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Property Price Trends in Chennai

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

    Originally posted by fmifmi View Post
    . I am seeing all these dramas during my current stay in Chennai. I have another 1 week left in Chennai and still looking desperately to close my RE investment. This desperation is just to save my money without eaten away by inflation. Should I go ahead now or wait for next year during my next vacation/leave to Chennai ? Please guide me ...
    I have been in such situation many times in the past.

    I visit Chennai almost every year.

    My advice would be: If you like the property, If legals are good and it in good location, meets your needs and you can afford it then buy it even if you think it is over priced by 5 or 10%.

    As long as you intend to keep the property for 7 to 10 yrs you will be fine.

    Don't try to time the market or drop deals because your valuation is 5 or 10% lower. You will never buy at a price you are happy at the time of purchase.

    You have to take a plunge at some time are the other.
    Particularly not residing in chennai means the chance that you will end up buying a place is even harder.

    Real growth or not Inflation will keep moving the price upwards on the long run.
    Last edited July 25 2012, 08:44 AM.

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    • Re : Property Price Trends in Chennai

      Originally posted by fmifmi View Post
      ...... This desperation is just to save my money without eaten away by inflation. Should I go ahead now or wait for next year during my next vacation/leave to Chennai ? Please guide me ...
      From whatever little experience I have, I think one should never buy a property in haste. I see that you have a sizable budget. There should be several options at that price point, and time constraint should not lead you to a mistake you will regret. Can't you invest in the name of your parent, or buy with a POA in their name, or some sibling residing here?

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      • Re : Property Price Trends in Chennai

        ------------
        Quote:
        Originally Posted by fmifmi
        ...... This desperation is just to save my money without eaten away by inflation. Should I go ahead now or wait for next year during my next vacation/leave to Chennai ? Please guide me ...
        -------------
        My own experience I was searching for the property since 2006 in central chennai and never able to rationalize the price. I was in Chennai specifically in early 2009 to take advantage of post crisis. But sellers never bulged with my price and returned to abroad without closing the deal. fast forward to the year, I plunged into buying old apartment. I came to know there is no way you can find a dream house in chennai that meets all the criteria such as price, bigger size, good social infrastructure near by, hospital, schools, 2 car parks, visitor car parks, no road noise etc...

        Finally decided to force myself to buy decent old apartment. Guess what, since I bought another one sold last week in the same complex with very similar size of my apt but with price 10% more!

        Over engineering some time deter taking the decision. As long as you can afford it and meets your minimum criteria go ahead for it. No way in RE you can find right price!

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        • Re : Property Price Trends in Chennai

          The Hindu : FEATURES / PROPERTY PLUS : Shift to buyer

          Here is the first article in last few years which shows realistic down trend in Chennai RE. Although this might not translate into reduced costs, it would atleast make sellers think twice before saying "X builder is quoting 5 K so we are quoting 4.9k" and other types of money swindling in the name of "value for money".

          I guess we buyers should hold for a while and make sellers come to us. This may help in price corrections. If buyers keep showing positive signs, this trend will only stagnate existing prices and then again move up in favour of sellers.

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          • Re : Property Price Trends in Chennai

            Nice article, but I wonder where get their numbers from.

            If they are using their sale listing to determine the prices, then I find it hard to accept. There is always a difference between listing price and selling price in resale property. The difference might be less in down market as seller might not exaggerate. But that does not mean closing price is down.
            Makaan has very few listings of Chennai market. Magic Bricks/99 acres is much better. Even IndiaProperty has higher number of listings. Hindu PP/Times are best source as sellers pay money to list so they might not overvalue their flat.

            Also in new developments, supply and demand dictates the price. If OMR has a ceiling of 5K means the developer (big projects) cannot price higher at 10K irrespective of the features.

            Prices might stagnate for a while, that does not mean price reduction.

            If there is a price reduction there will be a demand uptick. There are enough people who are not on market seriously but will jump in if there is a good deal.

            If the prices are low, developers will not launch new projects, making the demand increase anyway.

            So there will be always a balance between supply and demand. More often the demand side of the equation always tends to have upper hand.

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            • Re : Property Price Trends in Chennai

              No speculation key to Chennai realty’s affordability

              Absence of speculation by investors and the rise in property sales in the affordability segment has made Chennai’s residential market quite resilient to the looming threat of global economic turmoil, said a report by property research firm Knight Frank.

              The city has observed healthy sales level with the vacancy level in the residential market recorded at 31 percent as stability in the market since 2010 has instilled confidence in end-users to proceed with their purchase decisions.

              Nearly 42 percent of the absorption in FY 2012 has been in range of Rs 25 lakh to Rs 50 lakh,
              followed by the range of Rs 50-75 lakh at 23 percent. More importantly 14 percent of the residential units launched in FY12 belonged to the Rs 50-75 lakh ticket sizes, catering to the needs of the upper mid-end segment.

              For full article please click : No speculation key to Chennai realty’s affordability | Firstpost

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              • Re : Property Price Trends in Chennai

                Hmm. well .. my 6 months of property search says that.. affordability always does not translate to value for money at least in Chennai RE. I am mainly talking about the 35-50 L segment.

                This represents many who settle down for lower sized apartments like 900 sf or they settle down very far off from city by sacrificing their original requirements and these may not even be worthy apartments. Why this happens is because they are scared of losing out on the dream of buying a house in Chennai , where the current prices, in no way reflect the actual demand.

                Even in other categories like 50-75L people are stretching themselves by 10-15 L more than budget by squeezing every ounce of their loan eligibility. Hardly 20 % of the buyer purchase using their huge savings or profit from earlier sold property..

                So this kind of demand is not good as this doesn't mean "Buyer isnt speculative" this means "Buyer is scared of never being able to buy a house". I have seen atleast 20 instances in various projects where booked flats get release due to rejection of loans. On further analysis this might be a bigger number.

                A builder near Inner Ring road (near Velachery) quotes his apartment as 7K where as the rate is 4.5K to 5 K . He told me the reason is its a premuim project. I asked what is so premium.. Will we have facilities like fully furnished flats, jacuzzi , parks etc. He immediately said we are open to negotiation. Then i repeated my question. He said sir that is the going rate in that area and we have a small park and we are premium.
                This project has its compound "on the banks of Velachery Canal" and hope they dont call it lakeview apartments . I am sure inspite of being close to proposed rail station, this canal may be an obstacle in future resale etc. But he said there is a great demand for this! Again this project will face unrealistic demand which does not mean Chennai is back on this legs :-)

                I agree with demand for rare options like Hiranandani or ceebros where the buyer get value for money. But these G+2 builders with stinky apartments and zero sunlight blocks, quoting exorbitant prices, which get booked like a Ceebros apartment, is not due to the increasing demand exactly but to avoid losing out of the race completely.

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                • Re : Property Price Trends in Chennai

                  I dont even want to talk about the 1 Cr+ segment. It just represents the rich-getting-richer concept.

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                  • Re : Property Price Trends in Chennai

                    I would stay away from Small builder apts. For them, land parcels are hard to acquire, then they cannot make money from volume and also pay high interest costs.

                    Under 50L (4-5K per sqft), new apts in the city is pretty much impossible.

                    If the land cost is 1.5C per ground, that translates into 2500/sqft on the apt price just for the land (2 FSI, 40% UDS assumed). Construction even at the lowest quality costs 1600, interest costs another 1000 (in JV the builder saves a huge % of interest costs). Developer wants atleast 1000/sqft in pure profit. So they cannot sell an apt for 5K, they will price it closer to 7K. In JV, they will price it at 6K.

                    Thats why most of the builders are going for JV. They avoid paying interest to the bank for land. The construction costs mostly would be funded by buyers down payment.

                    Most of the units are bareshell so you need to spend another 1000/sqft on interiors anyway.

                    I would suggest looking for resale apts at that type of price points.

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                    • Re : Property Price Trends in Chennai

                      1000/sq.ft for interiors? That seems very steep.
                      I was estimating a max 10L for wooden furnishings (mostly shelves and lofts) and a few holders/stands on the wall here and there for a 3BD apt. I thought 10L was a high estimate. Am I out of reality or you are talking about exotic furnishings?

                      EDIT: Actually on a 1000 sq.ft carpet area, 1000Rs, translates to 10L, so it doesn't seem that bad.

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