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Property Price Trends in Chennai

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  • Re : Property Price Trends in Chennai

    Originally posted by k11 View Post
    Here are my views.


    Land owners, hoarders, speculators should pay more money (taxes).
    Lets say, 90% of Chennai population do not own land, then why should they contribute their tax money to put road and development near your property. If the govt develops the area with public money, you profit from it, not the rest of the public.

    Stamp Duty should not be same for flats/houses in city and vacant land in outskirts. There should be an substantial increase in stamp duty and property tax for vacant land. If I was CM, I will even impose these on day one.

    Home ownership should be encouraged, residential land ownership should be discouraged.

    Hoarding of land is the biggest contributor for price rise in suburbs.
    It does not make sense to punish genuine home buyers and reward speculators.
    Lending institutions always favour those who buy homes over those buying plots. Also the IT benefits are available only to those who borrow to buy a home.
    Also reg tax, an empty plot does not demand any infrastructure (power, sewage, water) whereas a home demands these things. So it is logical that plot owners are not taxed at same rate as home owners.
    One of biggest hoarders of land is Government itself (big government agencies - central,state, local govt). Most of land is not fully used or underused. If govt is serious they should liquidate all their Real estate assets in big cities to projects that provide low cost housing. Why is that not being done?

    Another thing that should be done is - all investors in plot should be asked to have PAN number and also provide evidence for source of income. Every plot transaction should go through a IT scrutiny to see if buyer bought out of white money.

    Let us not deny middle class of its desire to have decent social security and inflation proof retirement. But let those who invest be also told that investment should be done only through legally earned and income taxed income.

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    • Re : Property Price Trends in Chennai

      One last point from me - whenever we think of new laws, we should be careful and aware that people will find ways to misuse.

      If vacant land ownership is taxed, people will erect a thatched shed and show that it is rented out to some labourers . And that is it !! Will it look nice to see all those empty plots in city suburbs dotted with ugly looking huts?

      Comment


      • Re : Property Price Trends in Chennai

        Many builders have acquired large tracts of land along the ORR for future development.The ORR may witness maximum real estate growth in the future because prices there are very low at present, said Confederation of Real Estate Developers Association of India secretary T Chitty Babu.


        He said,the presence of service roads will pre-empt mushrooming of unorganized retail shops and promote planned development.Still,the CMDA needs to finalise a detailed master plan for the ORR such that all interior areas also see organised development.Otherwise,the ORR will witness a linear growth like the Old Mahabalipuram Road and interior areas will never get attention.

        Article Window

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        • Re : Property Price Trends in Chennai

          Originally posted by Love4land View Post

          Many builders have acquired large tracts of land along the ORR for future development.The ORR may witness maximum real estate growth in the future because prices there are very low at present, said Confederation of Real Estate Developers Association of India secretary T Chitty Babu.
          Article Window
          Wow! I must say that the RE Developers go hand in hand in promoting a place as the next big thing! They did it for OMR (altho it had some IT parks, if not infra and in comparison, the other places hardly are so close to city + provided employment opportunity), then they said Oragadam, then they said Guduvanchery, now ORR.

          Now already small builders would have started aquiring land near ORR. Then builders like Navin etc wud bring up huge gated communities there to exploit the hype and cheap land costs there!

          All the RE media like chennairealty.biz , etc will show statistics and growth charts and will project this area as GOLD. Many buyers will queue to buy plots and be happy!

          Then Govt might change and all things will stay put until some big businessman in IT or other industry will announce some office there.

          Then after few years everyone will realise they have created one more orphan! :-) By this time the developers wud be busy with the next big thing.. probably the new highways!

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          • Re : Property Price Trends in Chennai

            Originally posted by Love4land View Post
            Hira purchased Oragadam land from Triveni academy for dead cheap rate long before anyone knew it would become an industrial area.

            Following is the evidence of what Love4Land says above about Hira!

            Following article on May 12 2012 shows how much land Hira has currently in Chennai.

            business.outlookindia.com | Row House

            Approximately a total of almost 600 acres!


            In addition to this, the whole article is an interesting read about the personal and professional history of the family!
            Last edited August 27 2012, 10:47 PM.

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            • Re : Property Price Trends in Chennai

              Love4Land, I guess you were looking for Hira's 1 bhk unit details from their OMR project, if i am not wrong.

              I got the stats from thier investor update doc for 2007. Almost 10 % is 1 BHK (120 out of 1258)

              http://www.hircoplc.com/Investor_Update_August_2007.pdf

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              • Re : Property Price Trends in Chennai

                Originally posted by Love4land View Post
                This is only applicable to builders who buy land in established areas for exorbitant rates, not applicable for builders buying land in far flung areas for throwaway prices and wait for several years until area develops.

                Hira purchased Oragadam land from Triveni academy for dead cheap rate long before anyone knew it would become an industrial area.

                According to Sobha investor presentation, the average amount they spend on land purchase is Rs.100 psf.

                They have hundreds of acres of vacant land in Tambaram and Sriperumbudur
                purchased long back.
                Hira has always been an opportunist. They got their powai land under controversial agreement from Maha govt.Triveni academy land was also bought at dirt cheap rate from kanchi saints when they were stuck in a litigation. They even filled up a natural lake by paying off authorities in erstwhile DMK govt.

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                • Re : Property Price Trends in Chennai

                  Originally posted by ramki830 View Post
                  One last point from me - whenever we think of new laws, we should be careful and aware that people will find ways to misuse.

                  If vacant land ownership is taxed, people will erect a thatched shed and show that it is rented out to some labourers . And that is it !! Will it look nice to see all those empty plots in city suburbs dotted with ugly looking huts?
                  Yes, I agree people will find way out of this.

                  I think that's is where CMDA could come in and help evaluating the construction. I know this sounds crazy.

                  But they can set some rules like plots above 25L in value cannot have huts and need to have some kind of concrete structure of certain specification.
                  Of course, they cannot prevent people buying 1 acre and building a small house. To fix this they need to limit residential land purchase to 0.5 acre or something for individuals, for developers and companies this should not be applicable.

                  This will make an economic boom in construction (lot of jobs).
                  This will make the suburbs pretty much rent free for poor people because there will be so much supply. Govt can forget about housing schemes for poor.


                  Here is my list now, reworked to include the people who will misuse it.

                  20% Stamp Duty for Vacant Land in Suburbs.
                  POA disouraged for any RE deal. Registration with POA will attract 10% extra duty on top of 20%.

                  5% Vacant Land Tax (in addition to property tax)

                  Applicable to all residential plots in suburbs with GV greater than 1000/sqft which are not LIG/EWS housing from Govt. Far off areas like Walajah will not need to be included in this, it has to be metropolitan limits.

                  Govt will collect tax for 5 years for everyone. If someone sells in between they lose the credit.

                  After 5 years, Govt refunds the (tax collected + nominal interest),

                  If there is a CMDA approved plan with a structure (we need some specification) then it will be refunded. It cannot be locked, someone has to live, need to a registered rental document to show that the property has not been empty for atleast 2.5 years.

                  If land is bought by a commercial entity (or a Developer) they do not get refunds. They will bear the full cost.



                  Most speculators will not bother to build anything as they will pay the 5% per year then worry about going around CMDA. They will also not care about 20% stamp duty.

                  But what it will do is reduce the demand invariably. This will put a pin in the RE land bubble, values will automatically come down. Govt can raise a lot of money, they can use this for redevelopment. Even RE developers who hoard will pay maximum tax. If draconian laws are bought like this we might see some respite.
                  Last edited August 28 2012, 12:07 AM.

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                  • Re : Property Price Trends in Chennai

                    Originally posted by ramki830 View Post
                    But point is the biggest owners of vacant land in absolute terms are 1) Government and govt bodies themselves 2) Lot of industrial units. I keep hearing that Amalgamations group in chennai owns lot of unoccupied land.
                    Govt is owned by people. Not the other way around.
                    Whatever the Govt owns belongs to us.

                    Industries can own industrial land, we got to make sure they do not occupy residential land. Govt can put special tax or something on conversions when they happen.
                    Similarly, people can own agricultural land. When they do conversion is when you levy a conversion tax. Make them give up 20% for OSR (parks, trees), 25% for roads or public purpose and they can use the rest 55%.


                    Will vacant land tax solve anything? Think from point of view of someone who invested in a plot in say guduvanchery for 50L. He is a middle class guy, so he would be getting say 50K or 60K pm tax free. Currently the cost of construction is Rs 1600 per sqft . So to erect a decent house with FSI of 1.5, the owner of plot must plough 60L to build a residential unit. For most Middle class people, this is too much of a money. So the culprit is the cost of construction being very high relative to incomes.
                    If he does not have why can't he buy a flat. There are flats available in Guduvancherry for 25L.
                    What is the necessity for a middle class person (who does not have money) to build a 60L house on a 50L plot?
                    If he does not have 60L to build then he should not buy the 50L plot either. Under high taxation people will start thinking about it.


                    Originally posted by ramki830 View Post
                    One problem in India, is unlike in Western nations, inflation is very high. At same time there is no meaningful social security and no job security except govt sector. A middle class family out of job can within 5-10 years go to slums, unless they own hard assets. Gold and property investment is popular because they are only really inflation proof investments available to Indians. For a middle class person buying plot in a distant suburb it is not just a hoarding exercise, it is a social security scheme for his family in a distant future. Also taxation laws in india punish those investing in financial assets while doing nothing about those investing in hard assets. All these make investing in plots the only avenue left. We should reflect on all these and think how things can be changed . And that will all take lot of time.
                    People should not be forced to put money in RE. Put it in share market or other risky assets.
                    Making RE price increase is more like ponzi scheme.
                    They should bring down the price of RE and slow the returns. Taxes will do that.

                    I am already seeing lesser speculators on city properties becasue of high duties, thats why they are more stable and the price rise is backed by end users.

                    Govt does not need to make sure that RE keeps on increasing. They should encourage end users and keep out speculators. Why should they worry about your savings return?
                    Why make one segment of economy yeild high returns and other low.
                    Last edited August 27 2012, 11:48 PM.

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                    • Re : Property Price Trends in Chennai

                      Originally posted by vettipayyan View Post
                      Love4Land, I guess you were looking for Hira's 1 bhk unit details from their OMR project, if i am not wrong.

                      I got the stats from thier investor update doc for 2007. Almost 10 % is 1 BHK (120 out of 1258)

                      http://www.hircoplc.com/Investor_Update_August_2007.pdf

                      Great, but I think he was looking for HoH (Upscale, OMR) not Hirco (Palace Gardens).

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