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Property Price Trends in Chennai

Last updated: July 14 2020
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  • Re : Property Price Trends in Chennai

    Originally posted by contra View Post
    Nabhishek,
    Even if someone knows the "Buy-Now" indicator do you think he/she will share it with everyone rather then keep it to themselves.
    Well, you never get answers unless you ask the right questions. correct?Thats what I am attempting.

    we have had the good fortune of many people sharing their knowledge and insights earlier to give pointers like using price-to-earning ratio(rental yield), expected inflation-adjusted CAGR returns,Expected growth of RE inline with per-capita income growth, method to calculate rate/sqft of flat price of land, calculating depreciation of flat for resale properties, method to arrive at affordability based on pay in case of home loan etc.

    Originally posted by contra View Post
    So called experts will share the tricks and write "how to succed" "best investment" those kind of books only after their own investments have substancially increased so that they can sell them to others. Then people like you will admire such experts, buy such books and invest at Rs.4000 when same thing was available at Rs.1000 just before that expert came into picture. Ofcourse Rs.4000 is also a good buy, because tomorrow it could reach Rs.8000. But than if you had listened to your own insights then wait for some expert to guide your thoughts you could have got 800% appreciation then just 50% appreciation.
    It reminds me the story of a guy who supposedly wrote a book "1001 ways to become a millionaire", out of which the 1000 were how he failed attempting it, and the last idea being to write a book on all his failures and become millionaire of it.

    I have already explained my stance in my previous post, I am stating it again.

    For RE investment Affordability(Entry cost) and Location( sellable worthiness for exit) are very important.I reiterate, I want to invest not speculate.

    lets assume person A had 50 Lakhs in 2004 and missed the boom and feels frustrated now that had he invested it any worthless property within the city then it could have been 1.5C now.

    You are saying, instead of waiting for correction, buy a property for 50 lakhs wherever its affordable now it will be worth more than 10C in long term.

    But, do the places thats priced at 50 Lakhs have any infrastructure development, basic amenities today, do they even assure decent 5-6% rental yield??Do they match the same facilities available within the city?

    please understand, most people on this forum are looking for flats for self use and are demanding value for money nothing more.

    Its important people who want to take loan and invest know whats the realistic returns they can expect to plan their repayment.

    The disparity in the differnce between market rate of the land and the price quoted by the builders are so glaring, that it convinces most prospective buyers that price correction is imminent.

    Unless one is a land owner, there is nothing to rejoice about chennai real estate today.

    I would rather wait for prices to come within my affordability and buy at a better location than to speculate and crib over opportunity profit/loss which is a needless pain i need to inflict on myself.

    Meanwhile, Investing my money in other tangible avenues would give me more returns than any of these affordable locations now has given in the last 3 years.The prices have just stagnated and corrected upto 20%-30% in many places.

    Originally posted by contra View Post
    Today before another big expected rise in the future, when Natraj and myself are giving free advice that it is better to invest/buy real estate in India now then in future when prices will be higher due to global monetary liquidity being unleased, you are saying Wiseman has guided you not to buy. What can we do.
    Thanks for your advice contra, I am grateful to natraj too.Have learned lot from your postings.I understand the value and importance of holding on to the land/RE better now.

    I dont listen blindly to whatever anyone says, I take time to gauge the merits in the sayings and form my own opinion and act based on it.

    No one can be convinced against their belief, All the views being expressed here are just to help understand RE better.To accept or discard anyones view at the end of the day is one's own prerogative.

    Originally posted by contra View Post
    Just because prices have gone up 8-10 times from 2004 does not mean that real estate is a bubble. Infact this could just be a beginning and in future prices can go to even higher levels.
    I remember you saying in another thread four days back that chennai real estate is a super bubble and its prudent decision to wait and watch for sometime.What happened suddenly?

    Comeon, What chennai witnessed was surely a bubble.When crazy escalation of prices happens everywhere from within the city till 70kms out in the outskirts beating fundamentals of RE like affordability,location,demand/supply etc what else would you call it?

    Did you know that the rate at T.Nagar was 4500/sqft when builders started pricing their project in velachery at 4000/sqft and in siruseri at 3500/sqft.

    when velachery can be sold at 4000/sqft why shouldnt be T.Nagar priced at 8000/sqft?many believe this is how price rose overnight.According to me factors such as FSI, revised guideline value also played a major role.

    I have already discussed and opined in detail throughout this thread, the reasons why I believe the property prices are over-valued and how the correction would pan out in various locations at upto what depth.

    I feel this quarter is going to be very interesting with lots of cats coming out of the bags.I expect the market to be flooded and clogged with lots of unsold new and resale properties, builders offering great deals.

    I believe RE is more than investing, its my hedge against uncertain future.I dont want to get hasty and burn my fingers, if the potential loss risk is within manageble limits and if i come across a property that suits my liking.I shall surely contemplate entering straightaway.

    For now, I choose to wait and watch how the trend is going to swing.Shall re-visit this decision at a later time based on how the market reacts.
    Last edited May 27 2009, 03:01 AM.

    Comment


    • Re : Property Price Trends in Chennai

      Originally posted by contra View Post
      Nabhishek,
      Just because prices have gone up 8-10 times from 2004 does not mean that real estate is a bubble. Infact this could just be a beginning and in future prices can go to even higher levels.
      If price increase of 8-10 times in 4 years not a bubble then what you call a bubble?

      Contra I thought you were the only sensible bull in this forum and you proved me wrong again that bulls in this forum dont have any rational thinking.You were bearish few days back and then turned bullish.So you are oscillating between bullishness and bearishness like vikram in anniyan.(No offence intended)
      Actually it is not a bubble but a super bubble(as told by you) waiting to burst.
      Dont know how many people will lose their shirt when it bust.
      Last edited May 27 2009, 08:38 AM.

      Comment


      • Re : Property Price Trends in Chennai

        Originally posted by nabishek View Post
        Well, you never get answers unless you ask the right questions. correct?Thats what I am attempting.

        we have had the good fortune of many people sharing their knowledge and insights earlier to give pointers like using price-to-earning ratio(rental yield), expected inflation-adjusted CAGR returns,Expected growth of RE inline with per-capita income growth, method to calculate rate/sqft of flat price of land, calculating depreciation of flat for resale properties, method to arrive at affordability based on pay in case of home loan etc.



        It reminds me the story of a guy who supposedly wrote a book "1001 ways to become a millionaire", out of which the 1000 were how he failed attempting it, and the last idea being to write a book on all his failures and become millionaire of it.

        I have already explained my stance in my previous post, I am stating it again.

        For RE investment Affordability(Entry cost) and Location( sellable worthiness for exit) are very important.I reiterate, I want to invest not speculate.

        lets assume person A had 50 Lakhs in 2004 and missed the boom and feels frustrated now that had he invested it any worthless property within the city then it could have been 1.5C now.

        You are saying, instead of waiting for correction, buy a property for 50 lakhs wherever its affordable now it will be worth more than 10C in long term.

        But, do the places thats priced at 50 Lakhs have any infrastructure development, basic amenities today, do they even assure decent 5-6% rental yield??Do they match the same facilities available within the city?

        please understand, most people on this forum are looking for flats for self use and are demanding value for money nothing more.

        Its important people who want to take loan and invest know whats the realistic returns they can expect to plan their repayment.

        The disparity in the differnce between market rate of the land and the price quoted by the builders are so glaring, that it convinces most prospective buyers that price correction is imminent.

        Unless one is a land owner, there is nothing to rejoice about chennai real estate today.

        I would rather wait for prices to come within my affordability and buy at a better location than to speculate and crib over opportunity profit/loss which is a needless pain i need to inflict on myself.

        Meanwhile, Investing my money in other tangible avenues would give me more returns than any of these affordable locations now has given in the last 3 years.The prices have just stagnated and corrected upto 20%-30% in many places.



        Thanks for your advice contra, I am grateful to natraj too.Have learned lot from your postings.I understand the value and importance of holding on to the land/RE better now.

        I dont listen blindly to whatever anyone says, I take time to gauge the merits in the sayings and form my own opinion and act based on it.

        No one can be convinced against their belief, All the views being expressed here are just to help understand RE better.To accept or discard anyones view at the end of the day is one's own prerogative.



        I remember you saying in another thread four days back that chennai real estate is a super bubble and its prudent decision to wait and watch for sometime.What happened suddenly?

        Comeon, What chennai witnessed was surely a bubble.When crazy escalation of prices happens everywhere from within the city till 70kms out in the outskirts beating fundamentals of RE like affordability,location,demand/supply etc what else would you call it?

        Did you know that the rate at T.Nagar was 4500/sqft when builders started pricing their project in velachery at 4000/sqft and in siruseri at 3500/sqft.

        when velachery can be sold at 4000/sqft why shouldnt be T.Nagar priced at 8000/sqft?many believe this is how price rose overnight.According to me factors such as FSI, revised guideline value also played a major role.

        I have already discussed and opined in detail throughout this thread, the reasons why I believe the property prices are over-valued and how the correction would pan out in various locations at upto what depth.

        I feel this quarter is going to be very interesting with lots of cats coming out of the bags.I expect the market to be flooded and clogged with lots of unsold new and resale properties, builders offering great deals.

        I believe RE is more than investing, its my hedge against uncertain future.I dont want to get hasty and burn my fingers, if the potential loss risk is within manageble limits and if i come across a property that suits my liking.I shall surely contemplate entering straightaway.

        For now, I choose to wait and watch how the trend is going to swing.Shall re-visit this decision at a later time based on how the market reacts.
        Hi Nabhishek, As usual you have a nice way of presentation. I am not sure whether contra wants to make a bull out of you but to me, your being bearish shows the other side of the coin rather sensibly than most of the NRI bears (who lost their bag baggage and are living out of their komanams!) do.
        As for your comment about sitting on land. Infact INVESTMENT in RE means buying land, NOT buying Flats. Unfortunately half baked so called educated folks bought flats, not one but many. They are what is called as greedy lazy pigs. They will work in a company to get a fixed salary and a regular hike and expect it with or without delivery of goods. They will use company resources, read internet and computers to trade in stock markets. They will use their office time to hunt for flats and then invest there assuming it will rise sky high.
        As I have explained before LAND appreciates, BUILDING depreciates. So during the beginning of the bull phase like 2004 even flats bought by them appreciated primarily because of super hike in land, but later their trick failed.
        Why do they buy flats? Since they do not have the time to research land and negotiate and check documents.
        In summary our lazy souls who misuse their paymaster resources have to be punished. That will happen by job losses, lowered pay and flat price falling all justified for sure.
        So if you might want to be adviced. My view is that 2009 is la 2003-04. It is the next big upmove, which will put 2004 to shame. Now how do I know it.
        Unlike Wiseman who reads OLD ECO books and that too lessons apart and vomits out data, I read charts and analyse technical data. Go and check for Japanese RE charts. They say what I said.
        I planned to sell some RE in 2008 early part as I knew it was a top. The sign was my cousin bought a flat (and he has not done it after 15 years in the SW industry) and so did another person. THey were both the sort of folks who will enter when the game is over! However I did not sell. Japanese RE charts! In other words, though I hate to disclose, the RE is going to go one more major upmove. Even Indian economy will move up terribly upwards, whether our NRI friends from Kangaroo land to Bald eagles like it or not. Then it will top out.
        This move will make the guy who missed the 50L to 2C game in 2004 look like an angel! Now it may be 50L to 5C. And dont ask me why? Could you have answered the current scenario in 2004? Charts show it, is all I can say.
        All I can tell is, now we are in the next entry point for a BIG ride. How long? Maybe another 3 to 5 years, maybe only 1 year. I wont say that now. I can sense the top by examples I said. So that same cousin might buy another flat thinking it is fine, a conservative investing not for self use!! That will be the top.
        Or you might see WIseman talking bullish! Well you Nabhishek might talk super bullish! These are all sure shot points to find the top! Then I will exit.
        Even then not fully. Maybe 10% of my RE investments. That is to skim some milk.
        Since in the long run RE will continue to be a good cash cow.
        Finally Nabhishek your views are interesting and I will like to see them regularly. Regards.
        Last edited May 27 2009, 11:05 AM.

        Comment


        • Re : Property Price Trends in Chennai

          sanity and balac=nce

          Originally posted by nabishek View Post
          Well, you never get answers unless you ask the right questions. correct?Thats what I am attempting.

          we have had the good fortune of many people sharing their knowledge and insights earlier to give pointers like using price-to-earning ratio(rental yield), expected inflation-adjusted CAGR returns,Expected growth of RE inline with per-capita income growth, method to calculate rate/sqft of flat price of land, calculating depreciation of flat for resale properties, method to arrive at affordability based on pay in case of home loan etc.



          It reminds me the story of a guy who supposedly wrote a book "1001 ways to become a millionaire", out of which the 1000 were how he failed attempting it, and the last idea being to write a book on all his failures and become millionaire of it.

          I have already explained my stance in my previous post, I am stating it again.

          For RE investment Affordability(Entry cost) and Location( sellable worthiness for exit) are very important.I reiterate, I want to invest not speculate.

          lets assume person A had 50 Lakhs in 2004 and missed the boom and feels frustrated now that had he invested it any worthless property within the city then it could have been 1.5C now.

          You are saying, instead of waiting for correction, buy a property for 50 lakhs wherever its affordable now it will be worth more than 10C in long term.

          But, do the places thats priced at 50 Lakhs have any infrastructure development, basic amenities today, do they even assure decent 5-6% rental yield??Do they match the same facilities available within the city?

          please understand, most people on this forum are looking for flats for self use and are demanding value for money nothing more.

          Its important people who want to take loan and invest know whats the realistic returns they can expect to plan their repayment.

          The disparity in the differnce between market rate of the land and the price quoted by the builders are so glaring, that it convinces most prospective buyers that price correction is imminent.

          Unless one is a land owner, there is nothing to rejoice about chennai real estate today.

          I would rather wait for prices to come within my affordability and buy at a better location than to speculate and crib over opportunity profit/loss which is a needless pain i need to inflict on myself.

          Meanwhile, Investing my money in other tangible avenues would give me more returns than any of these affordable locations now has given in the last 3 years.The prices have just stagnated and corrected upto 20%-30% in many places.



          Thanks for your advice contra, I am grateful to natraj too.Have learned lot from your postings.I understand the value and importance of holding on to the land/RE better now.

          I dont listen blindly to whatever anyone says, I take time to gauge the merits in the sayings and form my own opinion and act based on it.

          No one can be convinced against their belief, All the views being expressed here are just to help understand RE better.To accept or discard anyones view at the end of the day is one's own prerogative.



          I remember you saying in another thread four days back that chennai real estate is a super bubble and its prudent decision to wait and watch for sometime.What happened suddenly?

          Comeon, What chennai witnessed was surely a bubble.When crazy escalation of prices happens everywhere from within the city till 70kms out in the outskirts beating fundamentals of RE like affordability,location,demand/supply etc what else would you call it?

          Did you know that the rate at T.Nagar was 4500/sqft when builders started pricing their project in velachery at 4000/sqft and in siruseri at 3500/sqft.

          when velachery can be sold at 4000/sqft why shouldnt be T.Nagar priced at 8000/sqft?many believe this is how price rose overnight.According to me factors such as FSI, revised guideline value also played a major role.

          I have already discussed and opined in detail throughout this thread, the reasons why I believe the property prices are over-valued and how the correction would pan out in various locations at upto what depth.

          I feel this quarter is going to be very interesting with lots of cats coming out of the bags.I expect the market to be flooded and clogged with lots of unsold new and resale properties, builders offering great deals.

          I believe RE is more than investing, its my hedge against uncertain future.I dont want to get hasty and burn my fingers, if the potential loss risk is within manageble limits and if i come across a property that suits my liking.I shall surely contemplate entering straightaway.

          For now, I choose to wait and watch how the trend is going to swing.Shall re-visit this decision at a later time based on how the market reacts.
          DEar Nabishek,
          You bring great value and a sense of balance to this forum.Thanks for
          your great posts.Ihave learn't a lot from you
          regards
          unlikely

          Comment


          • Re : Property Price Trends in Chennai

            This was a one time boom due to price arbitrage ...

            Originally posted by contra View Post
            Even now that property at Rs.1.25 crores cannot be purchased by millions, but millions don't need it. But there are some dozens who need it. These dozens get monthly income of Rs.4 lacs and hence can afford a loan of 1C and buy this property. But those who get monthly income of Rs.40,000 (26 year old professional for example) need not worry as they can still get another property like a 750 Sq.ft 1 BHK flat just 5 kms from same location for Rs.22 lacs to live with newly married partner.

            As for 2019,

            It is very much possible that many professionals could be earning salaries like 3C-6C per annum and such professionals could afford a 18C loan to buy 20crore property.

            In 1999, a ISRO engineer with 10 years experience was earning Rs.10,000 salary. In 2009, a highly skilled embedded coder who writes code for satellite systems with 10 years experience can easily earn Rs.1.25 lacs per month in bangalore. In 2019, if a highly skilled technician earns Rs12.5 Lacs per month, it is possible. why not?

            Contra,

            Price arbitrage opportunities like the one IT had in India from 1980 - 2008 was a one-time opportunity which will probably not happen again. Please note that this is mostly due to coolie arbitrage rather than value addition due to sustainable IP creation. With IP creation, like a drug molecule or an IC you can profit from it for long periods of time beyond the invention period. With coolie arbitrage profits die the day some other coolie comes in with a lower price!

            Now, the rest of the world has caught up and is probably getting ahead while our "captains" of Industry continue to squeeze so-called value from BPO operations. I do not see how India can continue to deliver increasing value by going down the value chain while other cheaper destinations continue to add technology value.

            Here is the conclusion:

            With deflation here to stay for some time to come (say a decade), demand will either decline or stay flat for a long time. This will continue to put pressure on jobs as there will be much more supply of people than jobs. This will ensure that salaries will continue to remain competitive around the range you see today. As this has a direct bearing on asset prices and loans given for their acquisition, these too will remain flat for a long time to come.

            Extrapolating 10000 in 1990 to 1.50L in 2008 and concluding 1.50L now to 12L in 2019 is putting the cart before the horse and ignoring the fundamental reasons that lie behind these moves. Please do not confuse cause and effect. Fundamentals cause moves in prices. Prices do not cause change in fundamentals!!!

            cheers

            Comment


            • Re : Property Price Trends in Chennai

              Originally posted by wiseman View Post
              Contra,

              Price arbitrage opportunities like the one IT had in India from 1980 - 2008 was a one-time opportunity which will probably not happen again. Please note that this is mostly due to coolie arbitrage rather than value addition due to sustainable IP creation. With IP creation, like a drug molecule or an IC you can profit from it for long periods of time beyond the invention period. With coolie arbitrage profits die the day some other coolie comes in with a lower price!

              Now, the rest of the world has caught up and is probably getting ahead while our "captains" of Industry continue to squeeze so-called value from BPO operations. I do not see how India can continue to deliver increasing value by going down the value chain while other cheaper destinations continue to add technology value.

              Here is the conclusion:

              With deflation here to stay for some time to come (say a decade), demand will either decline or stay flat for a long time. This will continue to put pressure on jobs as there will be much more supply of people than jobs. This will ensure that salaries will continue to remain competitive around the range you see today. As this has a direct bearing on asset prices and loans given for their acquisition, these too will remain flat for a long time to come.

              Extrapolating 10000 in 1990 to 1.50L in 2008 and concluding 1.50L now to 12L in 2019 is putting the cart before the horse and ignoring the fundamental reasons that lie behind these moves. Please do not confuse cause and effect. Fundamentals cause moves in prices. Prices do not cause change in fundamentals!!!

              cheers
              If RE can consistently give 25-30% CAGR over long period of time then people who have invested in stock,bond,gold etc etc are fools?

              Comment


              • Re : Property Price Trends in Chennai

                Originally posted by nabishek View Post
                I remember you saying in another thread four days back that chennai real estate is a super bubble and its prudent decision to wait and watch for sometime.What happened suddenly?

                Comeon, What chennai witnessed was surely a bubble.When crazy escalation of prices happens everywhere from within the city till 70kms out in the outskirts beating fundamentals of RE like affordability,location,demand/supply etc what else would you call it?
                Real estate marketplace has both good parties and fraudsters. DLF was considered a reputed builder, but recently they soft launched a project in Bangalore without even having BBMP approvals and now BBMP is warning all the customers who booked in that project about dire consequences.

                Even in Chennai customers are facing problems with builders like DLF, Puravankara, Indiabulls. For example Indiabulls are coming up with a project at medavakkam-sozhinanallur road which is perhaps one of severest water logging area.

                Those who book from such projects will definately face dire consequences. Hence it is always necessary to make people think to warn them to take cautious steps, so once in a while people like me make bearish noises like super bubble theory etc.

                I expected people to jump into stocks after election results and create a irrational rally in short term and fall prey to fraudsters. Hence again made a bearish noise "bearish in short term'.

                Ultimately people must feel confident about the marketplace to invest which is only possible if their are no fraudsters. This is in the interest of bulls like me also. More than economy, jobs; people must feel they can enter into a real estate transaction transparantly and confidently without fear. This is what will rise the prices and is in interest of bulls also.
                Last edited May 27 2009, 04:11 PM.

                Comment


                • Re : Property Price Trends in Chennai

                  Originally posted by wiseman View Post
                  Contra,

                  Price arbitrage opportunities like the one IT had in India from 1980 - 2008 was a one-time opportunity which will probably not happen again. Please note that this is mostly due to coolie arbitrage rather than value addition due to sustainable IP creation. With IP creation, like a drug molecule or an IC you can profit from it for long periods of time beyond the invention period. With coolie arbitrage profits die the day some other coolie comes in with a lower price!

                  Now, the rest of the world has caught up and is probably getting ahead while our "captains" of Industry continue to squeeze so-called value from BPO operations. I do not see how India can continue to deliver increasing value by going down the value chain while other cheaper destinations continue to add technology value.
                  I agree with the argument that price arbitrage opportunities will die soon. How soon is the question. I for one thought I was overpaid in 2003, but today I know jokers getting big deals. In other words though the logic is fine, it takes a super fast train lots of distance to stop. Just pressing the brakes wont stop the train next second. Something Wiseman wont understand.
                  To me the brakes will stop the train but maybe in 2015 or maybe in 2030, who knows. To me today the train at top speed is yet running fast, I mean the TRAIN OF INDIAN ECONOMY.
                  Last edited May 27 2009, 02:55 PM.

                  Comment


                  • Re : Property Price Trends in Chennai

                    Originally posted by BigBear View Post
                    If RE can consistently give 25-30% CAGR over long period of time then people who have invested in stock,bond,gold etc etc are fools?
                    Those who invested in Gold in India between 1970s and 2000s were fools without end. Regarding the others, we need to discuss in detail but I dont think you are bright enough to understand!

                    Comment


                    • Re : Property Price Trends in Chennai

                      Originally posted by BigBear View Post
                      If RE can consistently give 25-30% CAGR over long period of time then people who have invested in stock,bond,gold etc etc are fools?
                      Stocks have fewer participants, even today less than 10% of India's population directly or indirectly participate in stocks. Even the FII investments in India inspite of the hype is a tiny fraction of global market cap. Since the base market cap of stock market in india is small overall returns potential is smaller.

                      Bonds - These are fixed income instruments. Mainly institutions like banks, buy and sell bonds. Only taxable salaried individuals used to buy 8% tax saving RBI bonds etc which have now been discontinued since. Participation of individuals in mutual funds, corporate bonds in also less than 10% of india's population.

                      Gold - indians are the world's largest consumer. But indians buy gold as ornaments, jewellery, prestige which in rare cases becomes savings against emergencies.

                      But indians always buy land. In villages people buy in acres for agriculture. After land reforms, once landless poorer caste workers also have become land owners buying a few acres. In Cities people buy sites or plots.

                      A larger percentage of population participates in buying land. Hence Land is more valuable than gold, stocks or bonds in India.

                      But ofcourse everyone should get access to owning some land to have social justise. Solution to this is not crushing land prices in mumbai or chennai. Solution to this is developing more residential land and job opportunities in villages, small towns, rural areas.

                      Comment

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