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Property Price Trends in Chennai

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  • Re : Property Price Trends in Chennai

    Who’s to blame for rise in realty prices? - The Economic Times

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    • Re : Property Price Trends in Chennai

      Shift to budget homes

      As apartments sales in the middle and high income segments are showing no signs of improvement, many builders are seriously scouting for small parcels of land to promote budget housing units in the sub – 20 lakh segment.
      This is a segment which most builders have ignored, but those who have ventured into it say they have nothing to complain. “Identifying developable land at the right price in the right place is the key to success of a budget housing project,” said a builder looking for land for a new project.
      All developers doing big projects in the suburbs are stuck owing to poor sales and they are looking at alternatives to sustain the business, said Rajesh Babu, partner, Recs Group, a Chennai-based realty firm.
      Going by the experience of developers who promote budget housing projects, they are by and large cash-surplus projects as long as the promoter sticks to medium sized developments in the range of 2-3 acres. International realty consultant Jones Lang LaSalle MD Sarita Hunt said many new entrants may be getting attracted by this cash flow.
      “You can raise funds from the market (customers) and do projects. As long as the budget housing segment is treated as a separate entity and the money collected for it is used for the same project, it will work. But if the money is diverted to service bad loans or to complete other stuck projects, then things will miserably go wrong,” she said.
      Most builders have not shown interest in the affordable housing segment for years as margins are low in such projects. Hence, high volumes are required to make a significant profit, comparable with projects of higher capital values and larger unit sizes. Builders have gone wrong in the past by jacking up prices abnormally and keeping apartment sizes unwieldy, said Hunt.
      Slow pace of employment generation in the IT sector and retrenchment of several thousand people in the manufacturing sector, especially in the Sriperumbudur belt, have badly affected Chennai realty. A city-based builder said, “Chennai was the first market to turn around after the 2008 fall. But the current slump may have a longer effect because the investment climate in the state is pretty bad.”
      Source: The Times of India, Chennai
      http://content./industry-news/chenna...ing/79118.html

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      • Re : Property Price Trends in Chennai

        from the above news what may be the areas where the builders can make a 20 lakh homes..

        discuss the areas so that it may be useful for investors to park the money hoping price escalation based on this strategy by developers.....

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        • Re : Property Price Trends in Chennai

          Originally posted by subramania View Post
          from the above news what may be the areas where the builders can make a 20 lakh homes..

          discuss the areas so that it may be useful for investors to park the money hoping price escalation based on this strategy by developers.....
          IMO it was more hinting on developers ropeing new set of Bakara to finance its project or pay loans VGN did have two full page ads for few days catering to this budget however given its debt position I will stay away.... If it park ur money as investment why it should be real estate for time being I think it is sensible to park cash in another asset class
          RE overpriced still fancy then 4% yield is must anything less is overpriced

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          • Re : Property Price Trends in Chennai

            Originally posted by ramki830 View Post
            Greetings to all. I am visiting this forum after a gap of many months.

            Just wanted to share some thoughts - currently though not widely spoken there is a severe slowdown in Chennai RE over last few months. In my exposure for last 14 years i beleive this is beginning to look like the deadly slowdown of 2001-03 except that prices are at extremely high levels (even after adjusting for huge surge in liquidity).

            The question is where do we go from now.

            Unlike in previous slowdowns (1997-99) and 2001-03 period, liquidity per se is very high thanks to liberalization of capital flows plus endless QE by Fed and other developed nations. The real issue is - last two years, all asset classes in India except Stock markets have done badly.

            RE has severly underperformed last 24 months. Gold also has underperformed. Adjusting for inflation Fixed income has given negative returns except select basket of products like tax free infra bonds (which anyway are not widely available). Stock market in contrast has done exceedly well especially for anyone who invested in 2013 disregarding the doomsayers and all that is thanks to the change of guard in Delhi.

            Going forward what happens is the key.

            Let us discuss on our views on that.

            I will start by just telling one point - We need a decent rate cut for RE to get back to life and looks like that is going to happen after February budget but can be pushed behind or ahead too
            @ramki830 - I agree with your view point for the below reasons on your evaluation on the current RE trend in Chennai and how it's going to be in the long run:

            1. US Fed will any time increase their interest rate given that their unemployment levels are coming down drastically which leads to substantial money outflow from Emerging Markets including India.

            2. Crackdown on Black Money and digitization of monetary process will avert those who normally invests through this route

            3. As announced in the last central government budget, where they announce housing for all Indians which may lead to significant growth in "Affordable Housing" scheme whereby the existing inventory needs to be sold out without which the RE developer cannot plunge in to the new projects

            4. Lastly, I'm not very sure on the impact in RE sector, if RBI decided to cut the interest rates early next year..

            It's good to debate on these view which may give a clearer and broader perspective for all the members..

            Cheers.

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            • Re : Property Price Trends in Chennai

              Interesting article in The Economist about Chennai's Urban sprawl.

              A planet of suburbs | The Economist

              THIRTY kilometres south of central Chennai, just out of earshot of the honking, hand-painted lorries roaring up Old Mahabalipuram Road, you seem to have reached rural India. Farmers dressed in Madras-checked dhotis rest outside huts roofed with palm leaves. Goats wander about. Then you turn a corner, go through a gate, and arrive in California.

              Between 2001 and 2011 Chennai added just 7% more people while Chengalpattu swelled by 39%. In developed and developing worlds, outskirts are growing faster than cores”

              “Information technology has grown to the south. The World Bank calculates that, between 1998 and 2005, the number of IT jobs within 25km of the centre of Chennai increased by 27%. In the same period, 47% more IT jobs were added in an outer ring between 25km and 50km from Chennai. In high-tech manufacturing, the urban core lost about a quarter of its workers, while the outer ring gained 23% more jobs.”

              “The biggest and most spectacular IT campus in Tamil Nadu belongs to Tata Consultancy Services (TCS). It looks like Optimus Prime taking a nap. The 60,000 people inside the Transformer lookalike do back-office tasks for Western firms and governments.

              One of them, taking a lunch break, is Karbagam Chandrasekaran. She lives at home with her parents in Chennai, and takes a bus to the campus each day—a journey of about an hour and a half. She likes city living for its convenience, but has heard that the schools are better in the suburbs, and would prefer to live closer to work. When she marries (young Indians almost always say “when”, not “if”) she expects to move out, particularly if her husband also works in the IT Corridor”


              “Ravi Viswanathan, TCS’s president for growth markets, says that new employees are more likely to live in the suburbs. Buildings are newer, rents are lower and well-regarded private schools have appeared, along with new hospitals and restaurants. At the weekend, Mr Viswanathan says, the main roads around TCS’s campus used to be almost deserted except for cattle. Now they are thick with cars and motorbikes.”
              Last edited by Economist; December 17 2014, 11:29 AM.

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              • Re : Property Price Trends in Chennai

                TN included?

                Invest in real estate now, residential rates may rise in latter part of 2015 - The Economic Times

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                • Re : Property Price Trends in Chennai

                  Porur Prestige bella vista project new tower release price increased to 7500 as per proptiger rep. need to reconfirm.

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                  • Re : Property Price Trends in Chennai

                    Difficult to see these types of news. People wont buy now; they will only buy after the prices have gone up in early 2016. In 2002 and early 2003 the situation was similar with feeling of bearishness very similar to 2013-2014. Then in Bangalore prices of land almost went up 4 to 8 times in 2003-2004. A property I missed for 1400psft in a BDA auction went to 6000psft in just an year and another in AECS layout at 26lakhs cost 1.8crores in 2004. The same road another piece of land. Prices then stayed put for years.
                    In Chennai prices rose more slowly but in 2006 they were almost in similar levels. Now people will ask questions and questions when prices are reasonable and will buy when the prices finish shooting up. So no point what ET writes nobody with sense(perceived sense or can I say nonsense) will buy in 2015. They will do in 2016 after a 2 or 3 times rise.
                    Ofcourse many will question me for 2 or 3 times exactly like in 2003! God bless them.

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                    • Re : Property Price Trends in Chennai

                      Porambokku....sorry I mean...I wanted some advice from senior RE kings to decide on buying some PORAMBOKU land..if u r not a porampokku specialist then pls ignore..

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