more than 12-15L.
    This is very rare in Chennai.

    L & T is building it. So top notch construction.
    Amenities are good, will be one of the best in Chennai. It is a large GC in the city, only next to TVH project I think.
    Very good location, right on the main road. If you want a GC in city there are not many options.

    But problem with DLF is loading on some units is high. Some floorplans are ok.
    Duplex options available.

    Ceebros is a very good builder.
    But they do not have funding or landbank to do a big project like CC.

    It all boils down to preferences and money.
    If Ceebros gives good discount go for it. But if the rates are similar take a look at DLF CC.

    Comment


    • Re : Property Price Trends in Chennai

      Originally posted by k11 View Post
      I thought of responding earlier but I forgot.
      Anyway here is my take.

      DLF CC is a luxury project, one of a kind in Chennai. Google for the threads.
      I have been following this project right from when it was prelaunched at 7.5K with low downpayment. I considered it but then I favored older flat.

      Remember DLF project comes with centralized VRF AC with piping, Modular Kitchen, Appliances, etc. That itself is worth more than 12-15L.
      This is very rare in Chennai.

      L & T is building it. So top notch construction.
      Amenities are good, will be one of the best in Chennai. It is a large GC in the city, only next to TVH project I think.
      Very good location, right on the main road. If you want a GC in city there are not many options.

      But problem with DLF is loading on some units is high. Some floorplans are ok.
      Duplex options available.

      Ceebros is a very good builder.
      But they do not have funding or landbank to do a big project like CC.

      It all boils down to preferences and money.
      If Ceebros gives good discount go for it. But if the rates are similar take a look at DLF CC.
      Cc brought this land parcel for 180 Cr source Economic times plus all expenses it would cost CC 200Cr just for the land if they have Just taken a GPA and then transfer the land to individual apartment then I reckon the cost is going to 180 Cr
      however let us consider the land parcel cost 200 Cr

      The total land is 72000 Sqft after premium FSI CC could built 270000 saleable area this will cost them extra which I am not sure someone else who has knowledge in this regards could give more input

      however I will take the construction cost at double the going rate at present is 1850 to 2350 per sqft this is however is for carpet area with saleable area the cost per sqft comes lower however I will take higher cost at 3700 per sqft this will cost CC 100 Cr so now the total cost at MAX 300 CR for a saleable area 270000 so maximum cost as a standalone project will all overhead would cost CC 11000 sqft max

      however I reckon the cost is going to come around 40Cr to built 270000 sqft saleable area with ceebros kind of construction so total is around 240 Cr making cost per saleable area to approx. 9000 Sqft

      so I reckon ceebros will price this project at 14k to 16k as soft launch

      however the million dollar question is has ceebros paid tooo much for the land only time will tell

      VGN Presidency on nungambakkam rd is quoting 25k soft launch they paid 7.5 cr per ground they are coming with 71 ultra expensive apartment at 9cr each means the total project is 600 Cr plus at soft launch price in case on VGN the land parcel cost them around 200 Cr so 400 Cr is profit and development cost
      this is Just my observation all IMO I can totally be wrong
      RE overpriced still fancy then 4% yield is must anything less is overpriced

      Comment


      • Re : Property Price Trends in Chennai

        Nice post, @septaa.

        Couple of points I have to add, the project is not a 2.5 FSI project. This would be a 1.5 FSI one. Also very few builders venture into premium FSI in areas with high guideline value as that involves hefty fees to govt before approval, Ceebros does not do that. Most builders do avoid that.
        So @1.5 FSI and adding 20% common non-FSI area, you get 130,000 sqft.

        Other point is you left out interest expense, carrying cost for the land. Biggest expense.
        Land investments without including interest cost is kind of questionable. I have raised this in many threads as investors tend to leave it out and calculate returns to determine quality of investment.

        Here are the expenses for the project,

        Land - 180 Cr + 15Cr for Reg/Acq costs = 195Cr
        Building (@3000psft) - 40Cr
        Interest expense (15% for 3yrs) - 81Cr

        Total = 316Cr
        Break even psft = 24K psft.
        Cost without interest expense = 18K psft.

        I would be suprised if the project is priced under 20K as an early launch offer.
        Developer can make money if he can sell it quickly, reducing his interest expense
        I think it might be launched at 22-24K and then it will ramp up quickly to 25-30K.

        There is no way that this project will be priced at 16K. Ceebros will lose money at such pricing.
        This is not a small project with 6 flats and limited amenities. This would be a full fledged luxury housing project.
        Last edited January 21 2014, 09:08 PM.

        Comment


        • Re : Property Price Trends in Chennai

          Seems trouble is brewing.

          India Ratings & Research has maintained a negative to stable outlook on the real estate sector for 2014-15 on the back of continued weak end-user demand and adverse consumer sentiments.
          Real estate companies have been facing falling unit sales, flat revenue and EBITDA margins and continued deterioration in credit metrics and cash flows, the rating agency said.
          Most of real estate companies rated the agency have a stable outlook, as the risks impacting the sector have been factored into their ratings. The entities rated at investment grade are either single commercial properties with long-term lease agreements or residential companies with healthy sales and strong cash flows.
          The rating agency believes credit metrics will continue to deteriorate in FY15, as high residential prices continue to impact sales, even while rising bank credit to the sector indicates an increase in inventory for the sector.
          The sale of fresh residential units (in sq.ft.) by listed real estate companies has seen a downward trend in the first half of 2013-14. This is due to weak consumer sentiments and low real estate affordability due to high prices.
          Prices continue to remain high despite the weak end-user demand, as demand from investors and speculators could have been lifted by the government's efforts to curtail gold imports.
          The upward movement seen in National Housing Bank's house price index in 2QFY14 after a fall in the previous two quarters supports this argument, as it coincides with the imposition of import duty on gold.
          Ind-Ra expects subdued commercial property demand to continue in 2014, due to the continued slow economic growth which will impact fresh hiring in most sectors. Demand for retail space is also likely to remain muted in FY15, as retail companies continue to optimise their store portfolios.
          The real estate sector has seen strong interest from private equity and foreign investors. During 2013, strong investor interest was seen in rent-yielding commercial properties with conclusion of several large transactions by leading private equity players such as Blackstone.
          Ind-Ra expects the introduction of real estate investment trusts (REITs) to be positive for the sector, as it is likely to attract new investors and hence improve funding availability. As these REITs are likely to invest most of their funds into rent-yielding commercial properties, this could provide further liquidity options to commercial property developers, it said.
          FINANCIAL EXPRESS

          Comment


          • Re : Property Price Trends in Chennai

            Originally posted by k11 View Post
            Nice post, @septaa.

            Couple of points I have to add, the project is not a 2.5 FSI project. This would be a 1.5 FSI one. Also very few builders venture into premium FSI in areas with high guideline value as that involves hefty fees to govt before approval, Ceebros does not do that. Most builders do avoid that.
            So @1.5 FSI and adding 20% common non-FSI area, you get 130,000 sqft.

            Other point is you left out interest expense, carrying cost for the land. Biggest expense.
            Land investments without including interest cost is kind of questionable. I have raised this in many threads as investors tend to leave it out and calculate returns to determine quality of investment.

            Here are the expenses for the project,

            Land - 180 Cr + 15Cr for Reg/Acq costs = 195Cr
            Building (@3000psft) - 40Cr
            Interest expense (15% for 3yrs) - 81Cr

            Total = 316Cr
            Break even psft = 24K psft.
            Cost without interest expense = 18K psft.

            I would be suprised if the project is priced under 20K as an early launch offer.
            Developer can make money if he can sell it quickly, reducing his interest expense
            I think it might be launched at 22-24K and then it will ramp up quickly to 25-30K.

            There is no way that this project will be priced at 16K. Ceebros will lose money at such pricing.
            This is not a small project with 6 flats and limited amenities. This would be a full fledged luxury housing project.

            K11 I do not think CC will only have 130000 sqft saleable on 72000 sqft land parcel saleable will be at least double so around 260000 plus I did enquire two towers 148 apartment size from 1250 to 2500 once the Boucher comes out will know exact saleable area

            Take VGN Presidency this from the Boucher 71 Apartment each apartment around 3450 equates to 245000 sqft saleable area land parcel is only 1.41 acres equates to 61500 CC land is 72000 so I reckon it would sell at least 260000 sqft

            This my calculation


            Here are the expenses for the project,

            Land - 180 Cr + 15Cr for Reg/Acq costs = 195Cr
            Building (@3000psft) - 78 cr ( however I think is is going to below 50 cr )
            Interest expense (15% for 3yrs) - 81Cr

            Total = 353 cr
            Break even psft = 13.5kpsft.
            Cost without interest expense = 10.5k psft.

            So 16k is possible but I think it going to be around 20k plus

            Also on a different project landmarks developer is coming up with a project in perambur barrack road land brought from binny mills for 490 cr project is doing soft launch quoting 6500 - 6900 No plan sanction just booking has done close to 100 booking launch price is told 8200 just down road less then 1 km Arihanth is selling for 4500- 6250 evkanta and chaitanya in Northtown project
            RE overpriced still fancy then 4% yield is must anything less is overpriced

            Comment


            • Re : Property Price Trends in Chennai

              @septaa,

              For Ceebros project, this might be 2.5 FSI project without using premium FSI.
              If the road is not wide then it is premium FSI.

              If the regular FSI is 1.5, the builder can get extra 1 FSI if he pays for 66% of Guideline value of the land.
              So the builder would have to pay 72000X0.66XGuideline Value(20K psft) = 95Cr.
              Also this amount has to be paid at start, right now before plan approval.
              So add 95Cr and 42Cr as interest for three years.
              Ceerbos will get around (72,000sqft and another 20% common totalling 86Ksqft extra saleable space.
              Coming to Ceebros, add 353Cr + 95Cr + 42Cr = 490Cr.
              Total saleable would be around 220K sqft, still well over 20K psft.

              My caluclation on preimum FSI is just an example, this project might get regular FSI itself of 2.5.
              Your calculations are right if the project gets 2.5FSI without using premium FSI.
              Even I am confused on how Govt categorizes and measures road width.


              It is so expensive to get premium FSI with current high guideline value that builders do not go for it.
              I know some builders like Ruby does it in suburban projects, TVH did it in Adyar but it is rare.
              Premium FSI in my opinion is useless for builders, Govt demands 40% to 66% of the FSI space according to guideline value. Unless your guideline value is markedly low, there is little benefit to pay for it.


              By the way, VGN project in Nungambakkam might come under 2.5 permissibale FSI.
              62,427 sqft of land and 237,120 sqft of saleable area (2.6X the land).
              Nungambakkam high road is wide at certain parts so 2.5 FSI for this project is certainly possible.
              It is still a challege for VGN to sell 237K sqft at 25K+ psft in such a slow market.
              For them, 200cr is land cost and another 100cr for building + 80-90cr for carrying cost, they can still get 200cr profit.
              But that is if they sell the units fast.


              Originally posted by Septaa View Post
              Also on a different project landmarks developer is coming up with a project in perambur barrack road land brought from binny mills for 490 cr project is doing soft launch quoting 6500 - 6900 No plan sanction just booking has done close to 100 booking launch price is told 8200 just down road less then 1 km Arihanth is selling for 4500- 6250 evkanta and chaitanya in Northtown project
              6.5K for a new GC flat in Binny Mills area under a staggered payment is still a good value in my opinion. This place is undervalued compared to the southern suburbs when you look at it relatively.
              Last edited January 22 2014, 07:19 AM.

              Comment


              • Re : Property Price Trends in Chennai

                Originally posted by nabishek View Post
                Governments are now competing with each other to give subsidies and abolish taxes..I dont think they will increase it though I feel that's the fair option to deter rich from hoarding properties.

                Here's a post I wrote on another thread in off-topics section regarding the Radical idea of BJP abolishing taxes and our current system..Though it seems they wont do away with it completely..I am hopeful taxes will be simplified if they come to power. welcome your comments.

                https://www.indianrealestateforum.co...on?p=3#post178

                Sometime later I want to also bring up what would be the effect of such a move on the Real Estate market.
                A deathly blow by RBI that can have deep impact on RE sales, especially the plot market

                Currency notes issued before 2005 to be withdrawn post March 31: RBI - The Economic Times

                Please avoid any RE transaction using cash till the implications are clear.

                Looks like some serious thinking going on replacing our currency notes, demonetizing or even abolishing the Rs.500 and Rs.1000.

                Way to go after the black money cash hoarders. Its surprising that this News is not getting much coverage..its path breaking and kudos to Raghuram Rajan..Hope this decision is not reversed under pressure. We have to address the issue of black money and counterfeit notes on war footing.

                Politicians are mum, have they already found a loophole? or converted it into dollar, gold, transferred to swiss bank or converted to bit-coins?

                One thing is for sure, next time when political parties give money to Voters..time to check if its a valid tender

                Comment


                • Re : Property Price Trends in Chennai

                  This government needs lots of cash before the LS elections.... this attempt is to find who is hiding the money and most likely this order will be taken back once PC met his target....this is to bribe voters and other social schemed for which there is not much revenue but can't afford to fail...hence the target is black money hoarders or people with cash...

                  This order will definitely be challenged and be taken back....These smart people will not rush to convert.

                  Comment


                  • Re : Property Price Trends in Chennai

                    Friends,

                    With the national election coming up in couple of months..I would like to invite opinions about what you all think would be the impact on RE prices?

                    To help you all to imagine how it was like, Let me talk about the mood in 2009..It was eerily very similar to how it is now..RE was believed to be at its peak..there was huge difference between demand vs supply and any yardstick used comparing land to flat value or buy vs rent ratio etc didnt make financial sense..many including me had hoped that post election there would be change in regime and substantial correction in prices owing to more focus on development of domestic economy and infrastructure, strengthening of rupee etc. The market fundamentals and global sentiments were weak, there was huge liquidity crisis..high interest rates etc..The real estate market was slow..builders were stuck with unsold inventory..there were no takers for land..The mood was all gloom..Then the unexpected happened..Government unleashed populist measures, with infusion of liquidity in the market which coupled with devaluating rupee the slowing wheel of economy started moving..Inflation was being masked as profits..They came up with socialistic schemes, opened RE for foreign investments, riding heavily on the nuclear deal and nationalistic sentiments UPA come back to power..The years that followed has seen a rebound of sorts..We are nearly 40-50% above the 2009 price in many cases due to revision of guideline value has resulted in price getting doubled..In hindsight, the period just before the election was the correct time to have made a good deal.

                    What are the odds that such a cycle would repeat? Are we on the brink of a boom or bust?
                    Last edited January 24 2014, 12:09 PM.

                    Comment


                    • Re : Property Price Trends in Chennai

                      Without the economic recovery that affects common man, ensures accelerated job creation along with credible asset creation, consistent corporate profitability, friendly business environment, sustained infra development any upward price revision in the RE is just a bubble building up!!!! Longer the bubble, the burst will be heavier.

                      In India where Congress and UPA partners who have mastered the art of manipulating the system would definitely ensure there is a temporary mayhem by promoting AAP or Third Front to create instability so that UPA corruption will take backorder- at the same time they would not like BJP to gain maximum advantage....It will be like early 90s with kitchidi Government that will be ideal for Congress....during this period economy will nosedive and many policies will be put on the back seat.....most likely socio-political issues may dominate over socio-economic factors during this unstable political situation. But this mayhem cannot be anything less than 2 years from 2014 - April since Congress needs sometime to start their new game.

                      Congress will again try to topple this kitchidi government and try to force elections and this time they would try to actually form the government and again follow their usual corrupt practices....
                      Last edited January 24 2014, 12:27 PM.

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