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Property Price Trends in Chennai

Last updated: 4 weeks ago
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  • Re : Property Price Trends in Chennai

    Friends,

    Wanted to share another trend I have been noticing.The big hands in the industry are buying out several projects that were planned/developed by small and medium size builders and re-naming them,altering the plan/specification and launching it as if its their own and marketing them aggressively at exorbitant price.

    For example, a project in T.nagar near natesan park from the above list is now priced 14000/sqft.The same project was launched some months back by another medium sized builder for 10500/sqft who was willing to negotiate, but it didnt elicit any response.

    Does Brand Name/Builder Reputation justify a Rs 3500/sqft premium? Request members to share what they make out of it.Thanks.

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    • Re : Property Price Trends in Chennai

      Originally posted by nabishek View Post
      Friends,

      Wanted to share another trend I have been noticing.The big hands in the industry are buying out several projects that were planned/developed by small and medium size builders and re-naming them,altering the plan/specification and launching it as if its their own and marketing them aggressively at exorbitant price.

      For example, a project in T.nagar near natesan park from the above list is now priced 14000/sqft.The same project was launched some months back by another medium sized builder for 10500/sqft who was willing to negotiate, but it didnt elicit any response.

      Does Brand Name/Builder Reputation justify a Rs 3500/sqft premium? Request members to share what they make out of it.Thanks.

      It's nice to know that an old economy sector like construction is also becoming more like other modern businesses in terms of M&A (mergers & acquisitions). We always regularly read about Big Technology & IT companies acquiring smaller niche companies to improve their market value and to provide more types of products or services to their customers.

      As far as Brand names go...yes it has a lot of intangible value. When it comes to garments like jeans for example brands like Levi's, Lee attract a premium. Similarly even in campus interviews some companies attract a lot of talent because of their brand perception. Even for fried chicken for example we can't recall any other brand other then KFC. For a internet search engine Google is default, inspite of dozens of choices.

      However, to become a big brand proper pricing is important as per 4Ps of marketing. Google gives away search, email, and many other services for free and still makes 100-500 times more money then the largest construction companies in the world from just from text Ads. Would Google have become more successful if they charged for every single search performed?
      Last edited March 18 2011, 01:26 AM.

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      • Re : Property Price Trends in Chennai

        Agreed. But ...

        Originally posted by contra View Post
        It's nice to know that an old economy sector like construction is also becoming more like other modern businesses in terms of M&A (mergers & acquisitions). We always regularly read about Big Technology & IT companies acquiring smaller niche companies to improve their market value and to provide more types of products or services to their customers.

        As far as Brand names go...yes it has a lot of intangible value. When it comes to garments like jeans for example brands like Levi's, Lee attract a premium. Similarly even in campus interviews some companies attract a lot of talent because of their brand perception. Even for fried chicken for example we can't recall any other brand other then KFC. For a internet search engine Google is default, inspite of dozens of choices.

        However, to become a big brand proper pricing is important as per 4Ps of marketing. Google gives away search, email, and many other services for free and still makes 100-500 times more money then the largest construction companies in the world from just from text Ads. Would Google have become more successful if they charged for every single search performed?

        The value of the brand is equal to the sum of positive customer experiences of the brand. Better the experience, stronger and more valuable the brand.

        Therefore, one might expect to get better construction quality, amenities, etc from (say) a Sobha and therefore be willing to pay more per SFt.

        But Abishek's question was (I think), can Levis buy out an average quality jeans from a little-known brand stiched for price competitiveness and THEN put on a Levis label and charge a premium?

        Would that not cause a dissonance between the product's actual benefit level and the perceived benefit level appropriate to the bigger brand at a higher price?

        In simple English, would not the mid-size builder's benefit level be lower than the big-size builder's benefit level, thereby creating a poor impression in the mind of the buyer when he pays a premium expecting one quality and gets gyped actually seeing another, lower, quality!

        cheers

        Comment


        • Re : Property Price Trends in Chennai

          Originally posted by wiseman View Post
          The value of the brand is equal to the sum of positive customer experiences of the brand. Better the experience, stronger and more valuable the brand.

          Therefore, one might expect to get better construction quality, amenities, etc from (say) a Sobha and therefore be willing to pay more per SFt.

          But Abishek's question was (I think), can Levis buy out an average quality jeans from a little-known brand stiched for price competitiveness and THEN put on a Levis label and charge a premium?

          Would that not cause a dissonance between the product's actual benefit level and the perceived benefit level appropriate to the bigger brand at a higher price?

          In simple English, would not the mid-size builder's benefit level be lower than the big-size builder's benefit level, thereby creating a poor impression in the mind of the buyer when he pays a premium expecting one quality and gets gyped actually seeing another, lower, quality!

          cheers
          Point to be noted. If the bigger company is simply acquiring the project as it is and selling to customers at a premium, by just cajoling them on the brand name alone without any equal improvement in quality then in longer term their brand value would come down due to increase in negative experiences and word of mouth.

          It is better to branded companies to go alone in that case to maintain consistency in quality and customer experiences.

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          • Re : Property Price Trends in Chennai

            Friends,
            Please note the words 'altering the plan and specifications' ! The reputed builder is able to pump in more money in the project and carry out the improved specifications, which the smaller builder is not able to do, and therefore charges a premium for his quality and market brand name !!!

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            • Re : Property Price Trends in Chennai

              By the way who are the small and big builders we are talking about it.
              My guess is big builder will enforce quality standards on the project and ensure compliance simply because he wouldn't risk his reputation built over years and years to make few crores from this project.No doubt cost of quality improvement will not be equal to the amount of premium paid.

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              • Re : Property Price Trends in Chennai

                burst

                I happened to read at a forum. Are these true? Thanks for your opinions.

                Indian Real estate is going to burst like in US.
                The present property developers are pure politicians and invested their corrupt black money in real estates. It is just an illusion
                projected as having good demand. Once the elections are over all their game will also over bringing back the value to its knees.

                If I live in USA and invest in India the return on investment will get taxed twice.

                Comment


                • Re : Property Price Trends in Chennai

                  Originally posted by nidhsek View Post
                  I happened to read at a forum. Are these true? Thanks for your opinions.

                  Indian Real estate is going to burst like in US.
                  The present property developers are pure politicians and invested their corrupt black money in real estates. It is just an illusion
                  projected as having good demand. Once the elections are over all their game will also over bringing back the value to its knees.

                  If I live in USA and invest in India the return on investment will get taxed twice.
                  A crash like it happened in some US states like Florida during last few years is not possible in Tier-1 large Indian cities.

                  • There is good job growth across various sectors in some Indian cities like Chennai, Bangalore. In US there was actually job losses.
                  • Salaries are competitive in India, so more exporters want to come here and end up creating jobs.
                  • China, the world's largest exporter currently is aging slowly. India has a young workforce which is another advantage to create more jobs at competitive salaries.
                  However prices may become stagnant, and so double digit returns every year may not at all be possible, expect in few situations which depends.

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                  • Re : Property Price Trends in Chennai

                    Cannot compare US with India. Real estate growth depends on people and hence the population growth, we are very strong in that.

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                    • Re : Property Price Trends in Chennai

                      Folks, haven't had a chance to follow the market oflate. how is Chennai RE doing so far this year. Do we see it still booming or started to stabilize/stagnate again. Have read about Hira Upsacle quoting 6-7K for the new project in OMR!!!

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