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Property Price Trends in Chennai

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  • Re : Property Price Trends in Chennai

    CBE market in RE is dead please dont even bother

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    • Re : Property Price Trends in Chennai

      Originally posted by iceemani View Post
      Recently i have travelled Trichy, Madurai and Theni districts. the general trend is property transactions are highly reduced. reasons being high guideline value, coming elections, high prices, loss of jobs and no rain. Many complaint that there is no money circulation because of the current government.But prices of plots are stagnant, no much reducation in price.

      My cousin who is in coimbatore running a tiles business on his own said real estate has been worst hit and no much sales. which forced him to quit business. He is a MBA and couldnt get into a job in cbe so has moved to Chennai. Looks like few apartment prices have been slashed heavily in cbe.

      While this is a general trend all across, this makes people to move from different districts to chennai, which means it will help to hold the demand for housing. will it?
      I think it will be the other way around in RE sense. People in this economy without jobs won't sit and spend time in more expensive cities like Chennai where RE entry costs are much higher even in the outer areas. It may be possible for some to liquidate their assets in Chennai and live in a rented house in smaller cities until things become clearer. In all possibilities I sense more jobs will be shipped out of Chennai on the medium to long term since Chennai infra is crumbling without adequate water, STP/under ground sewage and road etc..

      When Tamil Nadu gets good quality power and good road connections, it will be advantage for smaller cities. Right now only major issue with smaller cities is quality power supply.

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      • Re : Property Price Trends in Chennai

        BTW, been to Coumbatore recently, the IT companies, manufacturing MNC units have much superior work place than the best of Chennai IT offices. Really impressive, I could see RE very active along Avinashi road!

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        • Re : Property Price Trends in Chennai

          Originally posted by Ramchi View Post
          I think it will be the other way around in RE sense. People in this economy without jobs won't sit and spend time in more expensive cities like Chennai where RE entry costs are much higher even in the outer areas. It may be possible for some to liquidate their assets in Chennai and live in a rented house in smaller cities until things become clearer. In all possibilities I sense more jobs will be shipped out of Chennai on the medium to long term since Chennai infra is crumbling without adequate water, STP/under ground sewage and road etc..

          When Tamil Nadu gets good quality power and good road connections, it will be advantage for smaller cities. Right now only major issue with smaller cities is quality power supply.

          I might diasgree with you. I do not see smaller towns and cities eclipsing Chennai anytime.
          It might get worse.

          Power - TN is not going to get enought power plants.
          TNEB is firmly in red and have huge dues.
          Pvt power plants are not going to come up if TNEB does not payout.
          For TNEB to have money, they need to raise charges or reduce pilferage/power theft.

          In India, socialistic govts give free power to farmers and encourage pilferage in rural areas and smaller towns. This is not going to stop. They are not going to raise rates to paying customer's either, lower/middle class votes will vanish.

          If you are TNEB, why will you send power to Tier II or Tier III cities when you get lower revenue for the power. Chennai has the highest number of paying customers and for TNEB, operating in Chennai and sending most power makes lot of sense.

          So Chennai will get most power produced in the state, whether by Govt or Pvt.
          It is not going to change. Rest of TN will get whatever is minimum.

          Also we will never have enough power, irrespective of what state govt wants.
          Demand in city is growing leaps and bounds.

          Roads - I feel all over TN it is good. Smaller towns/cities might be on par with Chennai.
          I never visited other towns/cities in TN, but what I hear is that they are good compared to KA and AP.

          Metro/Mono Rails - There is no public transit projects in smaller cities.
          Kochi is getting Metro but not other TN Cities. SG does not have money nor the CG wants to give.

          Bus - I think this is lifeline for smaller towns.
          Thank the pvt operators for this.

          Rails - English built most lines. Chennai has most connectivity to most of country.
          Being in the southern most region, rail connectivity has less potential to improve in rest of TN.

          White Collar Jobs - I am sure, IT companies and other indutries would prefer Chennai over rest of TN. Talent is here in big cities. Power/Infra/etc are in big cities.

          Outside of Agriculture or some spillover jobs, there is little reasoning to bet on smaller towns.
          Economies might shrink, actually they are shrinking in rest of TN.

          If you are from non-chennai region, it might be hard to swallow.
          But no point in investing in TN outside Chennai outside of Agriculture, etc.

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          • Re : Property Price Trends in Chennai

            Originally posted by k11
            Power - TN is not going to get enought power plants.
            TNEB is firmly in red and have huge dues.
            Pvt power plants are not going to come up if TNEB does not payout.
            For TNEB to have money, they need to raise charges or reduce pilferage/power theft.
            Old news and all predictions are off of that. Significant change in the power scene happened a month back. Southern Grid got connected to the rest of the regional grids - part of the One Grid(National) distribution system which has been going live in stages since early 2000s. This should normalize power prices over time and dependency on TN to look only for producers in the region will reduce. Needless to say, power prices (commercial) will come down as well.

            Originally posted by k11
            If you are TNEB, why will you send power to Tier II or Tier III cities when you get lower revenue for the power. Chennai has the highest number of paying customers and for TNEB, operating in Chennai and sending most power makes lot of sense.
            Above does not hold water and too lame to assume that Chennai continues to get all the power and Tier 2/3 will starve in future and hence no development. Reason why Tier 2/3 is not flourishing is not because of power situation alone. Take IT for instance, why did Wipro and other cos did not scale up as much as they thought in Coimbatore. For industries to set up and thrive, more than roads and power, certain 'moat' needs to be there or Govt support is needed to get the moat over time. That is absent.

            Not just with Tier II and III city growth wagon themes. BRIC story itself fell flat and is non-existent today. During boom periods, certain themes evolve and gain traction. Tier II and Tier III development are over ambitious, self-gratifying themes promoted during the boom time and money has been made. The kind of return in the rear mirror may still guide people to see the pattern repeat. Certain themes get offloaded at prices where it can't recover in a decade too.

            Tier II and Tier III can come alive with lot of Govt focus or private initiatives. Private initiatives will lack impetus if Govt is fickle or lacks political will to give that sense of deterministic policies. Till then, it will be a prove-me story much like an emerging market in the global context.

            Unless for a clear end-use in mind or ancestral loyalty or sentimental reasons, investing in Tier II and Tier III just on valuation alone is risky. May be as a diversification, one can have some but be in the thick of the Tier 2/Tier 3 action to mitigate the risks involved.
            Last edited by maverick007; February 4 2014, 08:22 AM.

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            • Re : Property Price Trends in Chennai

              Tier-III towns are plush with people who have grown rich beyond means in the last ten years and see more land dealings compared to Chennai..Chennai is more towards catering the new influx of people in built living spaces where RE is transferred from local people to outsiders while towns are about local development where RE is sold from weaker to stronger hands. I am of the firm belief its the growth of country's economy thats reflective on metro's RE prices and its the growth of metro's RE price thats reflective on the Tier-II and Tier-III cities..If there are any instances where the smaller town's have outperformed..it would be clearly a case of low-base effect. Chennai can never outbeat mumbai, coimbatore can never outbeat Chennai in terms of RE returns and resilience during a dull market. Having said that, the same also favours buyer to get a property at a good central location while one can afford only in the suburb of Chennai. Properties in Tier-III towns offer better quality and the comfort of 'safety' when its one's hometown/native but beyond that the speculation and exposure factor is less which translates to muted returns over long term. Buying a flat/house is a dud as rentals are abysamally low..I ask, When one can still afford to buy in Chennai, why buy in Madurai or Coimbatore? Unless you have a personal reason to settle there, it doesnt make investment sense.

              Coming to Power and water situation, I am optimistic Tamilnadu is better placed to deal with the future situation..We are just lacking the political will to address the shortage which is mainly due to mismanagement..If there is central government's support to ensure 100% power in the states, in no time TNEB will infused with cash and the situation will improve..Important Essential resources like Water, Electricity, Fuel, Telecommunication, Transportation etc should remain nationalized and subsidized..We can bring effeciency by public-private partnesrship to ensure distribution and build/operate. Utility services should be available 24-hrs on demand till the last mile. We already have the necessary infrastructure and network..the problem is unequal distribution. What we need is another green, white kinda revolution..A constant drive and development agenda..Heavy spending on Infrastructure modernization and computerization of the delivery systems..A overhauling of the dated transformers/pipelines/roads can do wonders to our country in less than 10 years time. Once we concentrate on domestic development and achieve that, Foreign investments will follow automatically.
              Last edited by nabishek; February 4 2014, 10:42 AM.

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              • Re : Property Price Trends in Chennai

                Originally posted by k11 View Post
                Outside of Agriculture or some spillover jobs, there is little reasoning to bet on smaller towns.
                Economies might shrink, actually they are shrinking in rest of TN.

                If you are from non-chennai region, it might be hard to swallow.
                But no point in investing in TN outside Chennai outside of Agriculture, etc.
                I would disagree to some extent

                Bus services in the Kongu region (Coimbatore,Erode,salem) are much better than Chennai. (both town and moffusil services due to private players' competition)

                Investment in RE sector in this region depending on the timing as elsewhere have given fabulous returns, some times better than chennai outskirts.

                Bteween 2006 and 2009, Outskirts of Coimbatore, Erode and even small towns like Tiruchengode have given better returns than chennai suburbans like Sriperumpudur,Mahindra world city,Oragadam etc.

                After 2009 ofcourse every where overall it is dull

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                • Re : Property Price Trends in Chennai

                  LB - CBE is an area that cannot really compared to let me use an acronym - ROC ( rest of chennai), the reason is simple.
                  This region went through a politically tainted , lottery mafia dominated, tamil maanadu induced RE boom for about 3-4 years.
                  Outside of that core industries are on life lines and some are in vegetative state, the only source of income or cap appreciation of these industries are the RE they sit on. Their plants are not producing anything, coupled with high power cuts, completely insourced North Indian labor, low quality output just destroys productivity.
                  I agree i admire the Kongu/CBE/ GD naidu / RVS / PSG/ GRD etc families to bring the innovation they brought to this area some 5 decades ago, truly inspirational, but current day scenario is not rosy.
                  Current admin does not care about improvements as well as the city is seen as an old admin darling, pongalurar haven, stalin's hoardings.
                  Even the well proposed airport expansion is going no where when amma is fullfledged investing in chennai.
                  This is reality.

                  I have had investments in 2004-2006 in CBE returns are good no question, but current market situation is even if you want to sell at 90% of market value there are no buyers.

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                  • Re : Property Price Trends in Chennai

                    Originally posted by k11 View Post

                    Outside of Agriculture or some spillover jobs, there is little reasoning to bet on smaller towns.
                    But no point in investing in TN outside Chennai outside of Agriculture, etc.
                    K11,

                    Do you support investing in Agricultural lands outside chennai?

                    FYI, there is no rain, shortage of water levels in Dams and what is avaible is utilised for drinking water instead irrigation. so there will not be much profit from agriculture.

                    do you mean buying agriculture lands for future RE?

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                    • Re : Property Price Trends in Chennai

                      Buying agri land is not for doing agri.

                      Convert and sell after some time for RE

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