Will the Chennai Realestate Market Crash??
Over the past few years, especially the last two years, real estate prices in the city has almost doubled. MRC nagar, which was quoting at rougly Rs 75 lakhs per ground in 2003 is now quoting at Rs 1 crore per ground. What is even more disturbing (if you have a bearish outlook like I do) is the price of flats. A 2000 square feet flat, a super deluxe flat, on C.P Ramaswamy road sells for anywhere between Rs 80 lakhs to 1 Crore, and all the flats have been sold out. the minimum price for a flat in Alwarpet, Mylapore area today stands at Rs 50 lakh, even in the dingy Alamelumangapuram (the area behind the Sai Baba temple.
The land price appreciation isn’t restricted to just the city, it extends even to the outskirts, areas like Guduvanchery and areas all along the OMR road and beyond Trishulam are also experiencing a boom. North Madras (as usual?) hasn’t experienced such a boom probably because a lot of land in that area is up for grabs, akin to mill lands in Mumbai (?).
The housing boom, is largely debt drive, is what is worrying, largely because it is dependent on the economic growth, if there is a slow down in economic growth, and especially IT boom (IT employees are at the forefront of this boom),it might lead to defaults on EMI’s. Is the Chennai real-estate market over heated? And therefore headed for a crash?
There has never been a real estate crash in Chennai, but then previous realestate booms have been financed through savings and not through debt, like the current boom. Does this mean Chennai will witness its first real estate crash?
I hope prices stabilise. Not able to even think of buying land in Chennai.
This is the story all over the country…
am new to Chennai…but feel the need of some good builders in the City…esp for Residential apts…the concept of a single building with only parking space is more here…hardly do any buildings have upto/more 100 apts…atleast I havint seen such…
So which area can you guys advise me to buy with a five year outlook. What directions is our city growing out ? Any one with a ariel / bird’s eye look ?
Thanks,
Gautham
I am wondering How far will this go…Just 1995 a house is mylapore duplex type was around 17-20 lacs…
Now You ask 70 lacs…
Dollar value is the same…note that….
Just point and tell what r the develpments in chennai…
Say Boom in IT…thats all then what….
Same Water problem
Same Electricity voltage problem
From Cooking Gas to Petrol Hike…for what…
Same Road network
BEach front homes…
Dollar value is the same…
There is much zoning…In a narrow road ,street ,even cars cannot go…They have schools…mutiple flats…Independant homes…all together…and not much drainage facility…still…and boom in price..
Just think for what u have to pay premium…prices…
just soaring up just like that shows the greed of the realestate…poeple…
Govt has to control…not like this…They should take of that…
Its floating now…not advisable to flock with the crowd now…there is a limit for anything…A certain rate…a percentage of increse should come..not overnight increase…
Its shows the greed of the agents and the people who are controlling the market…something fishy…
More Flats once u buy and resell…The sale valur falls down when compared to Newly bulit in same Nungambakkam and co areas…
Take Porur…What all new areas without any Drainage facilities still price hike…
What happned to the people…
Just becoz of the increase in salary for respected qualifications….
May be real estate people who to blame…have noted up a feeling an impression in boom in market…Let them pay…
Say bank loan comes 15000,As two r earning…they r reading to pay..as a middle income man can still save the rest of his earnings…Just misusing middle income ratio.
Just somebody r playing around…I feel this will crash down…Its not that far…More flats and people are ready to buy…
I think still the banks havnt faced foreclosures as yet…
Just becoz it is india…they opt a feeling dont care its our country…
I am surprised…Chennai okay…
Outskirts also have been come to this cloud…
In 2000 , Area which sold for 5 lacs have come to 15 lacs…
The economy growth should be gradual…the diffrence not like this…This sudden boom is a bubble…It will burst out…
when the curreny value is still balancing how come real estate…
Its becoz people are earning…compared to the last 5 years….
And let them pay attitute…
There should be a balance in ecom=nomic growth also…and a sudden boom is not good sign…at all…
Banks should not see any foreclosures…
Lets see…
A crash i doubt, but a slowdown is imminent, with interest rates rising to 4 year highs. Nowadays builders can justify any rate/sqft, thats how speculative the market is..
Onsite oppurtunities and cheap labor as a result of outsourcing has caused this huge IT boom in India currently.
Another reason to blame is the mentality of IT people, their half baked understanding of the real estate trend in countries like the USA, gives them the courage to buy houses taking huge loans. Here they fail to understand that the population in US is still not much compared to the land area available and also the real estate market will expand more with more people coming in as immigrants. So there is minimal possibility of the real estate crash in the States. On the other hand, if the IT industry crashes in India like the Y2K crash, people might lose their salary to a minimal amount and also they cannot sell the same property they bought for the bloated out amount since other people can’t afford that high price and they will be forced to sell at a lower price. With all the source being bank loans, am sure a whole bunch of un-foreseeing investors might be stuck with a huge debt on their heads.
Well, I have expressed what came up to my mind, bt with the comment getting large, I need to analyse more and prob post :-)
tata
sukku
I am from IT Industry and Bangalore. All cities in India are witnessing this ‘boom’ in Housing and everyone is stepping into this Business. I fell, sooner or later, they are gonna step on each others’ feet. 2 years ago a double bed room flat in Marathahalli would cost 18 Lakh. Today it costs close to 30 Lakh. By all standards, that is exponential. I am a very worried person now. I don’t want to be a loan-payer for the better part of my life. So I decided to live in rented houses only – a compromise on that. Anyway, I have own houses in my hometown built by my father. All my education in good senses tells me that if one pays too much for something which can be postponed like Housing, Entertainment etc, one shall not be left with enough money for other important activites like Food, Health, Education etc. I can tell all these because I have seen my father build very good homes for under 5 Lakh in my hometown. My hometown can no where compare with Bangalore. But I shall be ready to pay double because it would be ‘bangalored’. But the current rates require me to pay me 5 times (25 lakh) which I am certainly not ready to. Offlate, there have been many articles about people who earned crores in this business in recent times like three looser-actors of yester years in Telugu films industry, few people from the Reddy and Kamma community (otherwise employed in subsistence farming) who used to be farmers and their possession of land due to their anscestors has become their biggest asset. These articles are very misleading. As a result, people with excess money have stepped into the business – leading actors, politicians, IT people with enough reserves etc. I think if the transportation in India improves to European standards or Chinese standards, any individual can travel 120 Kms – Up and down daily with out problem. I know of people who travelled 220 Km in Ireland. Yet they make a better presence in their homes than the Bangalore people do. It’s all about quality of life. The qulaity of life in Bangalore is extremely pathetic. You get peanuts for you hard-earned earnings. This thoughts were reciprocated by the Reserve Bank of India when it raised it concerns regarding the debt-oriented hype and ‘growth’ of real estate in India. Their should be a ceratin cap like a person cannot be in debt more that 5 times his annual income etc. And whoever gives more than this, does so under his sole and own resposibility.
All said and done, I have adopted a wait and watch approach. If the prices continue to raise, I better get myself a house in the outskirts when I have made enough savings. I should admit that India can never reach the transportation efficiency of the West in the next 30 years.
For the moment it is all very unclear as to what and why this is happening with the real estate market?