We are ahead of Dubai and Singapore.
Dubai is a little behind us. Singapore, Malaysia.. pfft, quite. Are you asking about what this is about? Land prices my friend, land prices.
While at a friendly get-together yesterday evening, it seemed like all the conversations revolved around the changing landscape of Chennai. I whispered under my breathe to a friend that it seems real-estate is the hot topic for the day, to which he made a public announcement that its always a topic, because either we bought it and are hoping the prices will remain this way (or better yet keep rising), or we cant afford and we are just jealous. I am wondering if there is truth to it – there might be.
So the truth of the matter is this. To buy a house or land in Chennai right now is more expensive that buying property in Dubai or singapore. You can buy a luxury condomonium in Malaysia for 40 lakhs. In chennai, for that same style and comfort, you will be spending atleast 2 crores and upwards. The funnier part was when a friend asked “So whats the fun in having a luxury condominium right in the middle of nowhere without any infrastructural amenities around?”. Well, I dont think we have options. We are all speculating and trusting the voices of the real estate agents and seeing their pretty visualizations that eventually, someday, this place too can be turned into a buzzing hub with a stone throw access to every amenity possible. Not every one of those wishes might come true, but most of them probably will.For example, I hear that there is a mega mall that is coming up on OMR road. And there was also talks that there is a new golf course which is either close to being opened or has already started in OMR.
But Lets get down to the dilemma of the common man. Most houses today are financed by banks. I don’t think people are sitting on ready cash piles of 40 – 60 lakhs for a good house. I am not sure people are in a hurry to buy houses. Then why are land prices escalating so much? There certainly must be hoards of people who are driving up the demand and prices right? For one, the culprit seems to be the land lords. If there is one such union which brings them all together, they need to be visited and looked after. Rental prices have gone up, that in my own case, the price will be jumping to 100% by the end of this year, compared to what i paid last year. It has left me sitting here and wondering that if I had paid all the money that I paid as rent as a down payment, the monthly mortgage that I have to pay the bank would be still lower than the rent that I am asked to pay. That is the main reason why most folks are looking to buy as of now.
The good news is that there are lessons to learn from around us. Mumbai used to be this way sometime back, followed by Bangalore. The landprices, I am told, have come down by 30% in bangalore in some pockets, especially now that there are major infrastructure overhauls happening, such as the moving away of the airport to some remote destination.Matters as such will eventually happen in Chennai as well, and will be followed by a drop in land prices.
I am sure most of you who are reading this and do have any interest in real estate have heard that MARG has announced apartments from 10 Lakhs and upwards. I am doing the math backwards and wondering if its a 20 year loan and they have to payback close to 50 thousand (without the interest) a year, there are going to be quite a lot of significant takers and it probably would also have the risk of being over-crowded. I also hear of a project by DLF where they are building 4000 apartments in a complex, with three layers of parking alone. Imagine that!
I am thinking that it is the twitchy middle class that is making most of the noise. Most of the folks on the lower spectrum, or lower middle class are happy living in not-so-hip places. The traditionally wealthy ones do own their bungalows in Adyar, Nungambakkam, Boat club area and the likes. Its the newly rich, as always, that is making a ruckus. There is no place to buy, that would suit “the lifestyle”, and OMR right now seems to be the haven for them.
OMR eventually does have the prospect of becoming the new and modern wing of Chennai, if the traffic on that road will remain sensible.
So to the question that is nagging all of us. The market is driven by speculation and ofcourse I plan to fuel and extinguish atleast a part of it. *drums roll* “Will the market prices for houses come down?” Most probably, Yes. But we dont know when and by the time the market prices do come down, your rent might have gone up by 500%. Time is running out, and that’s the problem. It’s this very dilemma which is driving prices through the roof. Can anyone do something about it?