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.
