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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  • Dear friend,

    For the propestive buyers, I also feel, they should wait now, for atleast another 6 to 12 months time.

    ks2071746
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  • which could fall steeper

    according to you which do you think could fall steep, the new flats or vacant land?? And what is your reasoning behind such analysis?
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  • Many guys who were hitherto predicting max of 5-10 percent corrections are clueless now and expecting minimum of 40-50 percent corrections.

    Friend of mine who is a civil engineer who was strongly denying RE price corrections ,advise now not to be hurry and wait for the better bargain.

    Spoke to another friend who is constructing a house in Medavakkam now planning to confine with the ground floor and withheld the first floor.He is afraid of going for loans above 20 Lacs.As he has recently moved to another IT bigwig from TCS and the more likelihood of jobcuts in the new company makes him more concerned .It seems the new company is collecting information on those recently joined with high salary.

    Is the IT/ITES & other job markets in Chennai so bad ?

    R2I- Is it wise decision at this given situation ?

    Your thoughts are much appreciated.
    CommentQuote
  • This is going to be quite ugly ...

    Originally Posted by sethugm
    Many guys who were hitherto predicting max of 5-10 percent corrections are clueless now and expecting minimum of 40-50 percent corrections.

    Friend of mine who is a civil engineer who was strongly denying RE price corrections ,advise now not to be hurry and wait for the better bargain.

    Spoke to another friend who is constructing a house in Medavakkam now planning to confine with the ground floor and withheld the first floor.He is afraid of going for loans above 20 Lacs.As he has recently moved to another IT bigwig from TCS and the more likelihood of jobcuts in the new company makes him more concerned .It seems the new company is collecting information on those recently joined with high salary.

    Is the IT/ITES & other job markets in Chennai so bad ?

    R2I- Is it wise decision at this given situation ?

    Your thoughts are much appreciated.



    Hi,

    The last 7 years has seen an unbelievable change in the way we live. Most of the top 10 IT/BPO companies have grown by around 10 to 20 times. And much of their workforce are youngsters who have basically entered workforce and lived their entire working life in a dream bull market esentially earning salaries that they will find hard to see in the next few years - if they hold their job, that is!!! Basically easy money ensure most people have been overpaid and now believe they are worth more than they actually are!

    And this is the basis with which they have gone around blithely buying flats at 1 crore and such ridiculous prices. Now, let us see how this will pan out.

    To people who have had work/life experience of 20 years or more, you will realise that it is very unlikely that all through the 20 years you will have ever-increasing surpluses - even if you have continuously increasing salaries. Marriage, kids with all the additional responsibilities will severely bring down spendable surplus. And if you add the bad patches, many a times you will have nothing in hand or even worse will be deeply in debt.

    This is a crucial piece of experience youngsters do not have. And with this longish period of depressed economy, the next few years, if not the entire decade will have many, many youngsters living close to the paycheck-to-paychek level of savings - essentially running on an empty tank. And many times worse. How will they cope? Most times, they will not!

    This will, in the long run, make many people very conservative and go back to the 20% - 30% down payment mode of buying and even making sure that the EMI is such that even a low salary will take care of it. Basically many people will learn the essential skill of preparing a personal Balance Sheet and Income/Expense statement (I have done it for last 25 years every year and can go back and tell you the price of petrol all the way back to the 1980s! :D For that matter, the price of a plate of idlis at a popular eating joint all the way back!). These are among the essential life skills our young IT and other hotshot executives have not had the time to learn and who now will need to learn on an urgent basis! :(

    In conclusion, the wisest thing to do is to wait for serious distress prices to happen and stabilize, ensure that even in that climate you've got a safe job and then commit to purchasing property, ensuring that you follow the basic thumbrule of not more than 40% of take-home salary must be used to cover all debt (house, car, white goods, etc). Only then can you be sure of making payments over 15 - 20 years with some surety and live with much less stress.

    RE is a very large investment at very high leverage repaid over a very long time. Most people have been indulging in it as though it is some sort of gamble where you buy and sell like you would a much smaller asset. People will learn that the easiest thing to do is buy at ridiculous prices. The hardest things to do is to pay off your entire loan!

    cheers
    CommentQuote
  • I have seen the rough patch during 1997 to 2002 in RE.it was awful.you cant sell it easily.
    CommentQuote
  • Originally Posted by sethugm
    Many guys who were hitherto predicting max of 5-10 percent corrections are clueless now and expecting minimum of 40-50 percent corrections.

    Friend of mine who is a civil engineer who was strongly denying RE price corrections ,advise now not to be hurry and wait for the better bargain.

    Spoke to another friend who is constructing a house in Medavakkam now planning to confine with the ground floor and withheld the first floor.He is afraid of going for loans above 20 Lacs.As he has recently moved to another IT bigwig from TCS and the more likelihood of jobcuts in the new company makes him more concerned .It seems the new company is collecting information on those recently joined with high salary.

    Is the IT/ITES & other job markets in Chennai so bad ?

    R2I- Is it wise decision at this given situation ?

    Your thoughts are much appreciated.


    Correction are happening and will continue for another 2 years.

    If you are financially strong, Return to India is welcome.Otherwise do not plan now
    CommentQuote
  • Originally Posted by sethugm
    Many guys who were hitherto predicting max of 5-10 percent corrections are clueless now and expecting minimum of 40-50 percent corrections.

    Friend of mine who is a civil engineer who was strongly denying RE price corrections ,advise now not to be hurry and wait for the better bargain.

    Spoke to another friend who is constructing a house in Medavakkam now planning to confine with the ground floor and withheld the first floor.He is afraid of going for loans above 20 Lacs.As he has recently moved to another IT bigwig from TCS and the more likelihood of jobcuts in the new company makes him more concerned .It seems the new company is collecting information on those recently joined with high salary.

    Is the IT/ITES & other job markets in Chennai so bad ?

    R2I- Is it wise decision at this given situation ?

    Your thoughts are much appreciated.


    Hi Sethu,

    The jobmarket situation in IT/ITES sector in Chennai is getting very bad, not many companies are hiring and even those who do are offering very less.They dont even match the current CTC and dont negotiate.

    Quality of work is getting bad, and so is the timings.

    The competition is getting very tough with every passing day with more and more people losing jobs.

    If you are planning to R2I, I suggest you get one or two offer and then contemplate doing so.Coming back and searching would be excurciating task.

    I personally feel the region that you are now in is far safer than India.You can try moving into an indian company there itself and then ask for a transfer.That would be lot safer.
    CommentQuote
  • Originally Posted by lovebird
    Correction are happening and will continue for another 2 years.

    If you are financially strong, Return to India is welcome.Otherwise do not plan now


    Nataraaj - I like your name "lovebird".A welcome change to this board.Keep your thoughts coming.Just curious..how did you get your username changed?
    CommentQuote
  • Originally Posted by nabishek
    Hi Sethu,

    The jobmarket situation in IT/ITES sector in Chennai is getting very bad, not many companies are hiring and even those who do are offering very less.They dont even match the current CTC and dont negotiate.

    Quality of work is getting bad, and so is the timings.

    The competition is getting very tough with every passing day with more and more people losing jobs.

    If you are planning to R2I, I suggest you get one or two offer and then contemplate doing so.Coming back and searching would be excurciating task.

    I personally feel the region that you are now in is far safer than India.You can try moving into an indian company there itself and then ask for a transfer.That would be lot safer.


    Thanks Abishek for the information.

    Hear the same from friends.

    But you are spot on in advising "one or two offer" ... thats a good advice many has to think before R2I.

    Yes FAR is safer than India.
    CommentQuote
  • Originally Posted by nabishek
    Nataraaj - I like your name "lovebird".A welcome change to this board.Keep your thoughts coming.Just curious..how did you get your username changed?

    I did not know that Lovebird is that guy! Good, so the mod has heeded to my request. Good that spooky deviations on existing names are destroyed!
    CommentQuote
  • Oops you are forcing me to write!

    WISEMAN WRITES
    This will, in the long run, make many people very conservative and go back to the 20% - 30% down payment mode of buying and even making sure that the EMI is such that even a low salary will take care of it. Basically many people will learn the essential skill of preparing a personal Balance Sheet and Income/Expense statement (I have done it for last 25 years every year and can go back and tell you the price of petrol all the way back to the 1980s! :D For that matter, the price of a plate of idlis at a popular eating joint all the way back!). These are among the essential life skills our young IT and other hotshot executives have not had the time to learn and who now will need to learn on an urgent basis! :(

    In conclusion, the wisest thing to do is to wait for serious distress prices to happen and stabilize, ensure that even in that climate you've got a safe job and then commit to purchasing property, ensuring that you follow the basic thumbrule of not more than 40% of take-home salary must be used to cover all debt (house, car, white goods, etc). Only then can you be sure of making payments over 15 - 20 years with some surety and live with much less stress.


    I appreciate the fact that today's youngsters are spoilt brats and dont work out their finances. If you had been doing it, it is not abnormal. Twenty years ago, keeping a personal account book for idlis to bikes was the norm. Ofcourse today's youngsters need to learn it, and there are many who know it and do follow while some of the "arpanukku bhavishu vandal" categories dont!

    As for your want to buy at distress. That is exactly the reason for me writing against you. You are a typical bear. You want others to lose their money to you. Nothing more. You want people to get into distress. Nothing more; so that you or your coterie can buy and you want to push that view onto other's gullets. Unfortunately you are not even a grain of sand in the ocean and that too an UNWISE piece of sand that it wont have any effect on humanity!
    CommentQuote
  • Originally Posted by abk
    he may sell his "chaddis" next:D
    DLF DLF even lehmann brothers ,a much bigger name ,failed does that mean SBI will fail too.

    SBI was created by the State Bank of India Act and is governed by it in addition to banking laws. Which means, unless the Government repeals the law, it will exist.
    Verify facts before comparing Lehman and SBI.
    CommentQuote
  • Originally Posted by freedomIndia
    SBI was created by the State Bank of India Act and is governed by it in addition to banking laws. Which means, unless the Government repeals the law, it will exist.
    Verify facts before comparing Lehman and SBI.


    where is the comparision?
    that post simply says "if x fails then y will" is not true.
    understand the analogy and then comment.
    it is what i gather from abk's post.
    CommentQuote
  • Originally Posted by freedomIndia
    SBI was created by the State Bank of India Act and is governed by it in addition to banking laws. Which means, unless the Government repeals the law, it will exist.
    Verify facts before comparing Lehman and SBI.


    Dear Friend,

    I think abk meant SBI wouldn't fall.

    By the way, if you weren't aware.SBI has $5 million exposure to Lehmann and they hope to recover only 60-70%.Its wrong to say they are decoupled.

    apart from that SBI has heavy exposure to realty firms like maytas,unitech etc.No one really knows how overlevaraged they are.

    If they bank is under RBI regulations, dont take it for granted that things will be safe and the banks can never fail.

    The strict regulation by RBI governing cash reserve ratio(CRR) and Foreign Direct Investment(FDI) is what is protecting our econonmy.
    CommentQuote
  • Originally Posted by nabishek
    Dear Friend,

    The strict regulation by RBI governing cash reserve ratio(CRR) and Foreign Direct Investment(FDI) is what is protecting our econonmy.

    True. Very True. If not for our strict RBI and its strict enforcement of 35% SL ratios, our banks would have been dead for a long time.
    Thank God, the RBI has serious brains unlike our politicians.
    CommentQuote