Wednesday, June 20, 2007

Coimbatore land bubble bursts

Chennai prices as an indicator. In some areas prices have quadrupled in 5 years.

After Mumbai, now its Coimbatore. The bubble is deflating faster then expected. The bad news keeps pouring in.

Hindu reports from Coimbatore

our businessmen bought seven acres, located about 10 km from Tirupur for over Rs.1 crore. A real estate broker gave them hope that they could expect a huge income in a couple of months. But nobody has showed any interest in the property in the last six months.
Hardship to businessmen

Half the amount invested in the land got locked up and they could not pay the remainder. It caused a lot of hardship to these businessmen in their day-to-day transactions. It is not a story of single group, but the nightmare of many in Tirupur.
Investors blamed

K.J. Prabakaran of J.S. Promoters estimates nearly Rs.250 crore invested on lands in and around Tirupur is effectively locked now. Even those with good expertise in the land deals invested in land with long term plans. Now they have also been affected. The real estate boom that prompted investors from Tirupur to buy land to a distance of 100 km was at its peak between 2000 and 2005. But it appears that the boom has now burst. Sources in the registration department say that registration of land and agreements has come down in the last two months.

Many realtors say the downturn was expected and in fact overdue for sometime. They blame it on investors who wanted to make quick money by creating artificial demand.

Speculators pushing land costs, hardening interest rates and the fall of the US dollar against the rupee are being attributed as the main reasons for the downturn.

E. Thiagarajan of KRC Constructions said that while real estate was all about property development in metros such as Mumbai, in Tirupur even purchase of agricultural land was labelled as real estate business.

Like others, Mr. Thiagarajan maintains that there is still a good demand for budget houses and plots.

Even now investments on factory buildings and houses are being made based on requirements.

“Those who diverted funds from existing business, investing their surplus funds on land of five to 10 acres around 30 km from the town without any requirement for the same, are now in a spot. In many cases, their regular businesses were affected. Some of them have started selling the land at cost price while some are even incurring losses,” he adds.

Lured by heavy transaction, dozens of small time traders and people from many walks of life played the role of brokers. It was like mushrooming of brokers camping in every other tea shops. Now, their role also has been marginalised.

He, however, insists that transactions are being done now though not on a big scale. Selling the same land to many persons without registering it for a brief period was the trend till recently.

“In every stage, whenever the property changes hand, the value goes up by not less than 20 per cent. This kind of business has come to a standstill,” points out G. Ramasamy of Vasantham Group.

Exuding hope, he further showcases the brighter side of the business: A large number of buyers from all segments are ready to buy plots or houses if the promoter provides necessary infrastructure with quality.


Anonymous said...

it is not a bubble burst it is ony acomment of some individuals who are closed group which is not acceptable,since it is only their own statastics the evidance cited is too infant,also the refrences offered is not a national level buisness people to accept their comments,the real estate buisness is always aspeculative dependant and not ...,, yuor comments not accepted.

Anonymous said...

It is Really Correct
I am living in Tirupur and I was trying to Buy a land in good residential area. In Oct-07 I enquired about 25 lands in Tirupur it was average 2.5 laks per cent in Amarjothi gardens . But in December it was 4 laks per cent
And now it has gone to 6 laks per cent
And all the land which were there for selling about 6 months back is still there but they have hiked the land.This is not really hike because sellers themselves hiked the land cost , but there is no body to buy them.
It shows the rate will come down normally from this point.
ANd I except all the lands in tirupur will go dwn by 50-60 per cent in next one year

Anonymous said...

IT is exactly correct
Land rates are coming down in Tirupur

Anonymous said...

This is very very correct
So Guys who are going to buy lands in tirupur wait for 6 months
All rates will come down
And Guys dont invest in land like bussiness because it has attined the peak.So There will be loss if you entered in this real estate bussuness in tirupur
And if you are buying hte land for your own purpose then this is not the right time to buy.
The land cost will come down very soon.All the lands which are there for sale are waiting for more than 6 months. Because land owners are rising the land cost because it is corporation now
But we didn't get any hike in the icome then how come the land cost will go high.
So guys wait for some time it will come down normally

Anonymous said...

Hi Guys,

Perfect ....
The Land rates in tirupur started coming down
We can get cheap land every where
Because there is no buyers to buy the land at high cost and so the land rates are coming down

Anonymous said...

Lower prices seem to be the reality, I am an NRI and wanted to buy land in Coimbatore and the cost per cent was about 6 lakhs in December 2007 Sivaram Nagar near sungam. Now the same owner is pestering me to buy the land for 3.5 lakhs a cent, I am waiting for the day it becomes 2lakhs, as thats not too far. My sister bought in 2004 and the land cost was only 1.5 lakhs. If there can be corrections in stronger, richer economies like UK, Germany and Japan; a knock on effect on India should be expected.
AK 11/2008

Anonymous said...

Dont Hurry up yourself to buy lands.
There are lot of Lands in Tirupur...
The land owners are not real consumers. THey have bought the land for selling it for high profit.THey are brokers...Dont Buy lands from Brokers or dealers.
PLease buy lands from person who really want to sell it.
Consumers of Land is very less in tirupur. Most of the people people eho buyed the land for selling it for high margin cannot sell the land now.
THe land price near Amarjothi Gardens Have come down to 3.5 to 4 laks Again

Anonymous said...

I compared the price of land in US and Coimbatore, In san diego Del Mar ~20 cents cost $500,000. In coimbatore 10 km from city price is 10-14 lakhs/cent on the main road, which is over $500,000. you might be familiar form 80s "tokyo street worth more than state of california" NRIs hang on for few years... you will get better deals. Mean time earn interst for your FDs in India. Peak of Indian market was 2009... now most of them started to realize their mistake... if you want to build a business rent a place which is a much cheaper option than owning (put down your pride and bite the bullet for few years). No kidding it takes 10 yrs to save such kinda of money

Anonymous said...

Yes Guys now all the lands have come down completely.
Now Land owners are ready to sell the land for Cost Price....
No one is ready to buy the land for cost price also.
If it is urgent they have to sell the land below the cost price only.And if they keep the land with them to sell for higher margin, then it will go down further.
This shows that cosumers are very less in tirupur.Only broker are buying the land to sell for higher cost.
So guys sont buy lands for Investment now and if you require it really then buy it.
U wont get any profit in land now. It is Big DOWNTURN TO TIRUPUR......
Consumers enjoy this time....
This is time for you...
And this is the worst time for the people who got the land to sell for higher profit.
Sorry for the BROKERS , this is your BAD TIME.


Real Consumer

Francis (South Carolina USA) said...

Yes I too noticed that Land Prices are same form 2009 to now.

There is not improvement in cost. You can Buy Land for cheaper price if you have hot cash.

Lot of Lands are available in Tirupur Currently. Since there is a problem in Dyeing, everyone is selling the land and people are running out of Tirupur.

It is a slowdown in real estate
and good time to real consumers.

This is bad time for Broker and Agents.

Sichermove KL said...

Nice Post!!
real estate in india

Angela Navejas said...

Nice Info! Most of people are making the most of it and investing in small towns or purchasing up hotels, villas, guest houses, and resorts.

Property in Lucknow | Land in Lucknow

Rahul Tirupur said...

Nice..I am planning to Buy a Good land/house in Tirpur. I enquired many Lands , almost everything seems to be less than 2009(I bought a land in 2009 also)

It is very Good time for Buyers. If you are Real Buyer and if you have Hot Cash.. You can buy it...

Lot of people are waiting to sell their land...but cannot

Only Real buyer can use this time....