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 abk
    if they have analysed and find no room for concern dont you think a regulatory body like RBI wouldnt have looked at all aspects.no concern apparently means no problems whatsoever. and banks in india generally to RE companies who do not enjoy industry status(correct me if i'm wrong) would not give unsecured loans.


    Originally Posted by newboy
    in an interview today subbarao on asked about the real estate sector replied that they had analysed 10 companies(read top 10) their debt and liquidity and their capacity to repay debts was not of concern ,he did not guarantee the payback but saw no room for conceren.he said if there were uncertainities then they would have initiated regulatory procedures.

    for all those who were too worried about liquidity of the DLFs UNITECHs and HDILs...................RIP


    RBI/Govt will be anytime concerned only on the solvency and when they see the net asset is able is greater than outstanding debts they are not much bothered.

    Subbarao did not guarantee the payback ... Whats does that mean ...In fact the concerned company will volunteer-seek all these assessments just keep satisfy the shareholders. ICICI has forced this statement from RBI post Lehman Brothers exposure. DLF and Unitech has Approx 16000 Cr & Rs 10000 Cr respectively as debt.... and as you would know the rate of interest for loans much above the normal bank rates ...

    Concern is operating capital which is needed for the existing projects to grow...no sales and they cant even service the interest portion of these debts leave alone the principal...

    Cheers.
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  • Dear friends,

    It is a welcome sign that " to let boards " are being displayed now. The poor tenants should be the lucky ones now having choices and in a much better position to face the clutches of some greedy house owners.

    ks2071746
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  • the poor tenants were taken for a ride by the owners and the brokers,now they got a sign of relief
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  • Dear friend,

    There are some bad tenants who take the owners for a ride. Good and decent owner need to identify decent tenants and rent their property, lest they may have to spend more than what they would have received as rent in due course. I have my own experience in my flat at Saidapet. The chap (3rd tenant in 12 years) was paying a rent of Rs. 3800 pm, which was the rent for the 3 room flat of 850 sq. ft. right from the first tenant 12 years ago soon after the construction was over. I had to spend quite a lot of money to get the flat into shape, doing wall scratcing in kitchen (every hook and corner was oily) , repair to toilets, doors, windows, painting, wall distempering etc. at a cost of almost Rs. 70,000 which was almost the total rent I had received from this 3rd tenant during his occupancy. Another fact was that in the same project, the same rent of Rs. 3800 pm was being collected by owners of one room and two room flats also. See the position: a single room, a 2 room and 3 room flats in the same project with total 12 flats only G+1 floors, fetching the same rent. What surprised me further was that the one who paid Rs. 3800 PM for a single room flat was none other than the daughter of my tenant. In fact my tenant was telling me that the rent of Rs. 3800 is high and he wanted me to reduce it to Rs. 3200 PM. Incidentally I live at Trichy and rarely visit my flat at Chennai once in 3 years. I came to know of the rent aspect only after my tenant vacated the flat as I needed the flat for my son and when I enquired with the other owners in the project. The learning here for me is: please talk to the other owners frequently, visit your flat atleast once in 6 months, check the condition of the flat and do the repair then and there.

    There are bad owners and bad tenants too.

    ks2071746
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  • very true KS
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  • Originally Posted by ks2071746
    Dear friend,

    There are some bad tenants who take the owners for a ride. Good and decent owner need to identify decent tenants and rent their property, lest they may have to spend more than what they would have received as rent in due course. I have my own experience in my flat at Saidapet. The chap (3rd tenant in 12 years) was paying a rent of Rs. 3800 pm, which was the rent for the 3 room flat of 850 sq. ft. right from the first tenant 12 years ago soon after the construction was over. I had to spend quite a lot of money to get the flat into shape, doing wall scratcing in kitchen (every hook and corner was oily) , repair to toilets, doors, windows, painting, wall distempering etc. at a cost of almost Rs. 70,000 which was almost the total rent I had received from this 3rd tenant during his occupancy. Another fact was that in the same project, the same rent of Rs. 3800 pm was being collected by owners of one room and two room flats also. See the position: a single room, a 2 room and 3 room flats in the same project with total 12 flats only G+1 floors, fetching the same rent. What surprised me further was that the one who paid Rs. 3800 PM for a single room flat was none other than the daughter of my tenant. In fact my tenant was telling me that the rent of Rs. 3800 is high and he wanted me to reduce it to Rs. 3200 PM. Incidentally I live at Trichy and rarely visit my flat at Chennai once in 3 years. I came to know of the rent aspect only after my tenant vacated the flat as I needed the flat for my son and when I enquired with the other owners in the project. The learning here for me is: please talk to the other owners frequently, visit your flat atleast once in 6 months, check the condition of the flat and do the repair then and there.

    There are bad owners and bad tenants too.

    ks2071746

    KS, You dont seem to learn in life. I told you clearly that FLAT IS ONLY FOR LIVING and LAND IS FOR INVESTMENT. YOU have argued for ages that rental value makes the Flat a good investment and now your cat is out of the bag.
    Let me put it bluntly. ONLY IDIOTS INVEST IN FLATS. Intelligentia buy flats to live and invest in LAND.
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  • Dear friend,

    Every one has a few cats in their bags. Some leave out all the cats, some leave one by one and some do not accept that they have cats at all in their bags and will continue to hold or leave them slowly and do not tell others. I am one, who tells others on the cat leaving the bag once in a while when it leaves the bag to the benefit of others either to take it or leave it. I still maintain, investment on flat is not a bad proposition at all. As I told elsewhere, my flat at Saidapet was bought for an all inclusive price of about Rs.7,70,000 way back in 1996 or so and now people are asking it for Rs. 29 lakhs, 850 sq. ft. 3 rooms. It was consistantly(?) giving a rent of Rs. 3800 pm for the last 12 years or so, from 3 tenants. It is nothing but my ignorance which made the rent remain same for so long.

    ks2071746
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  • Originally Posted by ks2071746
    Dear friend,

    Every one has a few cats in their bags. Some leave out all the cats, some leave one by one and some do not accept that they have cats at all in their bags and will continue to hold or leave them slowly and do not tell others. I am one, who tells others on the cat leaving the bag once in a while when it leaves the bag to the benefit of others either to take it or leave it. I still maintain, investment on flat is not a bad proposition at all. As I told elsewhere, my flat at Saidapet was bought for an all inclusive price of about Rs.7,70,000 way back in 1996 or so and now people are asking it for Rs. 29 lakhs, 850 sq. ft. 3 rooms. It was consistantly(?) giving a rent of Rs. 3800 pm for the last 12 years or so, from 3 tenants. It is nothing but my ignorance which made the rent remain same for so long.

    ks2071746

    Even if you had tweaked smartly with the rental just do a calculation of total rental with interest for the period from receipt of rent till now after subtracting maintenance and other expenses (like coming from Tiruchi to Chennai to meet these funny tenants). Do all this and you will find a number X. (X= Current value+Rental gain/loss).Now find out the return for 7,70,000 based on X as current value. I bet the return will be sadly much much lower than if you just bought land in 1996 for 7.7L. Without rentals (gain or loss) your return now is about 10%. With a nominal return on rental it might move up to 13% or so is my guess. If you bought land in Saidapet in 1996 even a few sq ft it would have returned about 25%.
    Anyway I will leave your cats to eat you up! LOL!
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  • Originally Posted by chataara
    Dear friends

    Times of India dated 19-4-09 has reconfirmed the collapse of chennai real estate.

    Udhayam theatre property has no takers even after reducing the upset price to Rs.29 crore.

    So far only one person has paid the base amount, the auction has been cancelled and the deadline has been extended to 22-4-2009.

    This is the case all over the chennai. Buyers has lost interest in real estate.

    Thanks

    chataara



    udayam fetches 80 crores

    chataara?????????
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  • Originally Posted by ks2071746
    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


    Dear Ks

    I disagree with ur logic. Now the real problem is wrt to the land cost which are mainly dealt by middlemen and not by the direcot owners.

    Say the reasonalbe selling price is 2500 per sq.ft and the cost of constrution, tax, roi comes to 1500/- the balance cost goes towards land.

    This being the method of calculation now adopted, when the fsi is increased it will directly increase the land cost.

    Follow the ex:-

    Where the FSI is1.5 times the land cost is 36 lakhs( 2400*1.5*1000)

    Where the FSI is 3 times the land cost 72 laksh (2400*3*1000)

    resulting in no change in the clsoing selling price of a flat.

    Hope i am clear with this.

    vmggb1972
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  • it was bought by one of the shareholders
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  • Originally Posted by vmggb1972
    Dear Ks

    I disagree with ur logic. Now the real problem is wrt to the land cost which are mainly dealt by middlemen and not by the direcot owners.

    Say the reasonalbe selling price is 2500 per sq.ft and the cost of constrution, tax, roi comes to 1500/- the balance cost goes towards land.

    This being the method of calculation now adopted, when the fsi is increased it will directly increase the land cost.

    Follow the ex:-

    Where the FSI is1.5 times the land cost is 36 lakhs( 2400*1.5*1000)

    Where the FSI is 3 times the land cost 72 laksh (2400*3*1000)

    resulting in no change in the clsoing selling price of a flat.

    Hope i am clear with this.

    vmggb1972


    Dear friend,

    I fail to understand. The land cost may remain same in the area/locality with least change irrespective of the size, say one ground or 2 grounds. In case of FSI 1.5, the total saleable area of the flats that can be constrcuted is 1.5 times the plot area and in case the FSI is 3 times, the saleable area of flats increases twice, which means the UDS is less here. Of course the selling price of a flat is a different matter and dependant on the supply- demand, exact location and the promoter etc. However, lower UDS should mean lower cost of land.

    ks2071746
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  • Originally Posted by vmggb1972
    Dear Ks

    I disagree with ur logic. Now the real problem is wrt to the land cost which are mainly dealt by middlemen and not by the direcot owners.

    Say the reasonalbe selling price is 2500 per sq.ft and the cost of constrution, tax, roi comes to 1500/- the balance cost goes towards land.

    This being the method of calculation now adopted, when the fsi is increased it will directly increase the land cost.

    Follow the ex:-

    Where the FSI is1.5 times the land cost is 36 lakhs( 2400*1.5*1000)

    Where the FSI is 3 times the land cost 72 laksh (2400*3*1000)

    resulting in no change in the clsoing selling price of a flat.

    Hope i am clear with this.

    vmggb1972

    Thanks for bringing up this topic.

    Initially I was also of the same opinion as yours while facing this paradox.

    I believe price of land is being manipulated and increased taking FSI into account in a non stop viscous cycle.

    Large land transactions were shown and used to set the market price and sell in a location.

    Further the boom was fueled by increase in guideline value and proposed FSI increase due to second master plan.

    I couldnt get proper facts then to substantiate my claim.It will be helpful if you could clarify and further elaborate?

    Surprisingly, Considering your logic explains well why udhayam complex was sold at 80 crores. i.e. 3.36 crores/grnd.(14000/sqft)

    Even though they are planning to retain the theatre complex, assuming that they had planned to build a multi storeyed building or commercial complex the FSI would be 2.5

    14000/2.5 = 5600/sqft of built up for cost of land.

    So assuming the cost of land per sqft is constant, for 1 ground or 2 ground plot with 1.5 FSI, the price should be

    5600 * 1.5 = 8400/sqft = ~ 2C/grnd

    The market rate for one ground in ashok nagar is around 2.5C.

    will 1 or 2 grnd plot get sold at 3.36 crore?Can we conclude there is no uniform market rate for land and depends on the plot extent and FSI allowed?

    Now, Taking the same example as yours for a flat being sold at 2500/sqft.

    1 ground = 36 lakhs( 2400*1.5*1000) = 1500/sqft

    When FSI is increased to 3

    One would actually expect the following

    cost of the flat = cost of land per sqft builtup + cost of construction per sqft of builtup

    = (1500/3) + 1500 = 2000/sqft

    How do you say the land price will become 3000/sqft because of FSI increase?wouldnt it still remain 1500/sqft.Shouldnt land price increase only due to demand?!

    As ks put, less UDS should mean less cost of land per builtup, but its not what we observe, a high rise is also priced the same as stilt+4 building.

    Hoping to get some answers regarding this inconsistency from other members too.Thanks in advance.
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  • Originally Posted by abk
    udayam fetches 80 crores

    chataara?????????


    Dear Abk

    It was not sold for 100 crores as was expected earlier.

    Moreover, it was purchased by one of the shareholders. No one from outside wanted to quote higher price. That shareholder should have quoted higher price for this property to drive away outsiders.

    Yeahh... Its a matter of prestige for him.

    By the way, you were arguing that due to legal problems no one will come forward to purchase this prime land. So, it is clear now that there are no legal issues concerning with this land.

    Thanks

    chataara
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  • Originally Posted by ks2071746
    Dear friend,

    I fail to understand. The land cost may remain same in the area/locality with least change irrespective of the size, say one ground or 2 grounds. In case of FSI 1.5, the total saleable area of the flats that can be constrcuted is 1.5 times the plot area and in case the FSI is 3 times, the saleable area of flats increases twice, which means the UDS is less here. Of course the selling price of a flat is a different matter and dependant on the supply- demand, exact location and the promoter etc. However, lower UDS should mean lower cost of land.

    ks2071746


    Hi

    Ur logic of land price remian constant irrespective of the FSI allowed is not correct. basically today the land price are finalised based on the FSI u can reach. Where there is increase in FSI this will reduce the UDS no doubt. but the Land cost will increase proportionate to the time of FSI increase. Pl go through the ex. once again now u can understand.

    Thanks
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