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Real Estate Returns Vs Tier 2 Cities, Chennai

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Real Estate Returns Vs Tier 2 Cities, Chennai

Last updated: August 4 2013
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  • Real Estate Returns Vs Tier 2 Cities, Chennai

    Hi Folks,

    I would like our forum members to provide a comparison on the long term real estate returns between Chennai and Tier 2 cities in Tamil Nadu.

    The real estate price in Chennai even in far off places have shot up but it's not the case with Tier -2 cities.

    Please provide your views.
  • #2

    #2

    Re : Real Estate Returns Vs Tier 2 Cities, Chennai

    This is the general mindset based on my interaction with people from other parts of TN:
    -They are very optimistic about real estate potential of their place of origin, be it their native village or tier-2 city or town. This is despite of the fact that there is no prospect of job creation of industrial growth.
    -They have deep desire to invest in their native place.
    -People who move to chennai and buy first property here inevitably buy their second property in their native place.
    -People who move to chennai and find properties in Chennai unaffordable, choose to invest in their native place instead to strengthen their real estate portfolio.

    I see a bright future in tier-2 city investment, especially gated community projects in city limits. This is because there is a huge demand but supply is limited. Recently someone I know who is a hardcore chennaiite, owning multiple properties in Chennai, invested in an apartment in Coimbatore. He has no link with Coimbatore.
    Last edited April 3 2013, 07:26 AM.

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    • #3

      #3

      Re : Real Estate Returns Vs Tier 2 Cities, Chennai

      @Loveland - Interesting views. I do concur with your statements.

      In tier2 cities and towns, cost of owning a piece of land (2400 sq ft) is lesser than 15 lacs which is just 10 - 15 kms away from city center.

      In some other threads,i saw a discussion about the point of entry and it was around 24 lacs. Tier 2 cities provides ample opportunities in terms of affordability.

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      • #4

        #4

        Re : Real Estate Returns Vs Tier 2 Cities, Chennai

        In some cases investment in tier 2 and 3 towns have given better returns compared to Chennai. It depends on the timing.

        If you have invested in the suburbs of chennai after 2007, your return is less compared to the investments you made in some tier 3 towns.

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        • #5

          #5

          Re : Real Estate Returns Vs Tier 2 Cities, Chennai

          Originally posted by lovebirds43k View Post
          In some cases investment in tier 2 and 3 towns have given better returns compared to Chennai. It depends on the timing.

          If you have invested in the suburbs of chennai after 2007, your return is less compared to the investments you made in some tier 3 towns.
          Tier 2 & Tier 3 cities one can make great money in Acreage, buying Acers of Agriland in the outskirts and jointly developing layouts with Developers is great return.

          Flats & Plots return are minimal in Tier 2 & 3 cities (CBE is an exception)

          Thiruchy, Madurai,Salem,Velore,Karur,Erode,Dindugal,Thanjore ,Sivakasi all dud for plot & flats.

          Agri land conversion can provide return way superior than Chennai (200 -400% in 2-3 years) the approval process is easy.

          The Key is never invest more than 20L to 30L at one time.

          You must be prepared to accumulate small parcels and increase your holding (1st 3 Acres then 5 Acres and then more)

          It must be with in 10Kms to Town border and close to a Highway.

          If you don't have the time to subdivide & develop, Once you have a good size parcel with acess. You can sell it to a developer.

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          • #6

            #6

            Re : Real Estate Returns Vs Tier 2 Cities, Chennai

            Investment in hometown is inevitable in RE portfolio when one has time and money . Educational Institutions, Industrial Development,Tourism spots ,Good weather and Climate through out the year with free floating population movements play vital role for any tier 2 city to get developed and yield better returns.

            Cbe being only cosmopolitan city in TN attracted many North Indians and others and most of the lands got changed hands heavily . Many prefer to settle down finally or for better investment return in plots,acres and flats too since it is cheaper than costlier Chennai.

            Year back ,Invetsment moved to Madurai and got trapped heavily . Rest of the cities in my knowledge did not yield huge ROI nor attracted many outsiders due to the absence of parameters mentioned in Para 1

            BTW, I am settled down in Chennai and has interests in Cbe equally

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            • #7

              #7

              Re : Real Estate Returns Vs Tier 2 Cities, Chennai

              Pndicherry saw huge appreciations because of medical colleges propping up. 10yrs back, getting permit to start a medical college was easier in Pondy than TN. Early 2000s saw multi fold appreciation of land in Pondy. It's also a very good place to retire.
              Certain posh pockets of Pondy cost >2C per ground, but still worth it imo compared to equally priced desolate places in Chennai.

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              • #8

                #8

                Re : Real Estate Returns Vs Tier 2 Cities, Chennai

                Pondicherry is anyday better than Chennai for normal middle class lifestyle. You got beautiful beaches, resorts, shopping areas, restaurants and cinemas. I remember in late 90s watching movie in well maintained theater for Rs.16 in AC Box. In chennai you should spend thrice that amount and theatres are also not well maintained.

                Decent restaurants were charging Rs.16 for unlimited meals. There were several mid-range sea side restaurants dotting east coast road. They are anyday cheaper and better than Chennai ECR restaurants.

                I would gladly settle down in Pondicherry. Not sure of current situation though.

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                • #9

                  #9

                  Re : Real Estate Returns Vs Tier 2 Cities, Chennai

                  Originally posted by Economist View Post
                  Thiruchy, Madurai,Salem,Velore,Karur,Erode,Dindugal,Thanjore ,Sivakasi all dud for plot & flats.

                  you are wrong here. I have/ know of multiple investments that have appreciated like anything. five times in 7years, double in an year. of course local knowledge, timing and luck helped but these didn't disappoint.

                  if you have different experience with investments here I am all ears.
                  Last edited April 3 2013, 03:07 PM.

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                  • #10

                    #10

                    Re : Real Estate Returns Vs Tier 2 Cities, Chennai

                    My own exp.

                    Bought the land on a SH near Erode at 160 per sqft in 2005 (Not in acres but plots). Now the rate is above 2000

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