Hi Friends,

I had been to the FAIRPRO '09 Fair.My Impression after seeing, is that prices are stagnating for all ongoing projects and builders are trying hard to hold them up.

Prices are 10-20% lower for new projects in the pipeline and for ready to occupy flats.

The discount offered at the stall was very less and were in the range 150-500 Rs/sqft max.

For the benefit of fellow members I am posting the project/price details of some of the properties.



Akshaya Foundations

Adora - OMR - 3750/sqft
Aikya - Adyar - 12500/sqft

Alliance Group - Orchid Springs - 3199/sqft

Arihant Foundations

Heirloom - Thalumbur - 2499/sqft
Escapade - Thoraipakkam - 4150/sqft
Villa Viviana - Maramalai nagar - starting from 1 Crore

Asvini Foundations

Amarisa-phase1 - Ramapuram - 4500/sqft
Amarisa-phase2 - Ramapuram - 4250/sqft
Akshita - Madipakkam - 3800/sqft

Casa Grande

Riveira - Palikkarnai - 3450/sqft - before discount 3600/sqft
Silver Oak - Perungudi - 4300/sqft - before discount 4500/sqft
Madhuban - Madipakkam - 3300 /sqft - before discount 3500/sqft
Mylapore - R.K.salai - 12500/sqft
Plots
Ponmar -785/sqft - before discount 825/sqft
Maraimalainagar - 790/sqft - before discount 825/sqft

CeeDeeyes - Chenni Pattinam

Basic Rate - 1600/sqft All Inclusive - 2075/sqft

Chaitanya shanthiniketan

Sunnyvale - Ayanavaram - 4850/sqft
Serena - Rajkilpakkam - 2550/sqft
Gardenia - OMR - 1900/sqft
Green Park - Chitlapakkam - 3300/sqft

DLF

Gardencity - 3200/sqft - was told slash in prices expected in coming weeks.

Doshi Housing

Etopia I and II - Perungudi - 3895/sqft
Nakshatra - Tambaram - 2995/sqft - Completion May 2010
Tranquil - Velachery - 5500/sqft - Completion February 2010
Trinity park - Santhoshpuram,Vengaivasal - 3195/sqft - Completion April 2009
Serene Couny-Villas - Santhoshpuram,Vengaivasal - 2200,2600/sqft
LlanStephan - Chetpet - 9000/sqft - Completion May 2009
Sri Mahalakshmi - Ayanavaram - 4495/sqft - Ready to Occupy

ETA

Rosedale - OMR - 3100/sqft
Le Chalet - Villas - Sriperambudhur - 26 Lakhs - 37 Lakhs

Hiranandani Upscale - 4200/sqft

Hiranandani Palace Gardens - 3475/sqft

Indus Housing

anantya - Navalur,OMR - 2299/sqft + 400(other charges)
riviera villa - Navalur,OMR - 90 Lakhs onwards
habittera - urapakkam,GST - 2399/sqft + 400(other charges)
amber - Saidapet - 4750/sqft

Jain Housing

Ankush Prakas - Kilpauk - 7500/sqft - Ready to occupy
Amrit Kailash - Strahns Road - 4500/sqft - Ready to occupy
La Gardenia - Nungabakkam - 7500/sqft - Ready to occupy
Ansruta - Valluvarkottam, nungabakkam - 10000/sqft - Ready to occupy
Antariska - Kodambakkam - 4500/sqft - Ready to occupy
Eiffel Garden - Vadapalani - 4250/sqft - Ready to occupy
Saagarika - M.R.C Nagar, sea facing - 10000/12500 - Ready to occupy
Green acres - Pallavaram - 3900/sqft - Ready to occupy
Abhishek - Selaiyur - 3500/sqft - Ready to occupy.

Jamals

Orchid - Palikkarnai - 3500/sqft
Palazzo - keelkattalai - 3700/sqft
Grandeur - Velappanchavadi(near saveetha dental college) - 3200/sqft

KGEYES

3 Projects on L.B.Road, Thiruvanmiyur - 6650/sqft
Delmare - Beach road,Thiruvanmiyur - 7000/sqft
Carolina - Velachery,Taramani - 4500/sqft
Swathi - Sastri Nagar,Adyar - 8500/sqft
Kalakshetra - 8000/sqft

Landmark Constructions

Tiara - Perungudi - 4000/sqft - Completion on August 2009
Aston Ville - Vadapalani - 5500 sqft - Completion on July 2009
Tudors Place - K.K.Nagar - 6500/sqft
The Address - Adyar - 11500/sqft
The Grange - Palavakkam - 7500/sqft
Cenralia - Chrompet - 2950/sqft - prelaunch
Gem Towers - AnnaNagar - To be launched.
Mahalakshmi Heights - Ashok Nagar - To be launched

L&T Estancia
Construction in Progress
1st-3rd Floor - 3950/sqft
4th -12 floor - floor rise charge of 20/sqft for each floor
13th - 17th - 4450/qft

L&T Eden Park - 3600/sqft

Mantri Synergy - OMR
2800/sqft - with 20/floor rise
Special offer - First Floor - all inclusive
1140 sqft - 33,67,000
870 sqft - 28,50,000

Navin Housing

Dayton Heights - Nelson Manickam road - 6500/sqft + 30/sqft floor rise from 2nd floor
Subha Mangala - Ramapuram - 4200/sqft
Brookfield - Nanmangalam - 3500/sqft
Merrylands - Medavakkam - 3500/sqft

Olympia Opaline - 3441/sqft - spl budget flats available

PACE Builders

Anna nagar west - 4195/sqft - before discount 4495/sqft
Selaiyur - 3195/sqft - before discount 3495/sqft
Valasarvakkam - 2795/sqft - before discount 3295/sqft

PS Srijan

The Grand - Velachery - 5250 sqft - before discount 5500/sqft - Floor Rise applicable from 4th floor

Rajparis

Harmony - Medavakkam - 3100/sqft

Rajarathnam Constructions

RC Prince Gardenia - Perambur redhill road,Kolathur - 3600/sqft

Rajkham

Independant houses - Ayyapathangal - 2600/sqft

Real Value

Sai Skanda - Velachery - 4200/sqft
Sai Surya - Palikaranai - 3800/sqft
OMR opp SIPCOT - 13.20 Lakhs onwards

Shriram Properties

Trishakti - SIPCOT - 2750/sqft
Shankari - 1990/sqft

Sidharth foundations

Tulip - k.k.nagar west - 4800/sqft - completion march 2009
Natura - medavakkam - 3100 /sqft - completion july 2009
Visvaleela - Annanagar - 8500 /sqft - to be launched
Dakshin - Urapakkam - price TBD - to be launched
upcoming projects in porur, thoraipakkam, rajkeelpakkam, mogappair.

SIS

Safaa - Urappakam - 3150/sqft

SSPDL

Crescent - Kelambakkam - Vandalur Road - 2500/sqft
Upcoming 2 villa project one in OMR and one in Sriperambathur.

Sumanth & Co

Thiruvanmiyur - 6000/sqft
Besant Nagar - 11500/sqft

TVH

Lumbini square - Pursaiwalkam - 5500/sqft + 30/sqft floor rise from 5th floor
Ouranya Bay(Premium) - OMR,Padur - 3100,3200 + 25/sqft floor rise from 5th floor
Ouranya Bay(Budget) - 2bhk - 20 Lakhs
3bhk - 30 Lakhs
Ekanta - Coimbatore - 3100/sqft
Revata - Mogappair east - 4500/sqft
Kamya - K.K,Nagar - 7000/sqft
Metro Golden Nest - Sriperambathur - 1bhk - 15 Lakhs
2bhk - 22 Lakhs
3bhk - 28 Lakhs

VGN Group

Minerva - Mogappair,Nolumbur - 2975/sqft
3 in 1, 4 in 1 - 3800/sqft
Mahalakshmi Nagar,Thiruverkadu - 3500/sqft
Plots
Mugalivakkam - 52 Lakhs/grnd
Selaiyur - 50 Lakhs/grnd
SPKoil - 34 Lakhs/grnd
Katankulathur - 22-27 Lakhs/grnd

Yuga Homes

Shem Park - chemmenachery - 3300/sqft
Upcoming in Koyambedu, R.A.Puram(8000/sqft)



There are lots of properties and also lots of potential buyers.There is sure a sense of uncertainity among the builders and also the buyers on when to make the next move.It was evident that correction in RE prices have started to happen.

Requesting members to respond with their thoughts on the current trend.
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  • Originally Posted by BigBear
    Indian companies had laid off 1.31 lakh employees during April-June 2009 ,exports are falling continously for last several months,drought is expected in many places of India,prices of sugar and other food items have risen exponentially and one guy is shouting here to buy RE.See his words does it not sound like a typical broker

    Unfortunately stock market is rushing up in US and India. So is Bigbear an ex broker of US who has lost is lost penny and now trying to become a Chennai broker but is unable to find even one client? Sob Sob Big bear!
    CommentQuote
  • Friends,

    List of projects from Ungal Illam 2009 Fair and Affordable Homes Show at Tambaram.

    Focussing more on the latter which featured affordable projects from small/medium sized builders.



    Allsai and Associates

    Santhoshpuram - 2800/sqft
    Rajakilpakkam - 2900/sqft
    Gowrivakkam - 3050/sqft

    Arihant Foundations

    Villa Viviana - Maramalai Nagar
    Terrace Villa(Row House) - 2200/sqft
    Style Villa(Independant) - 2500/sqft

    Arun Excello

    Thillana - Pallikarnai - 3950/sqft

    Envision Developers

    The Meadow - Rajakilpakkam - 2600/sqft

    Hallmark Infrastructure

    Golden County - Maramalai Nagar - 2650/sqft

    Iniya Illam Construction

    Sembakkam - 2700/sqft

    Jeni Constructions

    Joel Mansion - Sembakkam - 3100/sqft
    Joel Villa - Madambakkam - 2300/sqft

    Lancor Holdings

    Abode Valley - Potheri - 2600/sqft

    Pace Builders

    Pace Acyuta - Valasaravakkam - 2995/sqft
    Pace Adarsa - Selaiyur - 3195/sqft

    Real Value Promoters

    Neel Kamal - OMR, Kazhipattur
    1st - 10th floor - 2597/sqft
    11th - 15th floor - 2647/sqft
    16th - 19th floor - 2697/sqft

    Ruby Builders

    East Tambaram (Irumbuliyur) - 2800/sqft
    Mudichur Road - 3000/sqft
    Chitlapakkam - 3000/sqft
    Rajakilpakkam - 3000/sqft
    Chrompet-Hasthinapuram - 3395/sqft
    Pallavaram - 2950/sqft

    Sabari Realtors

    Serenity - OMR,Siruseri - 1899/sqft

    Shrusti

    Vasantha Backiyam - Hasthinapuram - 2700/sqft

    Sri Raghavendra Builders

    Guru Heritage - New Perungalathur - 2500/sqft

    Sri Sabari Homes

    Pallikarnai - 3000/sqft
    Vengaivasal(Independnt Villa) - 2700/sqft

    Udhayams Associates

    Chitlapakkam - 3500/sqft

    CommentQuote
  • Friends,

    Visited the Affodable Homes Fair by magicbricks yesterday.No new projects to write about.It was the same set of builders with the same projects with same vacancy and unsold apartments.No new supply.

    Couple of days back I had written about the current mood

    "people have started to buy, rate is going to increase".

    This was echoed again by most of the builders.The willingness to talk and negotiate had reduced.

    I feel this could be the last leg of brave face the builders are trying to put up and can be a desperate attempt and orchestrated by the builders associations to try talking the market up citing some fresh new sales and price rising again talks.

    From what I observe, some fresh sales are happening for flats in 20-40 lakhs range and some are investing their surplus from salary hike/arrears into land.

    To me the price rising talks seem very unreal.I request fellow members to share any other factors they may know which could more clearly point towards the trend in coming months.
    CommentQuote
  • Even inner city buyers are cautious ...

    Originally Posted by nabishek
    Friends,

    Visited the Affodable Homes Fair by magicbricks yesterday.No new projects to write about.It was the same set of builders with the same projects with same vacancy and unsold apartments.No new supply.

    Couple of days back I had written about the current mood

    "people have started to buy, rate is going to increase".

    This was echoed again by most of the builders.The willingness to talk and negotiate had reduced.

    I feel this could be the last leg of brave face the builders are trying to put up and can be a desperate attempt and orchestrated by the builders associations to try talking the market up citing some fresh new sales and price rising again talks.

    From what I observe, some fresh sales are happening for flats in 20-40 lakhs range and some are investing their surplus from salary hike/arrears into land.

    To me the price rising talks seem very unreal.I request fellow members to share any other factors they may know which could more clearly point towards the trend in coming months.



    I have first hand experience trying to sell off prime land in RK Salai area. While original price in 2007 was going at around 10k - 12k (there was a lot of bull about 14k but I would like to see a sale at that price, not quotation). This gives a price range of 2.5 to 2.85 C.

    Today the price range has declined to 2.25-2.35C and there are ready buyers only at 2C. Volumes are also drastically declining. There is no dearth of cash parties, but no one wants to take risks at high prices (probably worried about prices coming down, or about the economy continuing in this way and so they are conserving cash).

    So, all in all, things have not changed and buyers are still savvy and keeping off unless they get what they see as bargains.

    cheers
    CommentQuote
  • Well said wiseman,Thats truly the mindset of buyers,what about the mindset of sellers?(including yours)
    CommentQuote
  • Sell with all urgency ...

    Originally Posted by vijai5
    Well said wiseman,Thats truly the mindset of buyers,what about the mindset of sellers?(including yours)



    Vijai,

    Seller's mindset (mine) is still great opportunity to sell and retain value in cash form (or, in other words, not lose further value in terms of price declines).

    The logic is simple. It would have been ideal to have gotten the 2.75C price. But that is history and it is always easy to strike a deal with hindsight! :D

    Let us see if we can get back 2007 prices in the near future. To do so, we need the kind of euphoria that was present back then. With drought and a continuing global deflationary situation, do I expect prices to go up? Absolutely not!!!

    In fact, as this depression continues into 2010 and beyond, people will become even more cautious and risk-averse and I may very well see prices go down as far as 1.25C (which is a 55% drop from peak).

    Even now at 2.25C, therefore, there is a great chance to sell and maybe even buyback similar land at 50% to 60% of today's prices!!!

    For me, there is only one way this is going to end ...

    cheers
    CommentQuote
  • 50% or 60% correction/Crash is unlikely Wiseman. I do not see any further downward movement in Indian RE (At least not material).

    The GFC is over and the economies all over the world has bottomed and turned the corner.
    The 2009 North Indian drought is not going to affect the RE market of any major metro city.
    The politicians are concerned about drought as the price of some food items will be high and that will affect the poor voters and not property purchasers (no impact on RE)

    Good luck and keep waiting for the imaginary 50% correction.

    I didn't expect this kind of assessment form you Wiseman, I know you are a well informed blogger - It appears the above statement is your heart driven not your knowledge driven.
    CommentQuote
  • Good luck to you and all other bulls!

    Originally Posted by Economist
    50% or 60% correction/Crash is unlikely Wiseman. I do not see any further downward movement in Indian RE (At least not material).

    The GFC is over and the economies all over the world has bottomed and turned the corner.
    The 2009 North Indian drought is not going to affect the RE market of any major metro city.
    The politicians are concerned about drought as the price of some food items will be high and that will affect the poor voters and not property purchasers (no impact on RE)

    Good luck and keep waiting for the imaginary 50% correction.

    I didn't expect this kind of assessment form you Wiseman, I know you are a well informed blogger - It appears the above statement is your heart driven not your knowledge driven.


    Economist,

    Each and every one of my assessments could be entirely wrong and thats a caveat I make each time I say something.

    But, my assessments are not done to satisfy the likes and dislikes of people, thank God for that! :D

    It is done keeping in mind the larger picture and laws of nature. For example, if a 50 ton truck is headed your way at 50kmph and is 50 feet away from you without any impediments in between, you can always allow yourself to get distracted by looking at the traffic around you, the hummer driven by Harbhajan without registration plates, the Rolls of Mallya swishing by and all of that. But momentum will ensure you get crushed despite all the distractions. The Ostrich is famous for burying its head in the sand. Why should we Emu-latethe same? (pun intended!)

    In other words, you can get carried away by all the feel-good news occupying every nook and corner of the press and electronic media. And if you go back into recent history (say from Nov 2007), you will see that everytime this kind of news blanketed all media, markets took one look at the bigger picture and crashed. Know the reason why?

    The world (especially the developed one) borrowed almost all of the money saved by developing countries and morer and frittered it away on ueless things and excess capacity building. The world built up capacity that may be today 30% above consumption in many sectors; and this consumption is not coming back because lending is not going back to those levels!!! The world has thrown well over $10 trillion to try and make the 2007 fantasyland come back and all they have got is this anaemic bounce (not the stock market) in terms of manufacturing and exports. Even today, manufacturing is only matching what was 2008 bottoms. Shipping rates are again crashing. And most important, when Govts turn off the tap on bailouts and cash for spending programs, the common man will go back to sparse spending and saving every penny he can. That will put the reverse gear on all this turnarounds all over again!

    That period is right round the corner for a large part of the world. Stock markets started discounting the "worst is over" theory and "China is going to lead us out of the rut" theory till everyone found out that China has finally put a halt to stockpiling of commodities (so an impending crash in shipping and commodities is right round the corner) and worst of all, they lied about their recent quarter GDP growth (over 6%) while it could have been anything from -2.8% to +2%. So, the Shanghai Index is crashing almost every day by large margins. Did you see the news that has got the entire commodities market in a panic situation? China just announced that it will allow its State-owned Enterprises to renege on Commodity Contracts!!! And china is the largest importer of commodities in the World. If actually happened, it could lead to billions of $$$ in losses by commodity exporters who have already contracted at high prices and total panic in the commodity markets as there is no one else importing all of this stuff! Is this a sign of confidence in the future and "we will lead the world out of recession" leadership?

    So, dude. While you want to see the feel-good projections about the good times that are coming given out by the same people who had no clue about the bad times that were to come even days before they came, I would prefer to see if there is really any real sustainable reason for good times to come and remain! Most people who are hopeful of turnaround generally have some hidden agenda that is forcing then to focus only on the feel-good. I can understand that and have made many such mistakes in the past. But markets do not forgive easily and we can continue to hope for prices to go up and see our purchase get minced to shreds while we continued hoping!

    Time and again I have seen extreme bullishness preceding sharp crashes. I suspect this time is once again going to be one such! Because fundamentals are still extremely weak. Please note that the decline has only slowed down and it has not turned around to become a sustainable rise!

    If you noticed, if things are so good and becoming better why is it that the Nifty has tried 3 times to cross 4740 and Sen 16000 and failed each time. Very rarely do market try a resistance level a fourth time and cross it decisively and that situation needs very bullish economic findamentals - not exactly what we see around us today, do we?!

    I have some serious reasons why I'm very sceptical about all this "worst is over" sound bytes. Especially when interested parties (like the Govt) are too quick to pull the trigger with only one single data point to support their claims. Why don't we wait for at least 3-6 months sustained data points pointing to a reversal before we start dancing with joy? :D

    cheers
    CommentQuote
  • Dear Wiseman,

    Your post was really interesting.It is a levelheaded assessment of the current scenario.It is so easy these days to get carried away by the information overload....

    regards
    unlikely
    CommentQuote
  • What ever crisis and crunch that can happen has happened already, there will be no more shock.
    Without any caveat I can stake my reputation to say that "There will be no crash in RE asset prices in India"
    The projection Chennai RE market is falt to moderate gross growth of up to 4% in the next 12 months.
    The next 12 month’s growth will be based on Core Inflation, Followed by real growth (Net of Inflation) in 2011.
    I am not hiding behind any Caveat; My projection is based on thorough assessment of global and Indian macro economic situation.
    What else can go wrong when the global credit wheel came to a grinding halt in Nov 2008? Nothing worse can happen.
    OECD interim economic report today predicted swift recovery and end of GFC
    I think OECD knows better than myself, Wiseman and Unlikely.
    Don’t beat around this bush and unleash bearish views just for the sake of it.
    CommentQuote
  • Originally Posted by Economist
    What ever crisis and crunch that can happen has happened already, there will be no more shock.
    Without any caveat I can stake my reputation to say that "There will be no crash in RE asset prices in India"
    The projection Chennai RE market is falt to moderate gross growth of up to 4% in the next 12 months.
    The next 12 month’s growth will be based on Core Inflation, Followed by real growth (Net of Inflation) in 2011.
    I am not hiding behind any Caveat; My projection is based on thorough assessment of global and Indian macro economic situation.
    What else can go wrong when the global credit wheel came to a grinding halt in Nov 2008? Nothing worse can happen.
    OECD interim economic report today predicted swift recovery and end of GFC
    I think OECD knows better than myself, Wiseman and Unlikely.
    Don’t beat around this bush and unleash bearish views just for the sake of it.


    Hi Economist,

    You seem to be having strong reasons to be really convinced that Chennai RE is on its revival path.

    Would it be possible for you to shed more light on what you believe are the local factors apart from global reasons that move Tier II markets like Chennai RE.

    I am hoping to learn and understand more from your insights and extensive study.

    Thanks in advance.
    CommentQuote
  • Originally Posted by nabishek
    Friends,

    Visited the Affodable Homes Fair by magicbricks yesterday.No new projects to write about.It was the same set of builders with the same projects with same vacancy and unsold apartments.No new supply.

    Couple of days back I had written about the current mood

    "people have started to buy, rate is going to increase".

    This was echoed again by most of the builders.The willingness to talk and negotiate had reduced.

    I feel this could be the last leg of brave face the builders are trying to put up and can be a desperate attempt and orchestrated by the builders associations to try talking the market up citing some fresh new sales and price rising again talks.

    From what I observe, some fresh sales are happening for flats in 20-40 lakhs range and some are investing their surplus from salary hike/arrears into land.

    To me the price rising talks seem very unreal.I request fellow members to share any other factors they may know which could more clearly point towards the trend in coming months.


    Dear Friends,

    In my attempt to learn the workings and dynamics of various investment markets like RE, stocks etc I have observed that market sentiments change quicker than market fundamentals.

    Markets always react to sentiments.As the word "reacts" itself suggests, The outcome of such reaction is temporal.Whether the rise/fall would continue or revert back is dictated by fundamentals, market forces of each sector and socio-economic positions.

    For example, Gold was believed to have reached its peak for this leg.Hope you all would have noticed, it has touched 16K today.This would be interpreted by many as leading indicator that the short term bullishness in the stock market is going to end soon, and the markets will see sharp corrections in the coming weeks.

    The reasons like failure of monsoon etc that was being attributed earlier may fizzle against a greater factor.I read somewhere that as per some weather report from a satellite data, its predicted that monsoon may not disappoint altogether as expected, but rather it will onset late and shower the same amount of rain which was expected of it.If it happens all the food grains/commodities price that sky rocketed, will hit rock bottom.

    If the markets have to rise or crash, it will.Its a culmination of various factors of which we understand and focus only on selected few.

    The point I am trying to make is, speculation based on such reasons never ends.

    In hindsight many reasons are identified and talked about in length by educated analysts.Normally its very hard to attribute reasons to why the market would react in a particular way beforehand.Your guess would be as good as mine.With better insights and information one can hope to make a correct call and increase the probability of success than leaving entirely to chance and luck.

    So, do fundamentals of a sector change?Of course Yes.It changes when the business decides to bring a change in the way they function adjusting to their customers/investors need and socio-economical situation.Whether the change will be positive or negative will depend again on the pshycology and how supportive the participating customers and investors are to the change.If a proposition is not profitable, It will be dumped.

    After the Financial crisis, the effect of excess liquidity and inflated asset prices.The focus should have been learning from past experience and limiting exposures to risky debt and high leverage.Sadly, It has been only on cutting losses and infusing additional liquidity from whichever sources to continue the wrongs they have been doing earlier.

    The growth projections and reports from various countries and companies suggest that the newly infused liquidity in the form of bailout packages has succesfully put economies back on track.Companies and economies are resisting pressure to change and are trying to dissuade from what happened, stating "worst is over".Whether this optimism will contniue?only time will tell.

    Coming back to our point of discussion - Chennai RE

    My attempts to find the tools to identify the bottom has seen limited success.

    Thanks to wiseman, The best instrument we have is based on Buy vs Rent decision (Rental yield)

    Stock Market (P/E ratio of sensx)

    Top = 24 to 28
    Bottom = 12 to 15

    Real Estate (Rental Yield)

    Top = 2.5%-3%
    Bottom = 6%-7%

    The rental yield of flats in chennai is still in the range 2-3%, right at the top.

    If someone is looking for value investing, RE is not at all attractive.

    Having said that do people buy RE only for investment?The answer is NO.They buy RE also as an investment.The main motivation I believe is sense of "ownership".

    Apart from that, One more important point is Chennai RE is unique at the micro market level when compared to other cities.The price rise did not happen when markets like mumbai, bangalore was rising and didnt correct as much like them similarly.

    When I hear people talk price is going to increase again, I would like to know first, Is there room for further hike?In other cities, builders are increasing the rates covering what they had reduced.In chennai, correction as such has been minimal and builders have managed to hold on to the peak rate with 10-15% reduction.

    So, logically price can only stagnate.The price reached a stagnation point only because the current income/affordability could not sustain anything above the current price.Demand died not because people with the intent of buying home werent there, it was because they couldnt afford.

    The appreciation Chennai RE saw between year 2002-2004/5 was due to genuine demand generated due to gentrification and increasing salaries.It was a period when the market caught up with the subdued appreciation witnessed during the last decade.Only the years 2005-2008 saw the spike in prices due to the culprit Easy Credit and excess liquidity.

    While debating whats the right price.I had said that in 2009, Inflation adjusted 2005 price +/- 10-15%, i.e. 2007 price is a good buy and also posted resaons why I feel so.

    For argument sake, lets accept that interest rates are down, job situation is improving, global financial crisis is over etc and that we are in a situation similar to we were in 2007.

    Lets look at the possible outcomes

    1.If the global situation is really improving as projected and there is no increase in salaries.We may only see extended stagnation period for some more years.The new demand and liquidity atmost can only result in minor 10% rise.The current price after 3-4 years isnt bad either.

    2.If the positive outlook results in another boom in price like 2005-2008.We would hit another roadblock around 2011-2012 similar to the current one.Reason, As clearly evident the appreciation is purely another bubble, and a bigger one.The burst of which would be catastrophical to individual's wealth.

    3.When its evident that it will take some years before the consolidation ends and economies start moving again.Builders may come in terms to reality, and try to sell at the right price(15-30% less than 2008/2009 price) and price would pick up in sustained manner after couple of years after market has bottomed out.

    4.None of the big talks and efforts work, resulting in devaluation and liquidification of assets immediately instigating sharp property crash.

    I still believe, point 3 is a distinct possibility and am expecting the correction to happen within year end and hoping to see pretty good deals in new/resale categories.Lets see.

    Requesting members to share their views and comment.

    I would like to end my post by quoting the following again

    When Euphoria about RE investment is still present, its a false top call.

    When Income levels cannot sustain the current price, its a false bottom call.
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  • how do you calculate rental yield,can you please explain,
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  • Originally Posted by vijai5
    how do you calculate rental yield,can you please explain,


    Hi,

    Rental Yield = (monthly rent * 12)/House price * 100%

    Considering a 1500 sqft 3BHK which costs 8500/sqft and fetches a rent of 25000 per month including maintainence and other expenses.

    Cost of House = (8500*1500) = 1,27,50,000

    Rental Income per year = 25000*12 = 3,00,000

    Rental Yield = 3,00,000/1,27,50,000 * 100 = 2.35%

    The optimum rental yield is believed to be around 4-5%.

    i.e. Cost price of house should not exceed 200-240 times the monthly rent.
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  • Thanks nabhishek!

    Thanks for your informative thoughts nabhishek! You have given some amazing details thus far including detailed coverage of the recent home fairs.. Has definitely helped me to get some plain facts on the ground..
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