Dear friends

Since there is slump in the sales of RE properties in Chennai, the bull writers are not accepting the fact that prices are crashing.

But a valid proof for this has appeared in todays newspaper.

According to Times of India, Udhayam theatre property's (1.2 acre) base price for auction sale has been brought down from Rs.100 Cr to just Rs.29 crore.

This price is arrived after analysing all the possibilities.

The reason: There is not even a single bidder for this prime property which abuts two arterial roads.

I hope a clear picture is emerging regarding the price of chennai properties.

Here is the link : ]http://epaper.timesofindia.com/Daily/skins/TOINEW/navigator.asp?Daily=TOICH&showST=true&login=default
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  • Originally Posted by ks2071746
    Dear friend,

    This Udhayam theatre complex is basically a commercial type. I am not defending that the RE prices are not coming down. But, they are reducing, higher percentages in out skirt areas and lower extent in the within city areas. Unless the FSI is increased substantially, say from 1.5 to 3 or so, I feel, large reduction within city limits for residential may be a distant dream.

    ks2071746


    Nice to see the prices are corrected and Wiseman you are almost there and the final bidded price will drive away many arguments/people from this forum.

    KS,

    When FSI is increased , how does it bring down the land price ? Do you mean the flat price ? When FSI is increased, land owners will claim more price as the builder can build more space with the same land. Rather it would escalate the land price...Pls clarify.

    Yes its evident that you are NOT defending the RE prices . As long as prices are high , Economy & Job markets are not condusive , the prices will fall not only outskirts & but all skirts.
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  • US housing market index fallen continuosly for 30 months.thats 2.5 years of downturn not yet stabilised.our market only 6 to 8 months still two more years to go....
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  • Almost there! :)

    Originally Posted by sethugm
    Nice to see the prices are corrected and Wiseman you are almost there and the final bidded price will drive away many arguments/people from this forum.

    KS,

    When FSI is increased , how does it bring down the land price ? Do you mean the flat price ? When FSI is increased, land owners will claim more price as the builder can build more space with the same land. Rather it would escalate the land price...Pls clarify.

    Yes its evident that you are NOT defending the RE prices . As long as prices are high , Economy & Job markets are not condusive , the prices will fall not only outskirts & but all skirts.



    Sethu,

    Yes. If the sold price is 30 crores, then it will be a climbdown of 70% from the quoted price. But as abk will say, the quoted price is not technically a sold price, so decline is actually not 70%.

    He is technically correct. But as I said, that is only a technicality. Because only 9 months ago, this quoted price was being taken as if it was the sold price. Therefore one cannot use two opposite arguments on the same type of price depending on the situation.

    Anyways, there seems to be some confusion that increasing FSI will increase land prices. My contention is this. Under normal circumstances, if demand is there, then this logic holds true.

    But when demand has literally ceased to exist (90% down), the increasing FSI only means even more supply potentially coming into the market. This will actually further reduce price of even land.

    cheers
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  • we have just seen the tip of the ice berg

    we have seen fairly very long bull run in RE prices and the dip we are seeing is just the tip of the ice berg.
    we will go through dark tunnels of bearish phase in RE
    The RE cycle is very long cycle.
    Any rise or fall will continue for a fairly longer peroid unlike share markets
    we will see a falling & then flat RE market for a long time to come
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  • Compare what you can get for 75 lakhs worldwide! :)

    Folks,

    Here is an interesting site which lists a sample of what you can get for $150k in various parts of the world.

    Check out the place in Chile, South Africa, Australia and Bali !!! :D

    ]http://matadorlife.com/what-can-150k-buy-in-real-estate-around-the-world/

    Have fun looking and wondering whether we are being shortchanged after all!!!

    cheers

    Have fun looking and wondering whether we are being shortchanged after all!!!

    cheers
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  • Originally Posted by sethugm
    Nice to see the prices are corrected and Wiseman you are almost there and the final bidded price will drive away many arguments/people from this forum.

    KS,

    When FSI is increased , how does it bring down the land price ? Do you mean the flat price ? When FSI is increased, land owners will claim more price as the builder can build more space with the same land. Rather it would escalate the land price...Pls clarify.

    Yes its evident that you are NOT defending the RE prices . As long as prices are high , Economy & Job markets are not condusive , the prices will fall not only outskirts & but all skirts.


    Dear friend,

    Inskirts are more required than the outskirts, you know?

    Coming back to increased FSI, for the same availability of land, more number of flats can be constructed, and the cost of UDS will be less and to tis extent, the flat rate should be down? Of course, I am not assuming the land owners will increase the land cost, but may maintain the rates considering today's weak RE market.

    ks2071746
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  • Originally Posted by wiseman

    But when demand has literally ceased to exist (90% down), the increasing FSI only means even more supply potentially coming into the market. This will actually further reduce price of even land.

    cheers



    Well said Mr. Wiseman.

    You have given another angle of this issue. I expect different story from the great bulls.

    Thanks

    chataara
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  • Courtesy Mr Ravi from another thread. Thanks Mr Ravi .

    Buy: In Chennai, Oct-Dec 08 saw a steep decline in property prices in some localities as compared to the previous quarter. Perungudi and Valalsaravakkam saw a decline in prices by 15-20%.

    Rent: Rentals declined during Oct-Dec 08 as compared to the previous quarter. Localities ilke Kilpauk, T. Nagar and Medavakkam registered a steep drop of over 20%."

    These are the declines in a quarter & possible for the 'reverse swing' ?

    http:www.businesswireindia.com/PressRelease.asp?b2mid=18588
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  • Originally Posted by sethugm
    Courtesy Mr Ravi from another thread. Thanks Mr Ravi .

    Buy: In Chennai, Oct-Dec 08 saw a steep decline in property prices in some localities as compared to the previous quarter. Perungudi and Valalsaravakkam saw a decline in prices by 15-20%.

    Rent: Rentals declined during Oct-Dec 08 as compared to the previous quarter. Localities ilke Kilpauk, T. Nagar and Medavakkam registered a steep drop of over 20%."

    These are the declines in a quarter & possible for the 'reverse swing' ?

    http:="http://www.businesswireindia.com/PressRelease.asp?b2mid=18588"]www.businesswireindia.com/PressRelease.asp?b2mid=18588

    Dear friend

    Rentals are fast declining all over chennai. If a tenant leaves a house, the owner finds it very difficult to get another tenant.

    For this reason he has to reduce the rent to cope with the other house owners.

    Thanks

    chataara

    Dear friend

    Rentals are fast declining all over chennai. If a tenant leaves a house, the owner finds it very difficult to get another tenant.

    For this reason he has to reduce the rent to cope with the other house owners.

    Thanks

    chataara

    Dear friend

    Rentals are fast declining all over chennai. If a tenant leaves a house, the owner finds it very difficult to get another tenant.

    For this reason he has to reduce the rent to cope with the other house owners.

    Thanks

    chataara

    Dear friend

    Rentals are fast declining all over chennai. If a tenant leaves a house, the owner finds it very difficult to get another tenant.

    For this reason he has to reduce the rent to cope with the other house owners.

    Thanks

    chataara
    CommentQuote
  • Dear friend,

    RE cycle is highly unpredictable. No one will be able to predict how it will behave in the coming months. One can even predict who will come to power after the forthcoming Lok Sabha Elections, as the choices are limited, but not in the case of RE behaviour where countless possibilites exist.

    ks2071746
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  • thats exactly what happens in my neighbourhood
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  • Originally Posted by vijai5
    thats exactly what happens in my neighbourhood


    Dear friend,

    Then better to build more cordial relations with the tenant and even go to the extent of giving some reduction in rent if the owner is happy with the tenant.
    ks2071746
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  • property owners rather keep thier flat empty then to cave in to the tenants,they are in that mind set not to reduce the rents,i personally know three house vacant for 3 months due to high rent.they keep on advertising but no luck
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  • Originally Posted by vijai5
    property owners rather keep thier flat empty then to cave in to the tenants,they are in that mind set not to reduce the rents,i personally know three house vacant for 3 months due to high rent.they keep on advertising but no luck



    Dear friend

    They cannot hold on to their portions without letting for some rent. In their neibourhood if one of the house owners reduces the rent automatically others will follow suit.

    Suppose one house is let for Rs. 5000. And it becomes vacant. If it is lying vacant for another 4 months without any tenant ready to give Rs. 5000 a month, house owner loses Rs. 20000.

    If the same house owner lets his portion for Rs.4000 without delay, he can avoid this much loss. The more and more months it lies vacant, loss will be heavy.

    Thanks

    chataara
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  • Right and wrong :)

    Originally Posted by ks2071746
    Dear friend,

    RE cycle is highly unpredictable. No one will be able to predict how it will behave in the coming months. One can even predict who will come to power after the forthcoming Lok Sabha Elections, as the choices are limited, but not in the case of RE behaviour where countless possibilites exist.

    ks2071746



    ks,

    If a person does not know how it works, things get highly unpredictable.

    But if you study history and know how trends happen, then things get quite predictable.

    Of course, I'm not saying that I can tell you on each day what the price will be. But that is immaterial to me. I can tell with reasonable accuracy how much it will fall and approx by which year.

    Either way, this alone helps me to keep my sanity and wait for the opportunities to strike when prices are low.

    In fact, as you have seen in the last 6-7 months (a very short period in RE), I have steadfastly held on to what I'm saying. And it has helped me by reducing my future purchase price by at least 15%-20%? Is that a small sum of money? If you add bank interest, this amount doubles the saving. So if prices fall 20%, then my real saving (not adjusting for inflation) is double that or 40% of the original price if the house. And if you calculate that this money comes after tax deduction from your salary (say 30%), then the amount will go up to 50% of the price of the house.!!!

    Saving 50% on the price of the house by way of money paidout in real cash, just waiting for a 20% drop is quite a bargain, right? What would be your saving when price falls by 50%? Check it out!!!

    Furthermore, many people have written to me privately telling me that this prediction has helped them put off purchase and that has been quite helpful to them as well.

    Let us see if the 50% level is reached? And then, in smoe cases, 80% level?

    Only then will I have satisfaction that my methods are correct to a point. Time will tell!

    cheers
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