Indian Real Estate Sector

SaiK · Post by **SaiK** » 14 Jun 2012 20:05

it is a pleasure to read rahulm.. yeah, keep posting it dude.. it helps us all to handle future risks.

Gaurav_S · Post by **Gaurav_S** » 17 Jun 2012 06:56

Guj Government approves tall buildings, houses to go cheaper

Hopefully they are designed and maintained well from Indian standards. Shabby looking tall buildings will only make skyline more ugly.

Although, can't compare this with western culture where local council can hit you with fine if you ignore warning about hanging clothes in balcony without clothes hanging stand as this creates ugly view from street.

Singha · Post by **Singha** » 28 Jun 2012 12:59

firstpost.

Real estate in Delhi-NCR is a bubble about to pop
by Sunainaa Chadha May 4, 2012

10 things to know about NCR emerging as India's largest residential market

Two days ago, property consultant Knight Frank termed NCR (the National Capital Region of Delhi) as the largest residential market in India, with around 5 lakh houses under construction that are slated to be ready for possession by next year.

But there is a dark side to the Delhi property market, and this will become apparent with the Delhi government passing an order this week that no further transfer of property should be allowed through general power of attorney (GPA), where the buyer gets a GPA from the seller not only for his own use of the property, but for further ‘sale’ to someone else if he so desires.

A Times of India article on Friday said “the revenue department has made all realty sales through transfer of general power of attorney null and void with retrospective effect from October last year.”

Those holding properties on GPA and SA (Special Attorney) will have to get a sale deed registered if they wish to sell the property in future. Many may face problems getting sale deeds because their properties do not have a clean title.

Realty experts told Firstpost the order will help curb evasion of duties, flow of black money into real estate and also save people from being cheated by unscrupulous owners selling the same property to several people.

The move to ban general power of attorney as a mode of property transfer is sure to impact the entire realty market in the region, and will finally regularise property transactions. In the absence of a clear procedure for converting leasehold property into freehold, the real estate market became highly speculative and GPAs were being used as a trading tool as and when the price of a property would appreciate.

The order passed by Supreme Court in October 2011 states that no sales deed will be registered if it is through transfer on GPA. This means that transactions carried out since October on GPA transfers will have to be registered afresh with complete documents.

Even though realty players have opposed the order, saying it will reduce the number of saleable properties in the capital, the truth is the ban will finally allow the real estate market to cater to real, genuine end-users and not just traders, who are looking to make a quick buck.

Pankaj Kapoor, MD of property consulting firm Liases Foras, told Firstpost that GPAs are the main reason why large private real estate developers like DLF and Unitech are reeling under massive debt despite claims of selling the entire stock The truth is property remains unsold but is floated in the market through a piece of paper, which makes NCR realty an even bigger scam than Mumbai realty. ” There is no real consumption here, NCR is a bubble market,” Kapoor said.

A builder can easily sell flats to investors at a token price of Rs 5 lakh for a Rs 1 crore property before the construction of a project begins. While the allotment of the flat would be in the name of the investor, the GPA ensures that the name of the buyer remains blank in the document, thus allowing the investor to sell the property further when the property appreciates in the next couple of months. Hence, what happens is that the buyer will book his profits, sell the property at a 10-15 percent mark-up, and make his money without even registering the house! So an investor who spends only Rs 5 lakh for a Rs 1 crore property, will end up with Rs 10 lakh in just three months.

” The power of attorney gets circulated within investors, making real estate tradable like equity”, explains Kapoor. So although the stock gets sold from the builder’s point of view, it remains unsold and traded in the market, which is why the gestation period for construction of properties is so long in Delhi.

Another realty expert told Firstpost on condition of anonymity that GPAs are a one-way ticket to black money in realty. One of the leading realty groups —Sahara— in Nagpur offered to sell 100 flats for Rs 3 crore with the promise of no construction for the next three years. Result? The price is sure to appreciate and the buyer can easily trade the flats with a 20-40 percent gain, without owning a single flat.

The Economic Times cited Mahesh Gupta of Mukul Consultants Group as welcoming the ban too. “Deals made via power of attorney involve black money. If someone sells his property for Rs 100 crore, he may show just Rs 2 crore in the sale deed. But in freehold property, they have to show at least the circle rate, which may be Rs 50 crore,” he told the newspaper.

And what’s worse is that banks were earlier at a massive risk since the documents would get registered only after the competition of the project. But now that property will have no value under GPAs, banks too will be relieved. But realtors won’t give up with a fight as GPA deals are their bread and butter.

vivek_v · Post by **vivek_v** » 30 Jun 2012 09:27

@Bade. I might not agree that only people who invest in property are people who have money from undecleared sources since from what i see (at-least in Chennai) is that a lot of people who buy a property are doing from a investment purpose since there are not any other avenues for investment. For example consider my scenario,

I was actually on fence and procrastinating on buying a property for close to seven years (despite fierce opposition from family) since I really did not need a property but there is nothing which gives good investment returns. For example Mutual Funds and ULIP's gives either zero returns or close to negative returns, with FD's pranab da wants 30% of it as tax and can't invest anything more than 50,000 without a Pan card, if buying gold then there is 9% wastage wile buying and equal amount while selling (yes Gold coins and Gold bar could be bought but the cost investment required for a Gold bar is very high and gold coins are difficult to maintain and store), PPF can only accept 1lakh as max.....basically there is other no safe return investment option's and SHQ and everyone i knew vetoed my idea of buying another car without some 'property' before that.

Hence bought a Flat in a gated community in Chennai OMR road a year ago, now Pranab da gives tax exception on Interest and Principle, Rental returns is terrifyingly terrific due to it being in IT corridor and IT crowd willing to pay rent, the whole thing has appreciated by 1000rs per sqfeet in just a year....nothing bets this investment. Unlike NCR, Bombay there is no satellite cities in Chennai and the only place everyone wants to stay in South Chennai with its limited land availability my only regret is not buying something sooner as i could have recuperated all the investment i would have made by now.

Yes , things probably won't be this rosy for ever but this is still a lesser risk option is what i saw personally.

ps: I am also part of the IT crowd to to speak ....i used to term 'crowd' in a humorous sense.

SaiK · Post by **SaiK** » 30 Jun 2012 19:01

http://www.thehindu.com/news/cities/che ... epage=true In Boat Club, a 2, 000 sq. ft apartment would cost a minimum of between Rs. 4 and Rs. 4.5 crore. While this is expected, what is interesting is that pockets of Alwarpet, Raja Annamalaipuram, Thiruvanmiyur, Anna Nagar and Kilpauk are also almost there. A similar-sized luxury apartment in Anna Nagar East, which would have cost only Rs. 70 lakh five years ago, now costs Rs. 2.5 crore.

hnair · Post by **hnair** » 30 Jun 2012 22:57

pandyan wrote:Mumbai plot sold for Rs 1.75 crore in 2002, fetches Rs 600 crore 10 years later

http://timesofindia.indiatimes.com/city ... 511587.cms

An eight-acre plot in Kalachowkie in the heart of central Mumbai, which was sold for a throwaway price of Rs 1.75 crore a decade ago by a Madhya Pradesh government undertaking to a small-time developer, fetched Rs 600 crore last month...
Last year, this paper had reported how the prime property had originally been sold for peanuts by the MP government-owned Provident Investment Company Ltd.
This was the time when glorious leader Diggy ruled MP.

Last week I got an update that an 8-acre parcel (owned by some revered company guys) on the outskirts of a far smaller city, Trivandrum, costs way above 100 crores..... If true, this 1.75 crores for 8 acres in a land-scarce and highly developed place like central Mumbai means daylight dacoity...

SaiK · Post by **SaiK** » 30 Jun 2012 23:00

face the sins and problems of pocketed (arrested) developments.

vishvak · Post by **vishvak** » 01 Jul 2012 01:34

decision to allot..
In Mumbai it seems it is the CM who decides on allotments, revenue for land, ceiling, etc.

Abhijeet · Post by **Abhijeet** » 02 Jul 2012 02:49

I think real estate cannot continue to appreciate in the same way as it has the last few years, just based on simple mathematics.

As an example, in Goregaon, a suburb of Bombay, rates are now around Rs. 15,000 per sq ft, up from Rs. 3000 in 2004. A 1000 sq ft apartment which would have cost Rs. 30 lakh ($60,000) then has now gone up by 5x to Rs. 1.5 crore ($300,000). If it continued appreciating at the same rate, the apartment would be worth $1.5 million by 2020. This seems impossible to me. More likely, appreciation will slow down. A second possibility is that the rupee depreciates drastically, since real estate inflation like other types of inflation cheapens the currency.

A new apartment in central Bombay or the western suburbs now costs a minimum of Rs. 2.5 crore ($500K). I'm not sure how much space there is for appreciation over these levels. Surely there isn't enough money in the system to support a price level of $1 million+ apartments over a large swath of Bombay.

Bade · Post by **Bade** » 02 Jul 2012 03:17

There is plenty of space for rupee to depreciate to 1$=Rs100 to reflect realistic prices in dollar terms as was the case a decade ago.

House prices in DC metro area though have not fallen drastically have stabilized or bottomed out. They are at the same levels as last summer. I am seriously thinking of buying a McMansion finally if I can see our jobs holding out for at least 5 more years. Cannot say the same about situation in India. Similar house will cost one in Blr at least 4-5 crores more like million dollars. Mumbai and Delhi suburbs will be worse with higher prices for something similar.

Uttam · Post by **Uttam** » 02 Jul 2012 19:48

Good News or Bad News:

A mortgage guarantee corp will increase availability of housing loans and thus expand housing sector. But in long run it can result in similar situation as US where similar guarantee corps led to runway prices in the housing market and the one of the biggest financial bubble. Hoping for the former than the later.....

India gets first mortgage guarantee co

National Housing Bank (NHB) and three others have joined hands to form the country's first mortgage guarantee firm, a development expected to improve and expand access to housing.

The other members of the joint venture company, which has an initial paid up capital of Rs 120 crore, are – Genworth, Asian Development Bank and International Finance Corporation.

"IMGC (India Mortgage Guarantee Corporation) will offer mortgage guarantees against borrower defaults on housing loans from mortgage lenders, which will help to expand access to housing in India," the joint venture company said in a statement.

In the JV, housing regulator NHB has a shareholding of 38 per cent, Genworth has a stake of 36 per cent, while both ADB and IFC (a World Bank member) have 13 per cent stake each.

The initial paid-up capital will be increased to support IMGC's growth over time, the statement added.

NHB Managing Director R V Verma said,"...NHB has been part of this project through the years. The company will operate under the regulatory jurisdiction of the RBI."

IMGC will operate on a commercial basis and its primary clients will be Housing Finance Companies (HFCs) and banks that are responsible for the majority of mortgage lending.

Thomas Davenport, IFC Director for South Asia said the new company will help expand access to affordable housing finance across income segments and regions.........................

Abhijeet · Post by **Abhijeet** » 02 Jul 2012 19:56

Despite my comments above, I think real estate in India has no place to go but up in general, long term. Real estate is pretty much the only decent investment in India right now. The stock market is still too shallow and subject to the whims of foreign investors, and nothing else will give you inflation-beating returns over a long period of time.

India is decades away from a situation where it can experience a US-like nationwide housing slump. People are simply too poor to bid up prices all over the country like that right now.

Prices might plateau in a few places which are hitting developed country price levels with Indian-level infrastructure, but most other areas will definitely see secular price appreciation long term.

nakul · Post by **nakul** » 02 Jul 2012 19:59

Abhijeet wrote:Despite my comments above, I think real estate in India has no place to go but up in general, long term. Real estate is pretty much the only decent investment in India right now. The stock market is still too shallow and subject to the whims of foreign investors, and nothing else will give you inflation-beating returns over a long period of time.

India is decades away from a situation where it can experience a US-like nationwide housing slump. People are simply too poor to bid up prices all over the country like that right now.

Prices might plateau in a few places which are hitting developed country price levels with Indian-level infrastructure, but most other areas will definitely see secular price appreciation long term.

What is secular price appreciation?

Bade · Post by **Bade** » 02 Jul 2012 20:13

Abhijeet, the prices in places which are "livable" in Indian cities/towns close enough to work given the infrastructure development are way above developed country price levels. It is far cheaper to buy a 2000-3000 sqft home within an hour of commute of the DC metro center than it is to buy within 2 hours of commute say in Bengaluru. Dilli and Mumbai are worse for commutes for such faraway residents.

Abhijeet · Post by **Abhijeet** » 02 Jul 2012 22:20

"Secular" = "across the board", although the more correct usage seems to be in the sense of "long term" (as in, a secular trend is a long term trend).

It does not mean that only people of a "certain community", or only Teesta Setalvad, or "non-aided minority institutions", will see price increases.

Abhijeet · Post by **Abhijeet** » 02 Jul 2012 22:25

Bade, people's expectations of what constitutes acceptable infrastructure, commute time, and general quality of life, are far, far lower in India than in the US, as you know.

Places which would be considered completely unlivable by people in developed countries -- that is, second tier towns and rural areas, or 95% of India -- still have real estate prices under $100K for a standalone house. They will see the maximum price appreciation because most Indians do not see them as unlivable.

Yogi_G · Post by **Yogi_G** » 06 Jul 2012 17:03

Dry taps & open sewers: Welcome to Gurgaon, India's 'Millennium City'

Welcome to Gurgaon, a city of wealthy urban professionals with gleaming shopping malls, five-star hotels and sprawling golf courses on the southern outskirts of New Delhi that is a symbol of newly affluent India.

But crippling power and water shortages, crater-riddled roads and open sewage drains have made it an extreme example of the poor infrastructure that is constraining growth in Asia's third-largest economy.

"Gurgaon is just a symbol of beautiful buildings. Otherwise it's rubbish," said P.K. Jain, the founder-president of the Gurgaon Chamber of Commerce and Industry. "Ultimately, the town is going to collapse."

The provision of essential services is so bad that many companies and residents rely on expensive diesel generators to beat power cuts, pay private water tankers to deliver door-to-door when the taps run dry.

But demand outstrips supply, and with long power outages of up to eight hours a day, even well-off citizens are sometimes forced to have dinner by candlelight.

Good one, on how short term solutions for enabling growth end up hurting the poor apart from impacting real estate prices.

Aditya_V · Post by **Aditya_V** » 06 Jul 2012 18:55

SaiK wrote:
http://www.thehindu.com/news/cities/che ... epage=true In Boat Club, a 2, 000 sq. ft apartment would cost a minimum of between Rs. 4 and Rs. 4.5 crore. While this is expected, what is interesting is that pockets of Alwarpet, Raja Annamalaipuram, Thiruvanmiyur, Anna Nagar and Kilpauk are also almost there. A similar-sized luxury apartment in Anna Nagar East, which would have cost only Rs. 70 lakh five years ago, now costs Rs. 2.5 crore.

And Brites in Kasturba Ghandi nagar, nungambakkam, except Yogi-G at Thirvanmiyur and OMR wallas have missed all of this.

vera_k · Post by **vera_k** » 06 Jul 2012 20:46

Even if Gurgaon is presently only a better slum, it is a massive improvement over living conditions otherwise seen in India. In the abscence of allowing unplanned development, all these people would have been living in a large shanty town with even worse infrastructure (minimal toilets, no plumbing, no electricity).

IMO real estate and infrastructure will also follow a similar trajectory to the automobile sector, where each successive generation gradually graduates from bicycles to two wheelers to cars.

Yogi_G · Post by **Yogi_G** » 07 Jul 2012 00:02

Aditya_V wrote:
And Brites in Kasturba Ghandi nagar, nungambakkam, except Yogi-G at Thirvanmiyur and OMR wallas have missed all of this.

People are jittery to buy stuff these days near the coast. I bought right after the 2004 tsunami and the prices were dirt cheap as they came down tremendously, ended up buying 2 apartments and now prices have appreciated 500% onleee. No such reaction observed during the recent tsunami threat after earthquakes.

Santosh · Post by **Santosh** » 07 Jul 2012 07:47

Yogi_G wrote:Dry taps & open sewers: Welcome to Gurgaon, India's 'Millennium City'

Not sure if this and this can be called a slum.

SaiK · Post by **SaiK** » 08 Jul 2012 03:40

http://www.thehindu.com/news/cities/che ... epage=true
chennai not good for muslims and non-vegetarians.

Zubair Ahmed, an auto driver, added a note of caution. “All is not well with Chennai. A few of us have had bitter experiences,”

RamaY · Post by **RamaY** » 08 Jul 2012 04:20

Dry taps & open sewers: Welcome to Gurgaon, India's 'Millennium City'

"Gurgaon is just a symbol of beautiful buildings. Otherwise it's rubbish," said P.K. Jain, the founder-president of the Gurgaon Chamber of Commerce and Industry. "Ultimately, the town is going to collapse."

The provision of essential services is so bad that many companies and residents rely on expensive diesel generators to beat power cuts, pay private water tankers to deliver door-to-door when the taps run dry.

But demand outstrips supply, and with long power outages of up to eight hours a day, even well-off citizens are sometimes forced to have dinner by candlelight.

How much Municipal taxes these gentlemen pay so they can "demand" those services? A 5star hotel in a 5-6 acre lot in Noida will be a ~$50m venture.

In massa it will be approximately $1m/year municipal taxes, not withstanding other state taxes. (calculated based on my house real estate taxes)

If all the Noida people pay Rs 5L per apartment and Companies pay Rs 1L per employee, then they can expect the Noida municipality to provide clean roads, sufficient sewage systems and 24hour clean drinking water.

Otherwise they better shut up...

Bunch of selfish people...

Manish_Sharma · Post by **Manish_Sharma** » 08 Jul 2012 18:38

^ +1000000000000000000

Surya · Post by **Surya** » 08 Jul 2012 19:56

Found one character who has property in bangalore, Gurgaon and Manhattan in addition to his normal residence in NJ

fella works 800 lb financial company and takes a cut on all outsourcing contracts given to desis.

never haggles on hourly rate.

How come such people never get ripped off etc

Idiots like us worry , fret over what could happen and these crooks seem to never face such problems

vera_k · Post by **vera_k** » 08 Jul 2012 20:20

Muncipal taxes even in those amounts, would only go towards sustaining what has already been built. Most of the basic amenities like water and sewer would be funded out of charges assessed during the permitting process. Those collectively would be many multiples of the annual muncipal taxes, anywhere between $15,000 to $30,000 for every unit (for e.g. sewer alone was $10,000 for our home).

There's something not quite right when a city is allowed to be built like a slum i.e. occupy land, and later beg government for water and sewer. Either the building codes and therefore associated development charges calculated during permitting are severely lacking, or the money was lost to corruption.

Singha · Post by **Singha** » 08 Jul 2012 22:16

I met a person today who deals with many HNI clients in the areas of wealth management and insurance. his family settled in one of the old CBD ex-tamil-anglo areas (now 99% muslim) 100 yrs ago.

2 hrs of conversation with him convinced me that the so-called ITvity elites of blr are mere sideshows to the real whales, just as the valley types are 99% just like that. they are allowed to be vocal on "issues" and launch campaigns and initiatives just so the real bit cats can quietly continue to accumulate wealth by fair means or any means.

the real power and wealth networks is wielded by people in areas like r.t.nagar , sadashivnagar, RMV , dollars colony.....senior bureaucrats and central services officers, self employed businessmen, CA, doctors, lawyers.... these people have deep roots and direct access to many levers of power......they have investible corpus in the range of crores..... mostly they serve themselves or atleast 90% themselves unlike ITvity munnas whose 95% effort goes to company bahadurs benefit.

Surya · Post by **Surya** » 09 Jul 2012 02:01

well Singha one of them (doctors) came this last weekend to NYC to check their munna's new surrounding

after finding the 17k per year accomodation unsatisfactory they coolly purchased a small apt on upper west side for munna.

munna also gets 4k a month pocket money.

i feel sick

svinayak · Post by **svinayak** » 09 Jul 2012 04:14

Singha wrote:

the real power and wealth networks is wielded by people in areas like r.t.nagar , sadashivnagar, RMV , dollars colony.....senior bureaucrats and central services officers, self employed businessmen, CA, doctors, lawyers.... these people have deep roots and direct access to many levers of power......they have investible corpus in the range of crores..... mostly they serve themselves or atleast 90% themselves unlike ITvity munnas whose 95% effort goes to company bahadurs benefit.

You have to be local to be in that position with 50 years domicile.

Singha · Post by **Singha** » 09 Jul 2012 06:55

true. the power and contacts of the high court top officials and top lawyers turns out is incredible. they have ministers, MPs and other movers n shakers as personal friends, clients and on direct lines.

Theo_Fidel · Post by **Theo_Fidel** » 09 Jul 2012 07:52

A lot of of the relations are personal and are built through marriage and family. If you want to stay in that circle you have to remain married into it.
-------------------------------------------

Meanwhile, I'm not sure these wildly unrealistic real estate prices are logical. I was looking to buy another property in the Covelong area near Chennai and the dang guy quoted me Rs 4,800 a sqft. I can't believe it, this is 5 times what I paid just 8 years ago. I checked out the property and it is not worth more than Rs1,000 a sqft per quality of construction. Long term I don't think these prices can be sustained. India is not flat land starved like Japan, China or Korea. Besides our population will never double again and the demand simply won't be there to make these elevated prices worth it in future. I'm just buying land. It is a heck of a lot cheaper and more valuable though you don't get rent.

Singha · Post by **Singha** » 09 Jul 2012 09:52

>> India is not flat land starved like Japan, China or Korea

but the shortage of good roads means people are effectively restricted to certain pockets and channels if they do not want a long commute and good schools for the kids. there may be ample land and resources in other areas but if they are not close to job sites they wont be valued.
or atleast buy at a place where major roads or industrial developments are chalked out - this is where being business/family tied to the "inner circle" gives these folks huge strategic advantages.

so better buy where there is demand, just like pakistan sits on a strategic location in CAR doorstep and collects rent for decade after decade.

vina · Post by **vina** » 09 Jul 2012 10:16

SaiK wrote:
http://www.thehindu.com/news/cities/che ... epage=true In Boat Club, a 2, 000 sq. ft apartment would cost a minimum of between Rs. 4 and Rs. 4.5 crore. While this is expected, what is interesting is that pockets of Alwarpet, Raja Annamalaipuram, Thiruvanmiyur, Anna Nagar and Kilpauk are also almost there. A similar-sized luxury apartment in Anna Nagar East, which would have cost only Rs. 70 lakh five years ago, now costs Rs. 2.5 crore.

The quality of housing stock in Chennai is generally abysmal, poorly designed, dingy, crumbling . However, there is next to no open land and redevelopment is not possible in any of the "central" areas in Chennai. That leads to extremely high prices , very high rents for nearly all places in S. Madras (the only barely liveable places in Chennai.. roughly the Boat Club, Adayar, Besant Nagar, Tiruvanmuyur & Extn, Kasturba Nagar, RA Puram, Alwarpet, parts of Mylapore/Luz/Mandaveli) part of Madras.. So any "apt" that comes up has none of the size of the ones in Bangalore and it's facilities (clubhouse, pool, party halls, squash/shuttle/tennis/basketball courts etc) and no parks, walkways . The only kind of places with that kind of facilities are in OMR. The "posh" ones quoted here with high prices come nowhere close to the ones we have in Bangalore ( I looked at a few and my inlaws live in an "upmarket flat" in Adayar) .

So really not worth the money you are putting in there. Go to OMR, you atleast get away from the crowds and hopefully garbage strewn streets of Chennai (those kind of integrated townships, you can have a sanitized controlled environment) .

Trying to live in Mandaveli and Mylapore tank with a 5 min commute to work and with your old neighborhood bum pals around and dropping by is increasingly unviable, cramped and simply not worth it. Time to let go and accept that it has gone to the ground and irretrievably so. Chennai went down the toilet in the late 60s itself when the DMK came to power and turned it into a massive slum.

Theo_Fidel · Post by **Theo_Fidel** » 09 Jul 2012 10:28

Singha,

That is exactly what I mean. India is not going to remain land access starved for much longer. Already road access has improved by leaps and bounds and now metro/mono access is coming in. I don't even want to 'think' what my dads 2 ground house in Anna Nagar is worth now. It is 3 blocks from a Metro station as well. But think long term. There is 10 times as much land available around Chennai, And the population will NOT grow 10 times. Yes it did since independence hence the shortage but not anymore. Property shortage will end, fairly soon as well. So you buy a marginally livable 'flat' for 2.5-3 Crore, which is $500,000. Does anyone really think that flat is going to be worth that much 20 years from now, esp. adjusted for inflation. It is pure speculation and I refuse to indulge in it. The incredible thing is I can buy undeveloped land for 8 lakhs a ground in the very same area. How silly is that. Right there it tells me it is a bubble.

Vina,

Anna Nagar, Besant Nagar, Indira, KK Nagar, etc were all acquired and developed during DMK rule. But your point remains that developers seem to offer very shoddy 'flats' in Chennai. I completely agree. The underlying problem is the standards of the 'buyers'. Chennai folk are still a bit rustic. They would not know what to do with a pool or club house.

Unfortunately they seem to have the money to pay such outrageous prices for such shoddy product.

WRT OMR it is the worst of the lot. They are way way overpriced. Esp. since there is Zero ocean access. Just a view doubles the asking price which tells me where the speculation is coming from. Chennai folk would never pay that mush for a view.

I'm very particular about my property searches. I always want beach access or less than 1 block away. IMHO this is way under priced in India, and in 20 years will become worth 3-4 times all other property.

vina · Post by **vina** » 09 Jul 2012 10:35

Theo Fidel wrote:So you buy a marginally livable 'flat' for 2.5-3 Crore, which is $500,000. Does anyone really think that flat is going to be worth that much 20 years from now, esp. adjusted for inflation. It is pure speculation and I refuse to indulge in it. The incredible thing is I can buy undeveloped land for 8 lakhs a ground in the very same area. How silly is that. Right there it tells me it is a bubble

Nope. You can't. Not inside the city. There is literally no "undeveloped" land and any empty plot you want to buy will be super expensive. After all,the value of your dad' Anna Nagar house is in the 2 grounds of land and not the building and fixtures, which is basically the first thing that will be knocked down, when an apartment comes in it's place.

Yeah. If you do REALLY want to be "strategic" , and if your view is that the prices have peaked (I don't think so) , atleast not for another 20 years before the transport systems have REALLY settled down, yes, rather than pay the Rs2.5 crore for half crap Anna Nagar apt, go to OMR area growth magnet areas and buy land (yes a large parcel).

Theo_Fidel · Post by **Theo_Fidel** » 09 Jul 2012 10:51

Vina,

I went thru this exact same cr@p in the USA when people were converting every Sh$tty warehouse into condo's and selling for $400,000+ for 1,200 sqft. I even lost my 6th floor parking garage because some bozo bought it convert to Condo! Even back then I did the quick math that showed me that those apartments were only worth $100,000 for land+building. And there was literally acres of land all around. You can see the same thing at covelong. Apartments for 80 lakhs plus (Rs4,000 per sqft), land for Rs 800 a sqft. This is a classic indicator of a bubble to me.

vina · Post by **vina** » 09 Jul 2012 11:00

Theo Fidel wrote:Anna Nagar, Besant Nagar, Indira, KK Nagar, etc were all acquired and developed during DMK rule.

DMK turned the traditionally less tony and seedier parts of Madras, the N. Madras area into a massive slum.

What they did with the Marina and the hideous Fore Shore estate slum/housing board thing was unpardonable. They made that beautiful beach into a gigantic slum and a no go area. With the Tsunami hit, those things are now condemned to go (thankfully) and those folks are getting resettled inland (near OMR).

OMR is overpriced, I agree. For eg, the OMR developments are more expensive than the already nearly developed ORR areas of Bangalore (where Singha has his It/Vity Munna chi-chi gated community penthouse), but that is the only place in Chennai that has halfway close to the quality and facilities that is now considered as "taken for granted" in Bangalore for the past 15 to 20 years. And yes, OMR has the economic backbone to sustain that , given the IT/Vity belt in that area. And increasingly many businesses which are bulk employers are moving out of the CBD to that area.

Sure, taking money and plonking it in say Ambattur is doing it on a prayer, at the Rs2.5 cr that you are putting down for an apt (unless it is black money that gets parked there, which is what a bulk of those kind of apts in Chennai are about) in say Anna Nagar , is never going to grow to 25 cr in 20 years. So unless you plan to live there in that 2.5cr apt, you are not going to see it go vertical in value.

But then, if you are planning to live there, I do submit that in a painful place like Madras, rather than live in say Mylapore tank , you are better off living in more peace and quiet in OMR, esp if you are in IT/Vity or if working in the city, manage the commute.

vivek_v · Post by **vivek_v** » 09 Jul 2012 11:14

@Vina.

The issue with buying a land in OMR nowadays is that all the 'semi' available land is only after Padur after the toll gate and in between the Kelambakam-Tambaram roads (or) Between Medavakam and Sirusei ......... which has horrible access roads , no infrastructure (i.e. schools and likes) and traveling itself is a pain. Even here the ground prices quoted are through the roof. Hence buying a 'large' parcel (which i presume should refer to about 2-3 grounds) is our of the question unless and until one has a large amount of liquid cash to invest which is again not possible with most of the IT wallas and such amount of cash is only available with politicians, accountants and the rest and hence the cycle repeats.

@ Theo

Regarding population growth, while the population would not double in twenty years , there is bound to be inorganic growth in population in main cities via the migration to cities in search of better prospects and hence the demand seems to remain relatively stable plus the traffic density increases day by day. These factors seems to makes these localities in south Chennai at-least very favorable since transport time and cost is reduced.

In prime OMR areas this transport factor seems to make a huge difference since most of the IT guys especially the bachelors prefer to stay close to office and since they share accommodation between at-least 7-8 guys , a rent of 35K for a gated community 3BHK apartment seems affordable.

Also i am very interested to know the area in Chennai where the land cost is just 8 lakhs but a marginal flat (or villa for that matter) seems to cost 2.5 to 3.0 Crore's. Last time i had checked Villa based apartments in Vellchary, Perungudi with a build up area of approx 3000 Sqft costs about 1.5 C to 2.0 C with a UDF of 1500 to 2000Sqft. Note that one ground in Vellachary costs around 1.5 C and in Perungudi costs 1C keep things in perspective. A budget of 2.5 to 3.0 C would probably give a flat of at-least 2500 sqft in Adayar areas with decent UDF.

There is not a place in Chennai with decent travel time where the land cost is just 8lakhs.

vina · Post by **vina** » 09 Jul 2012 11:30

In prime OMR areas this transport factor seems to make a huge difference since most of the IT guys especially the bachelors prefer to stay close to office and since they share accommodation between at-least 7-8 guys , a rent of 35K for a gated community 3BHK apartment seems affordable.

But I could NEVER understand the demand for a rent of RS 23,000 + maintenance for an ABSOLUTELY CRAPPY 2 Bedroom (size of 12*12 max of bedrooms, one in-suite tiny bathroom, another tiny one outside, a small living room a kitchen that is like a cave) , old, grimy, crumbling "flat" in Mandaveli (the electrical systems are a patchwork abomination, about to short circuit any minute), mosaic floors (no ceramic in madras, thank you). Okay, if you have happened to live there for 40 years , sure. But if you are buying new, and if you buy one of those , you must be out of your mind.

Renting there (like someone I know does), for a short term while your own house gets ready is probably okay/justified if you look at it and your commute time is valuable. But think of it, the kids cant even step out, there is no place to play, the noise the pollution, the bus and traffic noise at your doorstep!

Theo_Fidel · Post by **Theo_Fidel** » 09 Jul 2012 18:46

Vijay,

It is a bit south of Kelambakkam. The land is completely undeveloped. Just Casaurina trees at present. No roads even. I'm of the view that even the 2 Crore for (1) ground land in Velachery is unsustainable. And yes I have been offered those plots. What is likely to happen is what has happened around the world. The jobs will rapidly move to wards the suburbs and the inner city will depopulate. Large chunks will turn condemn worthy.Some of the elite property will stay TFTA the rest will deteriorate to zero value. Kelambakkam for instance is just 20 km from the city center. This is very close by world standards. As transport connections improve, people will live further and further out. I'm talking 20-30 years from now.

Even if we take a look at SDP. Chennai's output is roughly $50 Billion or If say 10% is diverted to apartment construction, $5 Billion or Rs 25,000 crore. If an apartment costs 2 Crore only, there is a market for only 10,000 apartments annually. Let us take Velachery, It has 8,000 acres or so of land. If sale able land is 60%, this works out to roughly 100,000 grounds of land. Each ground is 2 crore, then land alone is worth 200,000 Crore!

$40 Billion. If you consider the land area of Greater Chennai is now 1,500 sqkm and 60% is developed land. Then there is roughly 200,000 acres available, so 25x40 = $1,000 Billion. = $ 1 Trillion.

. Just for land! Chennai is now worth more than the state of California (just kidding). This is simply unsustainable guys! We are in a bubble. There was undoubtedly huge escalation from 2000 to 2012. Now it is simply unrealistic.

Vina,

the Slum building on Marina were the original fishermans colony right on Marina beach. They refused to go anywhere else. There is samll remainder next to the lighthouse and Santhome and the filth is unbelievable. In fact there is such a Fishermans colony remaining on Besant Nagar beach, which is why it is covered in Excreta every morning despite the public toilet right next door.