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Price of an Old Apartment in Alwarpet Chennai

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Price of an Old Apartment in Alwarpet Chennai

Last updated: July 21 2014
27 | Posts
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  • #11

    #11

    Re : Price of an Old Apartment in Alwarpet Chennai

    Originally posted by sunr2i View Post
    The yield logic discussion is beaten to death in this forum. Also why not 4% or 5% yield expectation and why limiting to min 3%. Also the yield logic does not work for new vs old apt. The rent is almost similar but new one has high capital cost. Anyway hardly I see price of the apt that has been sold for with rental yield >2%.

    If I have rationale I would expect rental yield of 7% with capital yield of 3% min to have total of 10% cashflow per year to just beat inflation. Nevertheless this stays only on theory and never applicable practicaly anywhere in India.
    U can get a good commercial property with yield in excess of 10% both office and retail in all tier one city I had given example earlier in this forum anyway Bangalore is only market in India u also get residential investment with yield in excess of 7% in old apartment and 5% in new apartment
    RE overpriced still fancy then 4% yield is must anything less is overpriced

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    • #12

      #12

      Re : Price of an Old Apartment in Alwarpet Chennai

      Originally posted by srivat View Post
      Septaa,

      If one is looking for a 4% yield then not sure if Chennai is the right place to invest. Folks will be left without any choice or hardly few choices.

      @shasun25

      11 years is not that old and also for 1700 sq ft you will be getting around 1100 UDS (If I am not wrong). Old apartment in that area usually gets better carpet area as well.

      As indicated by sun2ri go by discounted approach based on new apartment price. Take into consideration the structural stability of the outer apartment and quality of construction while discounting.
      If it is end use then the yield will not come into consideration however if it is investment why go for residential can easily go for commercial or office .
      With Uds I have first hand experience the carpet area is big however Uds is low take any old parsn gee gee arihant alsa si all the same gee gee is the worst 3000 sqft apartment with 2700 sqft carpet area but Uds as low as 750 sqft however one of best apartment in chennai
      RE overpriced still fancy then 4% yield is must anything less is overpriced

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      • #13

        #13

        Re : Price of an Old Apartment in Alwarpet Chennai

        I think having more UDS will help hold the apt prices longer. Any thoughts guys.

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        • #14

          #14

          Re : Price of an Old Apartment in Alwarpet Chennai

          Originally posted by chennaidesi View Post
          I think having more UDS will help hold the apt prices longer. Any thoughts guys.
          Biggest drive is location location location and UDS is second IMO
          RE overpriced still fancy then 4% yield is must anything less is overpriced

          Comment

          • #15

            #15

            Re : Price of an Old Apartment in Alwarpet Chennai

            Originally posted by chennaidesi View Post
            I think having more UDS will help hold the apt prices longer. Any thoughts guys.
            Yes, UDS is critical for older units.
            There is very low building value for older units, the whole valuation is primarily based on value of the UDS.

            I posted few weeks ago on how much the UDS value would differ from standardized land value.

            If you assume standard land value (what builders buy in auction, etc), adjusted for location premium as X.
            Small parcel lands or houses with white/colored transactions will happen at 1.2X or sometimes even more.
            UDS value is always less than X, it is generally at 0.6-0.8X - bit more or less.
            Just to give you an idea.

            Resale apts are completely different animal, ones with above normal UDS in a legal building will always trade above market value.

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            • #16

              #16

              Re : Price of an Old Apartment in Alwarpet Chennai

              Originally posted by Septaa View Post
              Biggest drive is location location location and UDS is second IMO
              Agree. The location is very important. That is the reason the property in main road fetches more value then one in quite road. Also there are apartments not legally approved after certain floors. They might have regularized later. The owners never know the UDS they hold in the paper may not sum up with other owners vs total land in the complex.

              In other words, the location and no legal issues would fetch more premium than UDS alone. That is another reason why capital value based on rental yield may not make sense!.

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              • #17

                #17

                Re : Price of an Old Apartment in Alwarpet Chennai

                I think your assumption may not be right. I do not understand how you arrived at 1100 sqft UDS. In my understanding anything more than 50% UDS is good enough. Specifically old complex with covered car parks, more open spaces, lift, servant room/rest rooms carry around 50% to 55% UDS. The old bldgs with no car parks etc could carry up to 60% UDS

                Where you could find more than 50% UDS now a days for new project?

                Originally posted by k11 View Post
                @Srivat is bang on.
                11 year old 1700sqft apt should have 1100sqft UDS, if they followed proper FSI rules. If it has less than 1000sqft there is something wrong. Only new apts will have lower UDS, that is because of loading.

                Remember, Illegal apts with less UDS should not be assessed market value. No way to properly discount them, so better to stay away in that case.

                Coming to Yeild, yes - no place in Chennai will quality for 4% yeild. Most of India is like that.
                Rents have fallen more than capital values in slow market today and made the ratio even worse.

                I hope the OP is buying for end use, I do not think RE in Chennai at this point is a good investment depending on rental cashflow.
                Last edited April 27 2014, 05:01 AM. Reason: spelling

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                • #18

                  #18

                  Re : Price of an Old Apartment in Alwarpet Chennai

                  Originally posted by sunr2i View Post
                  I think your assumption may not be right. I do not understand how you arrived at 1100 sqft UDS. In my understanding anything more than 50% UDS is good enough. Specifically old complex with covered car parks, more open spaces, lift, servant room/rest rooms carry around 50% to 55% UDS. The old bldgs with no car parks etc could carry up to 60% UDS
                  Actually rough calculation of UDS is pretty simple.

                  UDS is directly related to FSI. UDS is your share of land for every FSI sqft you bought.
                  You do not get UDS for non-FSI area like stairs/liftroom/etc.

                  UDS = Carpet+Walls/FSI

                  Older apts did not use to have loading or amenities, even in somecases it is very small amount. In our case, lets say there is no loading (non-FSI space).

                  UDS = 1700/1.5 = Around 1100sqft.

                  1.5 FSI is kind of standard in most cases.


                  Where you could find more than 50% UDS now a days for new project?
                  Ok, coming to new apts.
                  We have loading (around 15-20%) and then some high FSI projects.

                  Some multistorey buildings on 100ft roads like OMR can have 2.5 FSI.
                  Non- multistorey projects on either S+7/S+4/lesser will generally have 1.5 FSI.

                  So for a OMR Flat you could have UDS = 80-85% (FSI area) / 2.5 = 32-35%
                  For a flat on a interior roads UDS = 80-85% (FSI area) / 1.5 = 51-55%

                  Now I do not want people to misunderstand the difference.
                  Sometimes the 32-35% UDS on a 100ft road like OMR could have similar or higher valuation than 55% on some interior roads.
                  UDS + Location is the key.

                  Remember value of a land is always based on how much sqft can be legally developed.
                  That's how land valuation is done across the entire country.

                  Places like OMR main road will always have higher land value than interior OMR areas or even a low FSI area like ECR.

                  Hope I am clear.

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                  • #19

                    #19

                    Re : Price of an Old Apartment in Alwarpet Chennai

                    @K11

                    I understand that UDS based on FSI. However how do you assume 1700 sqft as in OP msg, could be only carpet+Wall?

                    It could be carpet+wall+common area = super built area.

                    The reason is I never seen 65% UDS of super built area to get 1100 UDS for 1700 sqft!. This may be possible for smaller older units with 4 or 6 apartments. But OP mentioned it was 22 units which is decent size to assume the sq.ft quoted is super built area.

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                    • #20

                      #20

                      Re : Price of an Old Apartment in Alwarpet Chennai

                      Originally posted by sunr2i View Post
                      @K11

                      I understand that UDS based on FSI. However how do you assume 1700 sqft as in OP msg, could be only carpet+Wall?

                      It could be carpet+wall+common area = super built area.

                      The reason is I never seen 65% UDS of super built area to get 1100 UDS for 1700 sqft!. This may be possible for smaller older units with 4 or 6 apartments. But OP mentioned it was 22 units which is decent size to assume the sq.ft quoted is super built area.
                      In older apartment common area calculation was pretty simple and not as complicated as in these days. Common area in many cases is area other than apartment footprint and this is divided equally by number of flats. Now this inturn figures in UDS as well as this is the actual land area. Reason older apartment had good carper area as well.

                      I have 2 apartments in an 100 and 200 flats complex in the GC. Both are built with 1.5 FSI and gets me 60%+ UDS. If legally built the number of apartment has very less to do with UDS ones get in old apartments. Newer apartment things are different.

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