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Property Price Trends in Chennai

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  • Re : Property Price Trends in Chennai

    For all the hype about sales picking and price increasing see the results announced by Parsvnath Developers.Net profit is up 150% sales have declined by 30% compared to last year.The company's net profit zoomed on the back of 464.83% spurt in other income to Rs 27.62 crore in Q2 September 2009 over Q2 September 2008.

    And last year was supposed to be the most difficult times for RE after Lehman went bankrupt and they are not able to sell more than last year.Lets wait and watch other builders result also before believing these false hype.

    Comment


    • Re : Property Price Trends in Chennai

      Friends,

      There's lots of false hype I agree, but we cannot ignore the amount of demand that gets generated due to it and the amount of money that gets sucked into the market due to it.There will be surely an impact(continuation of stagnation or temporary rise)

      The governments all over the world have done well by infusing liquidity to help sustain the businesses.What they have done is similar to providing a vaccine.By infusing the poisonous liquidity at low levels and short intervals they are hoping the economies will develop resistance and get back on its feet again.

      There are numerous reports to state that the efforts are working and the economies are recovering.There are at the same time also fear that it could be overdose of liquidity that will end up killing the economy.

      Its risky endeavour to attempt to live with the pathogen than to get rid of it.Only time can predict the outcome.

      In my opinion its too early to claim and assume that the economies will start running again when most are still struggling to keep the first step.The period of healing could take longer and would be slow and steady.

      The liquidity infused has been majorly used only to absorb loses, not create new demand.Now countries are depending on their people to spend their money from their savings or by availing credit to give the economy a boost.

      On closer introspection of the news and data thats coming out, it should be evident that all these news of "recession over","Boom days are back" etc are just attempt to get people spending again and create a mood of optimism.Its a desperate attempt to get rid of the excess inventory thats piled up without hurting themselves and build consumer confidence.
      There are scores of people who dont want to miss out another opportunity, and such propaganda aims at cashing on the sentiments of such people to get the markets moving again.

      With regard to real-estate, The big builders who are in a better cash position than last year are acting greedy to hike their price knowing well that it will kill the demand.It doesnt matter to them, as they have large numbers of projects under construction which they are yet to complete and the projects that the price are being hiked is scheduled for delivery some 2-3 years down the line and are those which has seen decent booking under the "affordable segment".The price is hiked in anticipation that the economies will revive by then and they will complete it then meanwhile diverting the cash generated now towards completing current projects.The pricing strategy of these builders has always been like futures.

      I request people to exert caution while booking with such builders.My advice would be to choose projects that has a special purpose vehicle floated only for funding that project, ascertain the cash position of the builders,clarify everything in the agreement before signing the dotted line.Even if you have to pay a premium, choose only from projects thats nearing completion or ready-to-occupy.Resale markets are also getting attractive.

      I personally choose to wait to see the smoke clear off and confirmation of the trend before deciding to plunge and am still of the opinion that there is scope for further correction before a take-off.

      Comment


      • Re : Property Price Trends in Chennai

        About Parsvnath ... and the 'Recovery' ...

        Originally posted by BigBear View Post
        For all the hype about sales picking and price increasing see the results announced by Parsvnath Developers.Net profit is up 150% sales have declined by 30% compared to last year.The company's net profit zoomed on the back of 464.83% spurt in other income to Rs 27.62 crore in Q2 September 2009 over Q2 September 2008.

        And last year was supposed to be the most difficult times for RE after Lehman went bankrupt and they are not able to sell more than last year.Lets wait and watch other builders result also before believing these false hype.

        BigBear, Abishek, Economist and others,

        Happy Deepavali! to all of you ...

        Was skimming the Parsvnath results. Last quarter, they sold 1.6 lakh shares by promoters to a private group (including a group company) Parsvnath Landmark Developers Pvt Ltd, Banrod Investments and Sterling Pathway for 24.99 Crores, at a premium of Rs.1550 per share. At the same they floated a QIP for Rs.168 crores at only Rs.111 premium (so this is one way of bringing in money into the company from own/provate sources). Without this their results would have been rather bad, considering RE is supposedly doing so well!!! Furthermore last quarter sales fell from 219 crores in 2008Q2 to 152 crores in 2009Q2, a fall of 30% which is not a good sign at all!!!
        A tax writeback of 9 crores (against 47 lakhs in 2008Q2) also added to profits. If we remove all of these, profits have been flat despite severe cost-cutting as well as the advantage of much lower "cost of construction" as much of this quarter activity must have been inventory clearance where cost was already allocated in previous quarters. Despite all this, they just about maintained profits on falling sales. One of these days there will be no more cost cutting and accounting gimmicks and by then, if there is no real recovery, then the sh** will hit the fan. They have just bought one more quarter's time at high expense for recovery to happen! Just like most countries and businesses worldwide ...

        Selling your shares to show revenue boosts thru other incomes is a game towards quick death. Also, one more point. They still have 12 Crores shares (81% of Promoter holdings) pledged against debt raised. Any weakening of company financials may see risk of management losing hold (though why anyone would want to get control of a company this badly managed is a wonder!).

        Anyway, Parsvnath is not the case study one needs to be looking at. Let us see what the big boys have to show in the coming days.

        There was a lot of hype about IIP shooting up to 10%+ and the markets used this to take off again! Let us not get as confused as the market. IIP is production data, not sales data. The principal reasons for this rise are 2 ...

        1. A low base effect (of bottom IIP data of Sep 2008)
        2. Inventory buildup on hopes of recovery

        Adjusting for these 2 effects, the real, normalised IIP growth has been calculated at just over 4%, still well below the 2007 rates of 20%+.

        My own contacts in the infrastructure business are not too happy about sales growth in critical items for infrastructure. Sales for past 4-5 months has been flat and not showing the magical numbers in the newspapers.

        Finally, both RBI as well as FED (and other Central Banks) are quite clueless about when this recovery will actually happen without the bailout! That is real recovery, right now its Govt spending and propping up (most large infrastructure projects are Govt funded).

        If this real recovery eludes India (and rest of the world) for another 1-2 years, builders will be in serious trouble as sales will start declining again. Their high debt and high level of pledged shares put them in a very risky position.

        Let us watch post-Diwali action in the markets and see how many legs this recovery has!

        cheers
        Last edited October 16 2009, 01:08 PM.

        Comment


        • Re : Property Price Trends in Chennai

          Wiseman's Credibility

          I request all the people to read all the previous posts of wiseman. This man is knowledgeble no doubt. However he uses his knowledge to send wrong propaganda. He said share market is going to 8000 levels again and Chennai real estate prices will reduce 50% etc. Nothing happened. Even he knows that wont happen. then why he is spreading always somthing when he intend to create panic among people.

          All dear members: please do not panic while reading his posts. you do what you intend to do before reading posts.

          Again, if chennai real estate prices are going to reduce by 50%, I will leverage myself fully with all possible loans and keep on shopping.

          But now market is not going to give " V " shaped recovery either.

          take your own decision.

          Comment


          • Re : Property Price Trends in Chennai

            Originally posted by wiseman View Post
            BigBear, Abishek, Economist and others,

            Happy Deepavali! to all of you ...

            Was skimming the Parsvnath results. Last quarter, they sold 1.6 lakh shares by promoters to a private group (including a group company) Parsvnath Landmark Developers Pvt Ltd, Banrod Investments and Sterling Pathway for 24.99 Crores, at a premium of Rs.1550 per share. At the same they floated a QIP for Rs.168 crores at only Rs.111 premium (so this is one way of bringing in money into the company from own/provate sources). Without this their results would have been rather bad, considering RE is supposedly doing so well!!! Furthermore last quarter sales fell from 219 crores in 2008Q2 to 152 crores in 2009Q2, a fall of 30% which is not a good sign at all!!!
            A tax writeback of 9 crores (against 47 lakhs in 2008Q2) also added to profits. If we remove all of these, profits have been flat despite severe cost-cutting as well as the advantage of much lower "cost of construction" as much of this quarter activity must have been inventory clearance where cost was already allocated in previous quarters. Despite all this, they just about maintained profits on falling sales. One of these days there will be no more cost cutting and accounting gimmicks and by then, if there is no real recovery, then the sh** will hit the fan. They have just bought one more quarter's time at high expense for recovery to happen! Just like most countries and businesses worldwide ...

            Selling your shares to show revenue boosts thru other incomes is a game towards quick death. Also, one more point. They still have 12 Crores shares (81% of Promoter holdings) pledged against debt raised. Any weakening of company financials may see risk of management losing hold (though why anyone would want to get control of a company this badly managed is a wonder!).

            Anyway, Parsvnath is not the case study one needs to be looking at. Let us see what the big boys have to show in the coming days.

            There was a lot of hype about IIP shooting up to 10%+ and the markets used this to take off again! Let us not get as confused as the market. IIP is production data, not sales data. The principal reasons for this rise are 2 ...

            1. A low base effect (of bottom IIP data of Sep 2008)
            2. Inventory buildup on hopes of recovery

            Adjusting for these 2 effects, the real, normalised IIP growth has been calculated at just over 4%, still well below the 2007 rates of 20%+.

            My own contacts in the infrastructure business are not too happy about sales growth in critical items for infrastructure. Sales for past 4-5 months has been flat and not showing the magical numbers in the newspapers.

            Finally, both RBI as well as FED (and other Central Banks) are quite clueless about when this recovery will actually happen without the bailout! That is real recovery, right now its Govt spending and propping up (most large infrastructure projects are Govt funded).

            If this real recovery eludes India (and rest of the world) for another 1-2 years, builders will be in serious trouble as sales will start declining again. Their high debt and high level of pledged shares put them in a very risky position.

            Let us watch post-Diwali action in the markets and see how many legs this recovery has!

            cheers
            Belated diwali wishes.Very nice analysis and looking forward for these kind of analysis about RE companies.

            Comment


            • Re : Property Price Trends in Chennai

              Originally posted by bear_baiter View Post
              I request all the people to read all the previous posts of wiseman. This man is knowledgeble no doubt. However he uses his knowledge to send wrong propaganda. He said share market is going to 8000 levels again and Chennai real estate prices will reduce 50% etc. Nothing happened. Even he knows that wont happen. then why he is spreading always somthing when he intend to create panic among people.

              All dear members: please do not panic while reading his posts. you do what you intend to do before reading posts.

              Again, if chennai real estate prices are going to reduce by 50%, I will leverage myself fully with all possible loans and keep on shopping.

              But now market is not going to give " V " shaped recovery either.

              take your own decision.
              Wiseman prediction might have gone wrong with Chennai but can you disagree with the fact that prices have fallen drastically in many places of India particularly in Bangalore,NCR and some parts of Mumbai.

              Comment


              • Re : Property Price Trends in Chennai

                Originally posted by bear_baiter View Post
                I request all the people to read all the previous posts of wiseman. This man is knowledgeble no doubt. However he uses his knowledge to send wrong propaganda. He said share market is going to 8000 levels again and Chennai real estate prices will reduce 50% etc. Nothing happened. Even he knows that wont happen. then why he is spreading always somthing when he intend to create panic among people.

                All dear members: please do not panic while reading his posts. you do what you intend to do before reading posts.

                Again, if chennai real estate prices are going to reduce by 50%, I will leverage myself fully with all possible loans and keep on shopping.

                But now market is not going to give " V " shaped recovery either.

                take your own decision.
                Looks like Wiseman has vested interest in panic creation.

                Comment


                • Re : Property Price Trends in Chennai

                  Originally posted by BigBear View Post
                  Wiseman prediction might have gone wrong with Chennai but can you disagree with the fact that prices have fallen drastically in many places of India particularly in Bangalore,NCR and some parts of Mumbai.
                  Wiseman has been only wrong always. Incidentally price fall in other markets are also a myth!

                  Comment


                  • Re : Property Price Trends in Chennai

                    Glad I'm not reading them! Don't have time and patience to read pages from him. And I don't even know how to validate many of his claims.
                    No reading! Less confusion!!

                    Comment


                    • Re : Property Price Trends in Chennai

                      Please be patient

                      Wiseman is talking about once in a century issue.Guys ,please be patient and watch.Don't expect everything will happen the next day.

                      I am sure about one thing. RE prices may not go down, But buying RE at current level is not going to give any good returns in the medium term(5 years).You need to wait for longer term (10 years or even more) to get some good returns.

                      The golden days for RE is over.It will take at least 2 decades to see another RE boom in indian metros.

                      I would buy in this market only If

                      1.I have a urgent need for living purpose
                      2.I can able to pay my EMIs for next 20 years with out any trouble(even in the worst case scenarios).
                      3.I don't want to miss any specific project/location for personal reasons.


                      Wiseman ,

                      Please ignore these bulls and keep sharing your views.

                      Thanks
                      Venkit.
                      Last edited October 20 2009, 06:32 AM.

                      Comment

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