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Property Price Trends in Chennai

Last updated: July 14 2020
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  • Re : Property Price Trends in Chennai

    Originally posted by defu22 View Post
    It is a known fact, mostly in Delhi and Mumbai. In Chennai I would expect quiet a number of vacant units around Siruseri and plenty of vacant units in Sriperumbudur/Oragadam belt.

    Good thing in Chennai/Bangalore is speculator activity is low, like one buyer purchasing 20-50 units in bulk in a single project. Such things are rampant in NCR and Mumbai.

    Price correction in Mumbai is bound to happen whether banks intervene or not.

    Comment


    • Re : Property Price Trends in Chennai

      @Love4Land
      I dont think in chennai speculator activity is low. Probably compared to mumbai and delhi in chennai number of projects also would be less and big projects entry into chennai came late so it looks it is less.

      Comment


      • Re : Property Price Trends in Chennai

        Why Investor Participation is low

        Supply in Chennai is very less compared to NCR/MMR market.
        Selection of properties is very limited.

        Returns on outskirts have not been spectacular especially on OMR.

        High downpayment amount makes money locked up.
        Builder do not like investors, they want end users.

        High Transfer fee, because of high stamp duty.

        Hassle to sell, bad broker network.
        Illiquid market.

        Not enough discount on pre-launches, very few pre-launches.
        Less Risk = Less Discount = Less Returns

        Finally funding is getting harder. Bank are becoming strict.
        High interest rates donot help either.

        Rental market is bad very low yeild, especially in suburbs outside of OMR/Mahindra City.

        No proper planning in suburbs by Govt.
        Most places are bad in social and basic infrastruture. Siruseri is the only place that looks to have some potential.

        Comment


        • Re : Property Price Trends in Chennai

          Originally posted by k11 View Post
          Why Investor Participation is low

          Supply in Chennai is very less compared to NCR/MMR market.
          Selection of properties is very limited.

          Returns on outskirts have not been spectacular especially on OMR.

          High downpayment amount makes money locked up.
          Builder do not like investors, they want end users.

          High Transfer fee, because of high stamp duty.

          Hassle to sell, bad broker network.
          Illiquid market.

          Not enough discount on pre-launches, very few pre-launches.
          Less Risk = Less Discount = Less Returns

          Finally funding is getting harder. Bank are becoming strict.
          High interest rates donot help either.

          Rental market is bad very low yeild, especially in suburbs outside of OMR/Mahindra City.

          No proper planning in suburbs by Govt.
          Most places are bad in social and basic infrastruture. Siruseri is the only place that looks to have some potential.

          Looks like the script of a Tamil serial.. everything negative.. ;-)

          But the only diff. is here all these are real concerns :-)

          Comment


          • Re : Property Price Trends in Chennai

            Chennai realestate - reg.

            Members,
            Hello ! For the flats already constructed as per perfect booking there is no cause to worry. For speculative investment, we have to analyse who would be the acutual end user. As we all know within Chennai city limits the apartment costs are very high. The plot costs within Chennai city (if any are left out) are for rich people only. Therefore, areas like OMR, Kelambakkam, GST Road, Thiruvallur, Avadi etc., are the places where flats are affordable. Within Chennai city limits, apartment costs would be determined by the market forces. We may all feel that without logic, if people have speculated, the results would be unpredictable. Some reports suggest 70% of the apartment costs in theory, is of the land in the area in the city anwwhere in the country. We have to see whether it is correct or not. If the economy grows too well and people make money either through good salary or business, then only real estate at the present costs would be all right.
            Regards,
            hariklgd.

            Comment


            • Re : Property Price Trends in Chennai

              Originally posted by k11 View Post
              Why Investor Participation is low

              Supply in Chennai is very less compared to NCR/MMR market.
              Selection of properties is very limited.

              Returns on outskirts have not been spectacular especially on OMR.

              High downpayment amount makes money locked up.
              Builder do not like investors, they want end users.

              High Transfer fee, because of high stamp duty.

              Hassle to sell, bad broker network.
              Illiquid market.

              Not enough discount on pre-launches, very few pre-launches.
              Less Risk = Less Discount = Less Returns

              Finally funding is getting harder. Bank are becoming strict.
              High interest rates donot help either.

              Rental market is bad very low yeild, especially in suburbs outside of OMR/Mahindra City.

              No proper planning in suburbs by Govt.
              Most places are bad in social and basic infrastruture. Siruseri is the only place that looks to have some potential.

              Chennai has always been end user market with investments flow mainly for family roots (Tamils both local and origin like SL, SGPR, MY, EUR), Andhrites, Malayalees and small % of Marwaris/Gujaratis. Neither it's magnet for Financial nor political career (Judiciary, Media, politicos etc..) at the moment- which Mumbai and Delhi have sway over.

              My observation has been Chennai is just gradually opening up for external investments/migration in past 6-8 years but it's generation behind compared to Mumbai. On optimistic note- Chennai has real potential to equate if not upstage other metros for following reasons:

              1. Power centre : Strong political parties, which is essential for city development- Whether it's airport/metro or if we bid for Asian Games in future?. Regulatory bodies like IRDA (in Hyd), Competition commission (M&A activities), RBI(will have more say in future with privatisation)need southern base. As and when Supreme court decides to set up southern bench it will revolutionise Chennai RE (back like 60s or 70s film industries) with migration from all 4 southern states + Mah . It will always remain as gateway of South, thanks to its geo-strategic location and ports.

              2. Affordability: Both Delhi and Mumbai is beyond reach on affordability for employees in service industries. It will choke creativity or new sunrise sectors (they missed IT boat just due to it). They are turning more like Monaco or Brussels.

              3. MNCs: South were always considered as laggards untill 90s thanks to PSU investments (which was the single source back then) , after liberalisation both Chennai and Bangalore, lately Hyd have set up their own niche in Mfg/IT/Pharma. MNCs don't have baggage when they invest, it's more based on ROI rather than political or ethnic reasons. Delhi and Mumbai have HQs but major chunk will be based out in South.

              4. Air Connectivity: Probably this is something we lack at the moment but I'm hoping with strong local entrepreneurship and MNC bases it's matter of time, will bring in much more tourists and business visitors add to it entertaintment and hospitality needs.

              5. Law and order: This one is the key ingredient for funds parking. It is something underestimated- why people (will) invest in Chennai + education and social infrastructure. If there are any political crisis like Telengana/unrest in Kar- people will flock to Chennai than other metros.

              There are multiple reasons why Chennai may or may not live upto its potential. Chennai RE is more driven by end user sales or local investments. When India grows to say 5Tn $ economy opportunities are manifold and all it needs is one major project to invest on infra like Olympics (may sound preposterous atm /Asian/Commonwealth games.

              Comment


              • Re : Property Price Trends in Chennai

                As I have said in earlier posts in response to news articles quoting Chennai as not being speculative market compared to others.. While in comparision this might be true but not in a positive way.

                I feel the way Chennaites are investing, its mainly out of fear of losing their dream of owning a home, in face of exorbitant price increase climbing ever since 2007.

                i myself have seen 8-10 ppl who come visit sites with me , express this opinion and when they are speaking with the marketing person at site, they typically say "Lets see. We are going to bank and will try to stretch our loan eligibility to the max".

                This is not a good sign as suddenly the affordability does not exist even for an average earning IT person. An average earning IT guy from 2000-2007 approx could have bought anywhere in many parts of city where there was less competition and not many cases of flats 50 % getting booked in first few months. Now the same person even though he is earning much better nowadays, has to go faaar away spending 60 L for a decent apartment. Also the loan rates are not favourable nowadays.

                There is an ever growing unrest among this middle class which is trying its max to squeeze every ounce of loan money and somehow book flat. Again this leads to many cases where flat bookings open up due to loan rejection or defaulters! I have noticed some cases like this in LCS anugraha, MFPL vruksha, Navin's Maris Dale to name a few.

                Now what happens in such a case is buyers are no more making calm decisions or decisions which would suit their requirements but booking something as per the current wave!

                Comment


                • Re : Property Price Trends in Chennai

                  Reg the points raised here by k11, one most important thing we all should note is that external investor/speculator participation in Chennai RE is lowest among big cities.

                  The investor/speculators in Chennai RE, are all those settled within Chennai. Outside state folks invest in Chennai RE if and only when they plan to settle in this city.

                  This i feel is a major factor that will prevent Chennai RE from sliding if RE in rest of India cracks. Even in OMR/ITH , people wont panic sell but rather would sit and wait. This is a big plus point of this City RE which we should not miss.

                  Comment


                  • Re : Property Price Trends in Chennai

                    Originally posted by vettipayyan View Post
                    I feel the way Chennaites are investing, its mainly out of fear of losing their dream of owning a home, in face of exorbitant price increase climbing ever since 2007.

                    i myself have seen 8-10 ppl who come visit sites with me , express this opinion and when they are speaking with the marketing person at site, they typically say "Lets see. We are going to bank and will try to stretch our loan eligibility to the max".
                    While what you said is true, it is also a fact that there is excess demand for apartments in some specific areas close to city. There is still reluctance for people to settle in suburbs. This will and should change and that would in turn spur the development of city. Plentiful land is available only in suburbs, and people should settle there if they cannot afford the cost.

                    Comment


                    • Re : Property Price Trends in Chennai

                      Yes, Investor participation is low.

                      But that also makes market illiquid sometimes. Lets say if you buy a units in a speculative area and if you want to get out during rought times, there might not be enough buyers (risk takers). It takes a lot of time to sell.

                      I have witnessed this recently back in 09/10 period, when lot of people stepped out when there were some deals to be made.

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