Hi Forum,

Here I see too much is discussed about the RE prices of Chennai. Moreover, Chennai being the capital there is no surprise it gets all the attention. However, there are some cities and towns outside Chennai and huge population lives thereand invest in RE. Therefore, I have started this thread to discuss about those cities and towns

Most of the people who stay and work in Chennai are not born in Chennai. They come from other parts of Tamil Nadu (including myself). Like me, most people would have invested in RE in their home town’s and there should be huge number of NRI's have invested in RE in their natives. Now, will this recession bring any ill effect to RE in other parts of Tamil nadu?

My Take on this situation

I come from Sivakasi a town down south, which is famous for cracker’s, matches and printing. I have friends in all these industries and they run the best companies in above said businesses. We discuss about market conditions sometimes and from a recent discussion I found that their orders has come down drastically, their payments from clients are not getting cleared as expected. And most of the firms have used their OD capacity in banks already. Regarding RE the rates have not come down as of now and there is no sales too.

Therefore, my guess is there is heavy liquidity crisis in these markets and by any means these business people will try to keep their respective firms running and to get the liquidity for business they will even come to a stage of selling their land’s. Moreover, this time there is no NRI's to purchase the land's nor the people who are settled and working in metro’s. Therefore, I guess the rates of the residential plots in these towns will come down.

Here, I wish to get more opinions from the forum on this topic.

Thanks,
sridhar
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  • Originally Posted by sridharchennai
    Hi Forum,

    Here I see too much is discussed about the RE prices of Chennai. Moreover, Chennai being the capital there is no surprise it gets all the attention. However, there are some cities and towns outside Chennai and huge population lives thereand invest in RE. Therefore, I have started this thread to discuss about those cities and towns

    Most of the people who stay and work in Chennai are not born in Chennai. They come from other parts of Tamil Nadu (including myself). Like me, most people would have invested in RE in their home town’s and there should be huge number of NRI's have invested in RE in their natives. Now, will this recession bring any ill effect to RE in other parts of Tamil nadu?

    My Take on this situation

    I come from Sivakasi a town down south, which is famous for cracker’s, matches and printing. I have friends in all these industries and they run the best companies in above said businesses. We discuss about market conditions sometimes and from a recent discussion I found that their orders has come down drastically, their payments from clients are not getting cleared as expected. And most of the firms have used their OD capacity in banks already. Regarding RE the rates have not come down as of now and there is no sales too.

    Therefore, my guess is there is heavy liquidity crisis in these markets and by any means these business people will try to keep their respective firms running and to get the liquidity for business they will even come to a stage of selling their land’s. Moreover, this time there is no NRI's to purchase the land's nor the people who are settled and working in metro’s. Therefore, I guess the rates of the residential plots in these towns will come down.

    Here, I wish to get more opinions from the forum on this topic.

    Thanks,
    sridhar

    Your question is very genuine and worth discussing. To summarize
    a. People who land in places like Sivakasi (for that matter in non prime cities) have a vested interest there. Very unlikely that an outsider will go and land there. Even in places like Ooty very few takers from outside seem to exist.
    b. When a market is managed by insiders (whether they are NRIs or businessmen, they are all insiders, meaning people of that locality!) the economics will remain static and highly dependant on the locality. So if as you say there are losses people will sell land and can get into trouble and so RE prices will actually fall.
    c. In non prime areas those who speculate are idiots and when I said speculate it is both ways, selling or b u ying.
    In summary, RE prices in places like Sivakasi depend a lot on the local economy and to a great extent anyone trying to play it is foolish beyond GENUINE INVESTMENT NEEDS. We have an old house in Karur, and we might never operate on it, since it wont bring big money. However folks like us might sell such property not for the money but if we dont have a reason to hold such property that is too far away to manage. So RE in such economies are mostly specific and I suspect you need to discuss it in a speed group maybe not in Chennai group.
    All the best.
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  • Originally Posted by Natarajg007
    Your question is very genuine and worth discussing. To summarize
    a. People who land in places like Sivakasi (for that matter in non prime cities) have a vested interest there. Very unlikely that an outsider will go and land there. Even in places like Ooty very few takers from outside seem to exist.
    b. When a market is managed by insiders (whether they are NRIs or businessmen, they are all insiders, meaning people of that locality!) the economics will remain static and highly dependant on the locality. So if as you say there are losses people will sell land and can get into trouble and so RE prices will actually fall.
    c. In non prime areas those who speculate are idiots and when I said speculate it is both ways, selling or b u ying.
    In summary, RE prices in places like Sivakasi depend a lot on the local economy and to a great extent anyone trying to play it is foolish beyond GENUINE INVESTMENT NEEDS. We have an old house in Karur, and we might never operate on it, since it wont bring big money. However folks like us might sell such property not for the money but if we dont have a reason to hold such property that is too far away to manage. So RE in such economies are mostly specific and I suspect you need to discuss it in a speed group maybe not in Chennai group.
    All the best.



    Hi Natarajg007,

    Thanks for your reply. As you said, yes in these town's outsider's will not be investing in RE as it makes no sense. Therefore, the RE of these cities depends on the local people mean natives. However, the economy of these small but vibrant towns like sivakasi, karur, tirupur etc depends on national and international market right.

    Say sivakasi depends on north india and other southern states for the local economy. Whereas, in case of karur and tirupur both depend on national and international economies. I think the slow down in these market will eventually affect the RE market in these small towns based on other economies. Am I right Natrajg007? Is this what you are trying to say and did I get it right?

    Thanks,
    Sridhar
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  • Invest in Tier II towns like Coimbatore,Trichy,Madurai,Erode as these are bound to be going up after a couple of years
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  • Originally Posted by Nataraajg007
    Invest in Tier II towns like Coimbatore,Trichy,Madurai,Erode as these are bound to be going up after a couple of years


    Yes natraj, you are right. But even the land and flat prices are way to high in coimbatore. However, they are coming down due to the slowdown. The rentals in coimbatore is comparetively very cheap to chennai. This I came to know as I was shifting my small Internet marketing firm to coimbatore next month.

    Thanks,
    Sridhar
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  • Originally Posted by Nataraajg007
    Invest in Tier II towns like Coimbatore,Trichy,Madurai,Erode as these are bound to be going up after a couple of years


    What about Nanguneri, Thirunelveli. This place has 2500 acres alloted for SEZ and Govt. projects are going on.

    This place is going to be hot when the SEZ starts functioning fully. Until then???
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  • Originally Posted by sridharchennai
    Hi Natarajg007,

    Thanks for your reply. As you said, yes in these town's outsider's will not be investing in RE as it makes no sense. Therefore, the RE of these cities depends on the local people mean natives. However, the economy of these small but vibrant towns like sivakasi, karur, tirupur etc depends on national and international market right.

    Say sivakasi depends on north india and other southern states for the local economy. Whereas, in case of karur and tirupur both depend on national and international economies. I think the slow down in these market will eventually affect the RE market in these small towns based on other economies. Am I right Natrajg007? Is this what you are trying to say and did I get it right?

    Thanks,
    Sridhar

    You are right that indirectly these economies depend on other economies. However one should be carfeful not to take this argument too far. Infact one reason I started writing on this board is because a bunch of folks were trying to argue that since RE in US was crashing IT WILL CRASH IN CHENNAI OR IN INDIA. Now in economics post hoc fallacies are a dime a dozen. Kaka vizhunthatu Panam Pazhum Vizhunthathu is not a right way or a scientific way of conclusion.
    So yes, Sivakasi price will trend with global economy, but well the range will be highly dictated by local demand. So if price of a Bombay flat goes to 1L psft it does not mean that Sivakassi flat can go to even 10K psft!
    Cheers.
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