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How Uncertain is Real Estate in Chennai?

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How Uncertain is Real Estate in Chennai?

Last updated: November 7 2009
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  • #11

    #11

    Re : How Uncertain is Real Estate in Chennai?

    I agree some people have lots of money and it is always true in the economy but the million dollar question is how much percentage of the people are really wealthy to afford 50 L or 1C land or building.

    People whoever talk about appreciation of prices in land and property, I will suggest them to read something about Ireland. 3 years before, it was called celtic tiger period and everything was up the roof. Other countries in Europe wanted to follow Ireland business model.

    Present scenario, the land and property prices have crashed by more than 45% and still falling. Supply is abundant compared to demand and rental income has taken a deep slope negatively. People whoever had more than one house are started struggling with negative equity.

    The similarity between Ireland and India ( Chennai at present ) is that the price increase of property gre multifold within a very short period of 6 or 7 years and no one believed that the property prices will crash and major players talked about soft landing.

    When the market dynamics start, the crash becomes inevitable and hopefully people learn from what happened across the globe. Why is Chennai property much different from stories from elsewhere???

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    • #12

      #12

      Re : How Uncertain is Real Estate in Chennai?

      Ireland does not have :

      1. The population like India.
      2. Inflation like India.
      3. Unlike Indian Gov, Irish government does not have a history of structured devaluation of currency to counter Inflation in asset prices.


      India population and Inflation will keep the property price unaffordable for many.

      The fate is rich will get richer and poor will remain poor.

      One junior local politician or Government official will own properties valued at 10C and over.

      Mid level politicians and officials own properties over 50C (Eg: Judge Dinakaran)

      Top politicians ministers and business men own properties over 500C.

      Indian gov lost USD 14 Billion in Spectrum sale Guess how much kick back was sent to TN.

      Were the best place to put black money and Corruption? Real estate.(Hard to trace, Easy to wash cash.

      As long as corruption (Large scale), profiteering and black money is present in India, RE will be growing extremely well.

      Dont think IT nerds, NRI's, overseas Investment are the only reason for Chennai's property growth; they are only part of the story.


      We can not change the system, Just take a plunge and invest in property if you want to live in India.

      If you miss the boat you will never be able to create wealth as asset price will get out reach and one will have to end up living in Arakonam or Back of Chengalpet or Thiruvallur.

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      • #13

        #13

        Re : How Uncertain is Real Estate in Chennai?

        While it is true that black money is the reason behind high real estate prices in Chennai, it is also the reason why it is not advisable to invest here.

        Never put money in a place where you are sure, black money is invested.

        Infact if you have more money, it is better ro invest in places with good governance standards like Singapore, Dubai. Go international but within asian region like middle east or south east asia where prices are more in tandem with high quality of life and infrastructure.

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        • #14

          #14

          Re : How Uncertain is Real Estate in Chennai?

          Originally posted by contra View Post
          While it is true that black money is the reason behind high real estate prices in Chennai, it is also the reason why it is not advisable to invest here.

          Never put money in a place where you are sure, black money is invested.

          Infact if you have more money, it is better ro invest in places with good governance standards like Singapore, Dubai. Go international but within asian region like middle east or south east asia where prices are more in tandem with high quality of life and infrastructure.
          if you want to invest in RE do where you or your relatives can safegaurd the propertty personally.buy where you can visit the property rregularly.
          this should be the first consideration.

          when there are buyers for RE in chennai white or black doesnt matter.and tell me where in India there is no black money.
          abroad if not black money there is a lot of illegal money from drugs,arms,etc therefore i do not see any reason to single out chennai alone on this factor

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          • #15

            #15

            Re : How Uncertain is Real Estate in Chennai?

            Originally posted by contra View Post
            While it is true that black money is the reason behind high real estate prices in Chennai, it is also the reason why it is not advisable to invest here.

            Never put money in a place where you are sure, black money is invested.

            In factif you have more money, it is better ro invest in places with good governance standards like Singapore, Dubai. Go international but within asian region like middle east or south east asia where prices are more in tandem with high quality of life and infrastructure.
            Try telling this to corporate investors queuing up to Invest in India and other BRIC nations.

            They know the joint very well and still willing to invest millions in India.
            I live in a G20 country and so called "developed nation" the accepted belief is so call mature nations or developed countries have not much to offer in terms of growth. Every investment portfolios in the west these days have 10% to 20% invested in India and China.

            In my country peoples retirement fund and Goverment future fund (Billions) has great exposure to India & China.

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            • #16

              #16

              Re : How Uncertain is Real Estate in Chennai?

              May we know which country you live in Economist?

              Originally posted by Economist View Post
              Try telling this to corporate investors queuing up to Invest in India and other BRIC nations.

              They know the joint very well and still willing to invest millions in India.
              I live in a G20 country and so called "developed nation" the accepted belief is so call mature nations or developed countries have not much to offer in terms of growth. Every investment portfolios in the west these days have 10% to 20% invested in India and China.

              In my country peoples retirement fund and Goverment future fund (Billions) has great exposure to India & China.

              Comment

              • #17

                #17

                Re : How Uncertain is Real Estate in Chennai?

                You should read this book!

                Originally posted by Economist View Post
                Try telling this to corporate investors queuing up to Invest in India and other BRIC nations.

                They know the joint very well and still willing to invest millions in India.
                I live in a G20 country and so called "developed nation" the accepted belief is so call mature nations or developed countries have not much to offer in terms of growth. Every investment portfolios in the west these days have 10% to 20% invested in India and China.

                In my country peoples retirement fund and Goverment future fund (Billions) has great exposure to India & China.

                Economist,

                I'm repeating myself as I have posted about this book a while ago ...

                You must read this 1955 book, "Where are the Customer's Yachts!. It talks about how, while you see so many bankers driving in their Masseratis, you hardly see any of their customers make much money out of their investments managed by these managers.

                Basically, bulk of these money managers are sham and end up losing customers hard-earned savings. And most of them exhibit herding mentality (check out most Mutual Funds will have a large chunk of their funds in very similar sectors, companies, etc, safety in numbers and if you don't stick your head out, there is no risk of getting it chopped off and at the end of it, they are only/mainly interested in their month-end salaries and bonuses!

                You will also see this in company ratings. When it reaches 1000 from 100 for a hypothetical company, the agencies will tell you to buy at 1000 and not 100. When it then falls to 150, it is only then that they will change rating from buy to hold. And when the company is about to go bankrupt, they will then change it to sell!!!

                Figure it out! You are the only good manager of your money. So, read up a little and do your own investment management!

                I should know. I have 2 of my MBA classmates as top fund managers (Templeton and Citi). Let me tell you. Each one of you can start educating yourselves from now on (do it as a hobby with passion) and in 2-3 years, I guarantee you will be as good as the best money managers in this country, if not better. You simply cannot trust your money to most money managers of today, especially the youngsters who do not even have the value systems of the oldies (they take mocu more pride in their work and much better care of your money), leave alone their experience! I know I'm generalising and will face flak, but, like in all generalisations therer will be a few exceptions!

                cheers
                Last edited by wiseman; November 4 2009, 10:29 PM.

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                • #18

                  #18

                  Re : How Uncertain is Real Estate in Chennai?

                  I agree with wiseman ;he is absolutly correct as i have experienced myself in the past 5 years of trading experience.
                  Sammy

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                  • #19

                    #19

                    Re : How Uncertain is Real Estate in Chennai?

                    prices that are tandem with high quality of life and infrastructure is acceptable. but in chennai, quality of life and infrastructure is nowhere nearer to any comfort level. but prices are multifold. as year passes, 3c property buy now will suppose to go 6c in 4 or 5 years is not going to happen here after. in mean time, foriegn fund will go easily where it find more attractive. so without world class standared, world class prices are not sustainable in longterm

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                    • #20

                      #20

                      Re : How Uncertain is Real Estate in Chennai?

                      Wiseman,

                      you should probably start a thread on books to read to educate oneself.

                      I'm gonna read the book you mentioned.

                      Thanks
                      George

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