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Property Price Trends in Chennai

Last updated: 2 weeks ago
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  • Re : Property Price Trends in Chennai

    Something new is happening. Just 3 weeks back a Hanu Reddy consultant was calling it a buyer's market. Suddenly today she is asking me to hold on and stating that there is a competition amoung buyers. Is the Chennai market waking up for another big uptick?

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    • Re : Property Price Trends in Chennai

      Last time the tide lifted entire India. This time can't be same. Location is foremost important either for Rental or Cap Gain. However for next 20 years, India is the place to be for any investment.

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      • Re : Property Price Trends in Chennai

        Originally posted by RE King
        Something new is happening. Just 3 weeks back a Hanu Reddy consultant was calling it a buyer's market. Suddenly today she is asking me to hold on and stating that there is a competition amoung buyers. Is the Chennai market waking up for another big uptick?
        This is new: The term Hanu Reddy Consultant is an oxymoron. Plenty of Hanu Reddy listed properties quoted at 5-10% lower in property sites by owners. In my random checks with direct owners, it was quite apparent. You have to observe outside more than HRR broker feeds you with.

        What is new: People who invested hard earned money in RE in the last 10 years with a life goal attached has realized, 'liquidity' is an important aspect when one chooses an asset for investment. I know many who are in quandary with marriages/children's education money attached to realization of sale. To get liquidity, they need to mark down - they don't have the luxury because the unrealized gain is meagre.

        What is sad: Scores of RE investors of last decade, with 5-6 % IRR on their investments. Several properties(apartments) in prime areas such as Alwarpet, Adyar with sellers having a neat excel showing their plight and want at least their cost of capital paid as a minimal return expected on what they paid for these properties. They don't realize that markets are brutal and they can only sell at where buyers are willing to pay for.
        Last edited by maverick007; August 4 2017, 08:50 AM.

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        • Re : Property Price Trends in Chennai

          What is sad: Scores of RE investors of last decade, with 5-6 % IRR on their investments. Several properties(apartments) in prime areas such as Alwarpet, Adyar with sellers having a neat excel showing their plight and want at least their cost of capital paid as a minimal return expected on what they paid for these properties. They don't realize that markets are brutal and they can only sell at where buyers are willing to pay for.

          People can use Excels , Calculators etc and cry that they need to at least get bank interest for their property but markets have their own way of moving and sometimes you may have to just accept the fact that you made a mistake in buying the property , sell it for the rate that is being seriously offered , book the losses and move ahead . This applies not only to Properties but also for stocks and other investments . In stocks at least you can exit it and book the losses at the click of a button but in RE it is not very easy and you need to get a buyer first .

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          • Re : Property Price Trends in Chennai

            Originally posted by kubera2016 View Post


            People can use Excels , Calculators etc and cry that they need to at least get bank interest for their property but markets have their own way of moving and sometimes you may have to just accept the fact that you made a mistake in buying the property , sell it for the rate that is being seriously offered , book the losses and move ahead . This applies not only to Properties but also for stocks and other investments . In stocks at least you can exit it and book the losses at the click of a button but in RE it is not very easy and you need to get a buyer first .
            In one instance, seller just wants the investment principal back - in USD, when it was invested in 2007 !!. Has accepted the fact it was a lost decade.

            What many do not realize is, this is the beginning of the unwinding of the largest bubble created in India due to the funny money and not clean money. Unfortunate fact is, clean money will pay for it and cannot avoid the collateral damage.

            -------
            How Real Estate performed in a clean & transparent system in US (since 1980) - the country with one of the highest standard of living, high governance, great place to do business, sustainable economic growth leading the world with innovation. RE under performed the Cash (90 day T Bills) is the message that can shock anyone but that's the nature of the asset and generally accepted around the world.

            Absolute Returns since 1980 -

            Stocks +6100%
            Bonds +1500%
            Cash +420%
            Real Estate +330%

            ---------------------------
            From above, one can measure the extent of skew the funny money had caused in our system - no excel or modelling can forecast the unwinding impact on valuation. If India needs to move in the direction of growth and becoming a developed one, this unwinding is inevitable.
            Last edited by maverick007; August 4 2017, 09:31 AM.

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            • Re : Property Price Trends in Chennai

              From above, one can measure the extent of skew the funny money had caused in our system - no excel or modelling can forecast the unwinding impact on valuation. If India needs to move in the direction of growth and becoming a developed one, this unwinding is inevitable.
              With Aaadhar and PAN becoming compulsory in almost everything we use be it Banks , Cell Phones , Property etc etc there is very little scope to hide the illegal money except through GOLD , or through Hawala or through entering Politics . No doubt the fat Cats will always find a way to scuttle the system and escape scrutiny but it is going to be very tough for the normal Cats to escape scrutiny and hide their illegal wealth .

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              • Re : Property Price Trends in Chennai

                It is crazy to compare US return with India. It is quite opposite environment. One have low inflation, low interest rate, matured market for other asset classes, aging population and decent social security. The other have complete opposite of the former. RE is one of the main components in the economy, and without this pillar other components can't sustain. For any asset class, when the price goes up or down, the mean reversion happens and that is what happening now in RE.

                It would take years to see normalcy in RE price. The RE price can't go to zero as some bears suggest. Still buyers have difficulty in getting right property at right price. Still builders are holding the price steady. For most of apartments, It used to be one forth the construction cost for total price, remaining land value. It is complete opposite now. One forth is land cost and remaining building cost.
                Last edited by sunr2i; August 6 2017, 10:36 AM.

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                • Re : Property Price Trends in Chennai

                  Unwinding of 2-3 decades of non-sensical build up using funny money has a strong lever has begun. 

                  Pillars supported the 'uncontrolled' growth of RE is being clinically dismantled.

                  RE is not going to zero and may not even crash. 

                  But, standing still and not providing liquidity when investors need can wreak a lot of pain. 

                  Any investor in the last decade and more so in the last 5-7 years know the pain RE has caused without crashing and not even correcting more than 10%. 




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                  • Re : Property Price Trends in Chennai

                    All those RE stocks such as DLF, Vijay Shanthi etc. in last 2 years either doubled or tripled and some one saying RE investment caused pain. Even in NYC, selling or buying RE is not easy due to the process involved and Chennai or any other Indian city is no exception. Actually it causes pain for people who have been waiting for price crash for last 10 years and end up becoming with price out of reach. Those who missed the train, unfortunately missed it forever!

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                    • Re : Property Price Trends in Chennai

                      Originally posted by sunr2i View Post
                      It is crazy to compare US return with India. It is quite opposite environment. One have low inflation, low interest rate, matured market for other asset classes, aging population and decent social security. The other have complete opposite of the former. RE is one of the main components in the economy, and without this pillar other components can't sustain. For any asset class, when the price goes up or down, the mean reversion happens and that is what happening now in RE.

                      It would take years to see normalcy in RE price. The RE price can't go to zero as some bears suggest. Still buyers have difficulty in getting right property at right price. Still builders are holding the price steady. For most of apartments, It used to be one forth the construction cost for total price, remaining land value. It is complete opposite now. One forth is land cost and remaining building cost.
                      I beg to differ, I believe high RE prices are holding our economy. here are some examples,

                      *I hope you wont deny the need of a bus terminal for south bound travelers. The huge traffic in GST from Guindy all the way through Perungalathur especially at Perungalathur is horrible, for a city like Chennai where 90% travelers depend on moffisul buses don't have proper facility in a needed area. everyone acknowledges the need and have consensus to bring a new terminal with good facilities. Govt is trying for 5 years now to identify land and acquiring them. They failed big time because they could not pay for the Land. we are losing infrastructure development because of the Land prices..

                      *how many so called schools in Chennai have play grounds for kids? when I remember my school the first thing that comes to my mind is the big playground where we played endless soccer and cricket, the tracks to prove our mighty speed. I met my best friends in playground not in classroom. I feel pity for most school kids nowadays, what they have other than those four concrete walls to see. this is the development! in RE prices that gifted our kids.

                      *High RE prices means, unsustainable rents for small businesses. eventually who could run a small business, will turn into a employee for a MNC killing his entrepreneur ambitions. unfortunately if one could not earn a professional degree against his/her name will have to fight a battle to prove their other valuable capabilities. not many realize high RE prices are killing dreams. even if someone own a chunk of RE now, doesn't mean that their next gen is safe.


                      the day when the entire society realize that RE price is holding us back, the craze for RE will reduce. Govts will be forced to control RE Price as there could be revolutions, that need to be respected. I am not saying we are there yet but we will eventually be if the RE prices don't match with average income of the mass population. if RE prices cant correct then atleast the average incomes need a steep raise.

                      Last edited by iceemani; August 7 2017, 02:35 AM.

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                      • defu22
                        defu22 commented
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                        Well said..
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