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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 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
    I'm glad I've kindled interest in investor data, this is the correct way to discuss as data is definite and indisputable. Like K11 has pointed out, Hirco is a different company. Let me know if you come across similar data for "House of Hiranandani".

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    • Re : Property Price Trends in Chennai

      Originally posted by vettipayyan View Post
      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!
      Sriniwasan of Kotak Realty, however, believes that the Hiranandanis have their task cut out in terms of breaking into new markets. “I am not sure whether the strategy of building a community township out of Chennai like they did in Mumbai will really work. For one, it’s a conservative market, sales velocity is low and the investor base is relatively non-existent, unlike Mumbai.” (See: Local lords). There’s also the risk of the brothers cannibalising each other’s market share since Hirco too is setting up a township, comprising 10,000 apartment units, in Chennai. But Niranjan rubbishes the argument. “There are several developers in the Chennai market and we are one of them. Besides, the distance between Hirco’s project in Oragadam and HoH’s township in OMR is more than 30 km, so where is the question of cannabilising? In fact, the projects will only ensure more brand visibility for the group.”
      Poor Kotak realty, they misjudged Chennai and HoH! They were right about Hirco though.

      This proves Oragadam and OMR are different markets with different dynamics, who knows, Hirco may strike gold 10 yrs from now just like HoH.

      Surendra has picked up land on OMR Road on the outskirts of Chennai, and Devanahalli outside Bengaluru. “We are not obsessed about return on investment or return on equity from day one. If we see there is an opportunity in the next 10 years we will jump into it. Profit may flow in late but it will follow for sure,” says Niranjan.
      Kudos to Surendra!

      Comment


      • Re : Property Price Trends in Chennai

        Originally posted by din132 View Post
        I am surprised to see link for tamil language in this UK website - www.tfl.gov.uk
        I believe they have open source API (Google translate) . It doesn't look professional but good attempt. Thanks to SL expats.

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        • Re : Property Price Trends in Chennai

          Originally posted by k11 View Post
          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.
          What we need is regulation not govt management. We already have govt running business which is root cause for red tapism. The fundamental reason- people view RE as an safe investment. Unless this mindset is addressed, no amount of laws will suffice.

          Germany has close to 2/3rd of population living on rent. Thanks to Rent ceiling act with strong legal protection for tenants (http://www.globalpropertyguide.com/Europe/Germany/Landlord-and-Tenant), there isn't much clamour to own property nor it appreciates wildly(one of the reasons you don't hear many German banks with sub-prime or toxic assets). I believe Scandinavia and even Manhattan has similar rent ceiling regulations.

          In UK it's bit different- there is strong association between wealth and property. Still you've good regulation on BTL (Buy to Let) mortgages. Now it's 25% as down payment but average rent yield will be close 4-6% and it's very decent return. Chennai prices for that matter any city in India prices will raise in tandem with inflation and lack of city planning. In Central london avg residential sq ft cost is 3000£ (Rs 2.6L/sq ft) so you can see the difference!

          Comment


          • Re : Property Price Trends in Chennai

            On a side note- personally i don't find Chennai RE market attractive. It needs correction plus good infra investment to justify present valuation. I had opportunity to visit recent HDFC's India Home fair here. I could clearly see bubble building up on RE prices . Some of the quotes received defies logic to me. Why would investor with any saner mind pay exobitant rates quoted with yield barely 1%.

            I'm re-thinking on my investment plan in Chennai as London looks affordable with amenities and rent yields. If I can't find decent property for let's say 2.5 Crs (350,000£) there's fundamental flaw here. If rent yield will be say 60,000-90,000 Rs/month, when EMI will be Rs 2.5L can't we see this investment lacks fundamental strategies. Not only you're pricing out end users but on the process long term investors as well.

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            • Re : Property Price Trends in Chennai

              Originally posted by Clairvoyant View Post
              What we need is regulation not govt management. We already have govt running business which is root cause for red tapism. The fundamental reason- people view RE as an safe investment. Unless this mindset is addressed, no amount of laws will suffice.

              Germany has close to 2/3rd of population living on rent. Thanks to Rent ceiling act with strong legal protection for tenants (http://www.globalpropertyguide.com/Europe/Germany/Landlord-and-Tenant), there isn't much clamour to own property nor it appreciates wildly(one of the reasons you don't hear many German banks with sub-prime or toxic assets). I believe Scandinavia and even Manhattan has similar rent ceiling regulations.

              In UK it's bit different- there is strong association between wealth and property. Still you've good regulation on BTL (Buy to Let) mortgages. Now it's 25% as down payment but average rent yield will be close 4-6% and it's very decent return. Chennai prices for that matter any city in India prices will raise in tandem with inflation and lack of city planning. In Central london avg residential sq ft cost is 3000£ (Rs 2.6L/sq ft) so you can see the difference!

              I do not understand your post.
              If I read it correctly, you want rent ceilings like Germany but you want high rents like UK (last para).

              Rents are already very low in India. That itself is a good indirect subsidy for people, especially the poor.

              I am not saying govt should run RE business, but I am saying they should raise taxes on RE (Vacant Land) to pay for roads, buses, metros, etc.
              Free markets should rule. Govt should not get into anything.
              They should just sit and get a good % of profits for use in public projects.

              Price decrease because of govt taxes is just an indirect result.

              Rent controls are bad for economy.
              Google rent control in Bombay. There are so many dilapidated buildings with rent controls there.

              I grew up in a building like that. Take it from me, you do not want me to occupy your flat worth 2 crores and pay you govt rent (which is probably rs500) for 40 years.

              Rules are already tilted so much towards tenants, why make it even harder.


              I'm re-thinking on my investment plan in Chennai as London looks affordable with amenities and rent yields.
              Chennai is not London. India cannot be compared to western countries.
              RE is driven by demand and supply, not amenities. Rising income and Indians becoming affluent is a natural phenomenon in developing countries.
              Central London is 3000 pounds, Central Chennai is 300 pounds. Chennai has at least half the population of London but one tenth of the rate.

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              • Re : Property Price Trends in Chennai

                Govts around the world increase taxes on stuff that they want to discourage public use.

                See Tobacco, Liquor, etc.

                Raising taxes on these products are good for the people.
                Of course people using them might get pissed off at first but it also helps them indirectly by discouraging the use.

                You do not want Govt to kill the industry or prohibit it.

                RE is similar to these products.

                All they need to do is make some money out of it and bring down the sales taxes for rest of products, or reduce bus fares, etc.

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                • Re : Property Price Trends in Chennai

                  Originally posted by k11 View Post
                  I do not understand your post.
                  If I read it correctly, you want rent ceilings like Germany but you want high rents like UK (last para).
                  .
                  Apologies if it had confused you. They were two different post deliberately done to differentiate my observations (Germany) and opinion (UK).

                  I'm not lobbying for rent control as we haven't descended into big brother state. My pov was as long as rents are unaffordable and RE is speculators market w/o regulation we will foresee gullible investors (incl end users) losing money.

                  Originally posted by k11 View Post
                  Rent controls are bad for economy.
                  Google rent control in Bombay. There are so many dilapidated buildings with rent controls there.

                  I grew up in a building like that. Take it from me, you do not want me to occupy your flat worth 2 crores and pay you govt rent (which is probably rs500) for 40 years.

                  Rules are already tilted so much towards tenants, why make it even harder.


                  Chennai is not London. India cannot be compared to western countries.
                  RE is driven by demand and supply, not amenities. Rising income and Indians becoming affluent is a natural phenomenon in developing countries.
                  Central London is 3000 pounds, Central Chennai is 300 pounds. Chennai has at least half the population of London but one tenth of the rate.
                  All I'm referring to is % yield not Chennai vs London. I understand the dynamics and naive to compare them both. There are concerns here on foreign money flowing into C.London RE. Avg Londoner income is approx 50k £/annum (3000£/sq ft is 6% of gross income) . Now compare that with Chennai's avg income/person and Rs 30000/sq ft in C.Chennai. Over-inflated London appears cheaper than Chennai. Don't we see the bubble here? I'm strong advocate of demand-supply! but I do have concerns over irrational exuberance .

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                  • Re : Property Price Trends in Chennai

                    The Hindu : Cities / Chennai : Tardy monsoon: Chennai water table rises only marginally

                    Water quality in various parts of Chennai

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                    • Re : Property Price Trends in Chennai

                      Originally posted by Love4land View Post
                      I'm glad I've kindled interest in investor data
                      True! But this link was found as a result of googling for 1 BHK apts in Hiranandani. :-)

                      But yes the math you provided, of how you read the investor's update, was very useful!

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