Announcement

Collapse
No announcement yet.

Property Price Trends in Chennai

Collapse
This is a sticky topic.
X
X
Collapse

Property Price Trends in Chennai

Last updated: May 20 2021
2453 | Posts
  • Time
  • Show
Clear All
new posts

  • Re : Property Price Trends in Chennai

    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..

    Comment


    • Re : Property Price Trends in Chennai

      Chennai

      I am looking for a flat in chennai along OMR. I was told that MARG's Pushpadruma is upcoming and also Arihant Heirloom was there. Any thoughts on these or better properties? I really appreciate anybody's thoughts.

      Comment


      • Re : Property Price Trends in Chennai

        In my opinion, people do not buy property just on the calculation of a rental yield. The main driving force for the RE market is the expectation of further appreciation.

        Also other income may include tax benefits. Also safe heaven for black money

        Originally posted by nabishek View Post
        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.

        Comment


        • Re : Property Price Trends in Chennai

          Originally posted by antonyprakash View Post
          In my opinion, people do not buy property just on the calculation of a rental yield. The main driving force for the RE market is the expectation of further appreciation.

          Also other income may include tax benefits. Also safe heaven for black money
          Though people dont take into account the yearly rental income while planning a purchase.I believe they do take it into account rental prospects and the current rent outgoing while calculating their affordability for any loan obligation.

          According to me when a flat is bought taking loan

          1.Yearly rental income should be treated as the returns on the downpayment towards the loan.
          2.Returns from RE due to leveraging taking into account repayment capability and discounting borrowing cost should be treated as profits.

          If people take time and do the maths right, I am sure they will instantly realize the one-sided ness of the process.

          Rental yield shouldnt be confused with rental income.One of the movers of RE is the increasing demand for a particular locality.

          If we probe why demand would increase.Some of the reasons maybe

          1.It would be because of new people wanting to reside and rent there due to proximity to work, schools, facilities etc
          2.People already renting there, wanting to buy as rent is increasing which can be diverted towards EMI and a place can be called home.
          3.Investors buying to book profits as rates are increasing.

          looking at the reasons, It would be evident that everyone is buying because they expect someone to rent their house or want to stay themselves.The expect the flat to be occupied, not lie vacant.

          Pure investment is only land, which is held till some development happens and people start living with basic facilities available.

          All of the above is fine until the happens

          1.The rent reaches a level when it fails to attract new demand.
          2.Prices reach a level when for people who are currently renting find that the house is not affordable to buy.
          3.Investors find that the rates are not increasing any further, because new flats are not selling and vacant flats already available without takers for rent.

          This when the downslide for RE starts.The rental and price starts correcting and continues till a balance is reached when the locality starts to attract new people again.

          This balance is what the rental yield indicates.

          Comment


          • Re : Property Price Trends in Chennai

            This is not an Ego trip ...

            Originally posted by Economist View Post
            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.

            Dear Economist,

            I'm not getting into an ego fight with you.

            But having said that, like Abishek says, you might just be jumping the gun with a lot of feel-good stuff. Let me explain ...

            You have said that after a thorough analysis of the economy you have come to a definite conclusion that the bottom is already in and we are running upwards now! And the source of that analysis is OECD.

            Simple bunch of questions ...

            - Source of the whole mess is the Investment Banks in the US. When they themselves do not know for sure how much of the mess is still undiscovered, how is anyone so sure of their analysis? In other words, if the data itself is not clear, how can anyone be so sure of the analysis and conclusions?

            - Where was OECD before this mess started? When the analyst had no clue about the impending disaster in 2007, how is he now so confident that the worst is past?

            I have been in this analysis business to know that no analyst worth his/her salt would ever venture out to state things so boldly about a situation about which there is so much uncertainty - without a caveat!!! The guy who actually predicted this decline in 2006 (and who was laughed at at that time, but is now sought after), Roubini says he believes that there is a 50% chance of a double dip. Let me tell you hat he has more credibility than the OECD because he was one of the very few to do a highly accureate prediction of the recession before it happened!!!

            Another point. The Credit markets did come to a grinding halt in Nov 2008. But the only reason they did not collape is the insane amount of money thrown into the economy by the US, UK and others; even China besides India. When all this credit is reversed, do you think the economies will shrink a little?

            Also, US and other banks are sitting on TRILLIONS of CDSs and other derivatives (the value of which is anybody's guess) and no one can guarantee what will happen when one of these parties goes under. The estimated size of that market is a gross of over $600 Trillion which is 15 times the size of the entire planet's economy. This problem has not gone away. It has simply been postponed to a later date. Under these conditions, recovery is definitely uncertain and even a small shake in any major economy might unleash a tsunami of cascading defaults running into amounts so large that even all the Govts of the world combined may not be able to throw enough money to save the situation. So, what happened in Nov 2008 was a small thing and much bigger problems can happen!

            Lastly, I have skin in the game. I'm an active seller in the market. And in the last 6 months I have seen how difficult it is to sell. We have had at least 40 people come and show interest in the property (pretty prime area and all interested parties with loads of cash) and go back and not return.

            I have never seen a bull market where there is also so much disinterest among buyers. In normal bull markets buyers are fighting with each other to grab assets. In addition, with bull markets in the last 25 years driven by easy credit, how can today's situation with such tight credit markets ever hope to be a bull market?

            Therefore, in conclusion, my so-called bearish statements (and I also stated in the post that I was not trying to unnecessarily frighten people) has several sound reasons for them - besides the kind of reasoning brought up by Abishek.

            Anyways, let us wait and see which way the wind blows!

            cheers
            Last edited September 12 2009, 03:12 PM.

            Comment


            • Re : Property Price Trends in Chennai

              In India the wind is blowing north

              Originally posted by Economist View Post
              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.

              I am not sure about the US and european economy but you are absolutely right about the indian economy and RE.

              India is a growing economy is not solely dependent on exports.
              it has the added advantage of a robust banking system.
              what used to be the criteria for the world accepting dollar as a hard currency was the political stability and US policy which were intact for nearly 200 years. now the indian financial system has earned the reputation of nearly foolproof system. this alone is enough to attract FDI in all sectors in India spurring growth.

              In India the wind is blowing north

              Comment


              • Re : Property Price Trends in Chennai

                [QUOTE=wiseman;34845]Dear Economist,

                The estimated size of that market is a gross of over $600 Trillion which is 15 times the size of the entire planet's economy. /QUOTE]

                This is a often quoted m is representation. The amount is not the ctaul amount but a notional amount. when SWAPS on interest or credit defaults are entered into they are based on a notional base value. The actual underlying asset is probably a fraction of th above.
                Cheers

                Comment


                • Re : Property Price Trends in Chennai

                  Price of flat in thiruvanmiyur

                  This is a great thread with lot of food for thought. I have waited more than 7 years to see if the prices of flat will stabilize or come down. Lately, I have done some research and found that most properties in the City are selling well. For example in Thiruvanmiyur the going rate is between 6000 to 7000 rupees per sq ft.

                  I have checked out few properties by Ramaniyum, Land Marvel, Casa Grande etc in the Besant Nagar/Thiruvanmiyur region and it is in this range.

                  Is this a good time to take plunge into the Market or do you guys think the price will go down further? The builder is not willing to reduce the price by more than 200 rupees.

                  Comment


                  • Re : Property Price Trends in Chennai

                    I am not expecting a very bullish and sky high RE market between now and the next 2 years, BUT we have hit the bottom and THERE WILL BE NO MORE DOWN WARD PRICE MOVEMENT" (It does not mean that it will go sky high).

                    You will see mild/moderate growth in RE prices from now to next 24 months.

                    I agree with wiseman that currently properties are not selling like hot cakes and neither it will for at least the next 12 to 24 months.

                    Guys good properties and good location are now available and vendors are willing to listen, use this opportunity and get in.

                    If you wait assuming there will be big correction, before you realize it will be too late.

                    Comment


                    • Re : Property Price Trends in Chennai

                      Agreed,Anthony rental yield has been historically very low in Chennai.

                      The net rental yield is not a major factor in most purchase decisions in Chennai.

                      Comment

                      Have any questions or thoughts about this?
                      Working...
                      X