A comment on real estate
Arul wrote for my post
I had similar thought process as you have. As the current pricing scenario is unreall. But my sister and mom wouldnt listen and went ahead and bought 7 cent plot near mathampalayam bus stand in 2009 for 1 lakh per cent. Now in just two years we had three to four calls from the broker asking us to sell the plot for 1,50,000 per cent. I dont know what to make of this! In another bizarre pricing the house opposite to our grandpa’s house near periyaniackenpalaysm is quoting 70 lakhs. It has 61/4 cent land but the building is atleast 20 years old … Then i decided not to use my logic and analytics here..Just go with the flow and milk as much money as possible… Its like short term trading. I am still young just 25 years old. So i also dont have the memories like you do which makes my decision to buy and sell that much easier… The only way to stop this arbitary price rise is to have 2 year buy and sell ban on properties..similar to hongkong…in 2009 HK had similar problems now the prices have come down.. So the thing is you can still make lots of money out of the real estate market… You gotta trade short term in the long run the bubble will burst no doubt about it… Lot of people will default on their home loans..
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Here’s the 2011 post. The other day, one of my colleague was telling me that a group of people who had booked in Mantri project in OMR has refused to take possession because the price appreciation has not happened the way investors had wanted it to be, and ICICI bank has been saddled with that property ( in lieu of home loans ). The colleague told me there are quite a number of apartments facing the same fate in OMR. Apparently, his friend works in the recovery department of ICICI.
I am not sure about the veracity of the statements though.
December 11th, 2011 at 1:00 pm
‘GREED’.
Once upon a time, humans bought land to construct a house and called it ‘HOME’. Life was quite happy!
Then came all this…and the GREED started. It continues and this is the result.
Our culture says ‘NO GAMBLING’ and there is lot of PRIDE over it.
But alas, these things are cleverly hidden !
December 12th, 2011 at 10:14 pm
NV sir,
There is no market which is free of greed and fear. Long before (1960s), apparently even the Indian stocks were bought merely for the dividends. Folks had no control to price the securities for primary issue, the government did the pricing. Will send you information if I come across.
The only way to remove greed in real estate is to put restrictions on buying, selling activity - Reduced leverage, people cannot transfer a property within 5 years of acquiring it, etc. the Singapore government did something similar I suppose.
January 16th, 2012 at 5:24 pm
Really? - I understand that the bubble will burst some day. But compared to the craziness in chennai, the periyanayakampalayam prices seem to be extremely reasonable. In any case, the credit bubble is a whole another problem - but as long as the black market holds the money that it does, it makes it hard for the bubble to burst. The credit issues are being offset by black money. But, it is entirely wise to be a short term trader if you have the resources/know-how to be one!
January 16th, 2012 at 9:16 pm
Dinesh,
I am sure you know the geography of periyanaicken palayam - it’s a good 20 km from coimbatore in Mettupalayam road. BTW 6.25 cents = just about 1.2 grounds. 5.5 cents make one ground approx. In terms of city size, I’d say periyanaicken palayam is comparable to maraimalai nagar near chennai.
In effect, the asking price in periyanaicken palayam according to this comment is 60 lacs per ground.
Coming to chennai, in pallikaranai a ground goes for 60-70 lacs.
The overnight millionaires in chennai are those whose forefathers had land in suburbs. These guys - without job or education, just sell their land, go ahead and buy themselves a Scorpio ( they can only call it mahendra vandi )