Real Estate Prices in Chennai ...
Real Estate prices in Chennai and its surrounding regions are just absolutely insane (as everyone knows). And there are conflicting opinions out there on two things:
1. Whether there is a bubble.
2. If there is, is it about to burst.
I have been looking for some office space in Chennai for the fast few days, and I have been quoted some crazy prices. But, you know what, I think I see some softness in the market. Property owners do not seem to be completely confident about their ability to rent out their space and are coming down to below-market prices fairly quickly.
I am going to go out on a limb here and say something here, and this could be absolutely far off the mark (And I was far off the mark when I thought the Sensex would peak at 9,000), but I think that Chennai has reached the peak price levels and at any higher levels, people are going to start moving away.
Another indication is the insistence on the part of quite a few of the property owners that they wanted a 3 year contract with fixed pricing - Which is something they would insist on only if they believed that rates would stagnate, fall or rise moderately. Atleast that is my experience with my work in Procurement.
Anyway, time will tell and until then, I am going to have to pay rates almost as high as Raleigh, North Carolina for inferior properties. And if office space is costlier, so is residential space, and that will consequently, indirectly increase the cost per employee.
And there is this guy I heard about, who is moving his operations from Chennai to Port Blair :-)
1. Whether there is a bubble.
2. If there is, is it about to burst.
I have been looking for some office space in Chennai for the fast few days, and I have been quoted some crazy prices. But, you know what, I think I see some softness in the market. Property owners do not seem to be completely confident about their ability to rent out their space and are coming down to below-market prices fairly quickly.
I am going to go out on a limb here and say something here, and this could be absolutely far off the mark (And I was far off the mark when I thought the Sensex would peak at 9,000), but I think that Chennai has reached the peak price levels and at any higher levels, people are going to start moving away.
Another indication is the insistence on the part of quite a few of the property owners that they wanted a 3 year contract with fixed pricing - Which is something they would insist on only if they believed that rates would stagnate, fall or rise moderately. Atleast that is my experience with my work in Procurement.
Anyway, time will tell and until then, I am going to have to pay rates almost as high as Raleigh, North Carolina for inferior properties. And if office space is costlier, so is residential space, and that will consequently, indirectly increase the cost per employee.
And there is this guy I heard about, who is moving his operations from Chennai to Port Blair :-)
Comments
dude, this is no bubble and its not going to burst.
there is only so much land and demand is so high and people can offord....
bombay was like this 15 years back. the guys who buy the land first make money ... the rest cannot buy it at all.
BUY NOW ... dont wait for the 'bubble to burst'... as there is no bubble at all.
The reasons, is exactly as what Guru said, and also is the fact that since the population is high, there will be always be a joker to buy no matter what it costs..
U know, I came across this flat in Chennai....in Velachery
its about 1600sft...and the price is about Rs 40lakhs...
I think this is way pricy...or is this the standard ?? Obviously I am not in India, so I don't know...
If anyone has input since we are talking about real estate ...pls shoot
For IT, location should be less important that for financial firms, in my mind.
And although supply-demand is the primary driver, there is a breakpoint when other cities/states or even countries become more competitive and whatever said and done, India still competes predominantly on price. And we have to reduce price if the market dictates it - And that means reducing real estate costs.
I agree with you, that this is not really a "bubble", but the concern for India is that one more 9/11 could create a lot of chaos in India, with several landowners overextended, along with banks - Check out the NPA's of banks.
This is not an easy qustion to answer and anybody's guess is as good as mine
Then reality strikes and we are all wondering " how could we be so dumb"
Same with India.
Same with rickety property with lousy roads; powercuts ; etc.
Same with the other scams like the chit funds - 25% returns finance companies which went bust.
Same with the orchards companies and forest income scams
Same with Japan land bubble.
Congrats for you great blog
at the moment i am writing my diploma thesis about the new it sector in Chennai. Does anybody know where i can get detailed information about the landprice developments in Chennai throug out the past years.
Greetings from Germany.
Jens.