Real Estate in Coimbatore
Everyone who has someone in Coimbatore will know about the skyrocketing real estate prices there. Last week I was in CBE for some personal work. As I had some time to kill, I went to some brokers in familiar areas posing as someone interested in buying a property. The rates they are qouting had me stunned.
I am one who felt even Chennai’s real estate was overheating. How else can you explain a demand of Rs. 1 Crore for a ground of vacant land in Perungudi?? I saw a quote in IndiaList.
If Chennai was bad enough, Coimbatore was just insane! The only reason people could come up is that some IT companies are planning to set up operations there. Try a google search for IT companies in Coimbatore right now and all you get is some innocous list of small time companies. Not the ones which would pay salaries high enough to settle the monthly EMIs.
Wipro has bought 12 acres of land in the TIDEL coming up in Peelamedu, TCS has got about 5 acres there. These two projects will take its own sweet time to come to reality. About 18 months is a realistic estimate. Others are expected to follow suit but god knows when. My hunch is that these two would hire about 20,000 people at the maximum. It is an irony that these companies are coming to Tier 2 cities just so that they can hire people at lower costs than metros!.
So, if a 1000sqft. flat in a decent area sells for 2500Rs per sqft in a city like Coimbatore, the EMI. would be about 22K per month (Rs.900 per lakh for 20 years). Right now, there are not many companies which would be glad to give 25K, leave alone 40K in Coimbatore. This leaves the real estate market completely at the mercy of NRIs and other local folks with black money.
Interestingly, the rentals have remained fairly stable. A1000 sqft flat would hardly fetch anything more than 6-7K per month. So, if some X, purchases a 1000 sqft flat and lets it out, he would be paying 15-16K Nett. per month out of his pocket so long as he owns the flat. In that case, I wouldn’t call that an asset. I think it’s a liability. I am no good in predictions but to me, this market trend has ‘correction’ written all over it.
But I guess people are buying because they fear prices are going to go up even further. They come to this conclusion simply because it has doubled up in the past 2-3 years. In the process they’ve forgotten a basic rule of thumb - Never buy in a seller’s market.
Indian Economy had a very good post on the real estate scenario sometime back.
January 2nd, 2007 at 4:26 pm
Very true..the prices are crazy..like 28 lacs for one ground in Ullagaram, chennai!! Was shocked to see the prices going up like this…definitely not a buyer’s market and sure a “bubble”…
January 3rd, 2007 at 3:25 am
Hey karthi,
Unga kadhai neram padichen…7th episode kku mela illaye..enga poyee padikanum?
January 3rd, 2007 at 4:41 am
keeripatti, paapapatti la evlo irukum ground vilai ? ipo book panna thaan angeyum vaanga mudiyum nu ninaikuren neenga solrartha paarthaa..
January 3rd, 2007 at 5:14 am
pls answer Sree’s kostin
January 3rd, 2007 at 7:23 am
I second sree’s question. PK your answer ????
January 4th, 2007 at 1:10 am
Uma,
I am not sure if its a bubble as ‘Bubble’ seems to be very loosely defined and interpreted nowadays.
srikanth,
anga kooda unnai madhiri NRI s ku vena mudiyalaam
sree,monu and active reader,
viraivil nalla sedhi solren:D
amaidi amaidi
January 15th, 2007 at 8:10 pm
Interesting article yours..but,lot of erroneous facts..like real estate is rising because some IT companies are planning to set up shop.That’s what most people think.
But,if you look at coimbatore, it’s the only city in tamilnadu which has lot of potential next to madras..it’s no doubt one of the leading tier-3 cities(Tier 2 being the chandigarhs and Ahmeadabads, Tier 1 being mumbais and delhis)..
Leave alone IT firms..which city in tamilnadu,other than chennai, has colleges of the nature of coimbatore(I don’t mean to say they are top class..but lot better than others)?
Which city in tamilnadu,other than chennai has the knowledge bank as deep as coimbatore?
Which city in tamilnadu,other than chennai, has as much industries as coimbatore?
Which city in tamilnadu has enterpreneurs as much as coimbatore?
Above all, which city in tamilnadu, including chennai, has weather as pleasant as coimbatore ?
January 15th, 2007 at 8:14 pm
Also, take my word now,Jan 15 2007..real estate is going to be continuously up in coimbatore and would have atleast,I mean atleast 75%-100% appreciation in the next year..I’m not telling this as a average palanisamy…I’m working with people in real estate in coimbatore for over 20 years.you read this article again in 2008..and you’ll know.
January 15th, 2007 at 8:48 pm
Kumar
Welcome here. As a coimbatorean who has lived in that city for 25 years, i know where you are coming from
As a person who owns some property there, i would be more than glad if real estate prices keep going up there..
But…
You have made lot of questions starting with “Which city in Tamil Nadu..”
My point is, this has been the case with Coimbatore for the past 30 years…
Be it climate or water or top class educational institutions, coimbatore has had it for so long. If IT is not the reason, i am not able to think of one pausible reason for this price rise…
Also, i’ve been making enquiries in other cities in TN too. Trust me, be it madurai or trichy, real estate prices r going up there as well….So its not exactly like people have woken up to CBE’s potential now.
January 17th, 2007 at 12:27 pm
Hey dudes its absolutely ridiculous to compare the price rise in madurai, trichy with coimbatore…
There were many questions as to “which city other than chennai stuff”… Well include chennai in every question and it makes more sense… Actually Coimbatore has a deeper talent pool than Chennai… Its insane to compare, Outlook rated Coimbatore to be the best city for education in the country. Moreover its not a tier-III as u mentioned. An “pcoming metro”will be more ideal. I’ve been in chennai for the last 3 years and the lifestyle here is pathetic. Forget the ferraris and porsches u see in Coimbatore, ordinary people here in chennai are so uncivilized and lack the cosmo syle thats there in Coimbatore. The realty raise in coimbatore is going to continue and its only a matter of time before other companies opt for coimbatore rather than chennai. CTS has already started doing it
January 17th, 2007 at 7:59 pm
I want to reply to prabukarthik’s point:
Be it climate or water or top class educational institutions, coimbatore has had it for so long..
You think IT is THE reason, but I disagree.Why? Because Coimbatore is witnessing appreciation in real estate prices which simply did not appreciate significantly very much in the 90s…Take for example, 4 year periods- What appreciation % you might have got for a property bought in (peealmedu,for example) ‘93 and sold in ‘97? may be 25-50 %.What appreciation % if bought in ‘03 and sold in ‘07? Definitely more than 100%.
That is the one single biggest reason that you are looking for..IT is definitely a contributing factor..but not the single biggest factor/reason..
Also your point on rising prices in other cities..true..but you want the most bang for your buck..? I can’t think of any other city other than coimbatore(exclude chennai) in TN..
January 17th, 2007 at 10:33 pm
Sudarshan,
You mean to say CTS has already started dumping chennai and embrace Coimbatore? Perhaps that explains why they r opening up centers here right upto Siruseri here while they sticking only to KCT in Cbe in the last 3 years?
Chennai is a metro. So, like in all metros u will have all kinds of ppl living in the city. CBE will suffer the same fate when it grows up.
Please dont give all the cosmo lifestyle gyaan to a coimbatorean, that is me
January 17th, 2007 at 10:35 pm
Kumar,
I think an appreciation of 25-50% is more realistic and less prone to correction.
You had conveniently left out the period from 1998-2002 when prices actually(post bomb blast in feb.14 1998) dipped.
All this NRI’s investing in cbe, is actually making me think abt kerala’s economy where lot happens only due to gulf money…
January 31st, 2007 at 2:33 pm
Hello,
It’s definitely an interesting phenomenon in coimbatore. I have been a resident for more than 30 years. I don’t know if the increase in prices is justifiable, considering the fact that most of the transactions happen with black money, thats a pain considering the fact that people who work to earn their living are left without a choice. A significant correction is likely…there was a similar run up before 1998 blasts.
I feel brokers not financial basics, are dictating the terms in this.
More speculators playing the investment game. It’s like stock market, people asking for next year’s prices now.
With all talk about entrepreneurs, where are workers now ? most of the textile / manufacturing companies are finding it difficult to find / retain labour. Leave alone agriculture.
February 4th, 2007 at 10:41 am
CTS has office near Kidney Centre on puliakulam - lakshmi mills road, the sky rocketting real estate prices is helping brokers and stamp vendors and middlemen, anyone who owns lands wants to sell it, an article a few days back in an tamil daily said about farmers selling their land and investing the money in bank deposit, the rationale they say the bank deposit earn more interest than what they earned farming.can u people guess where this leads to, there will be ni farms, already we don’t get farmworkers, they have gone to tirupur to work in garment factories, the coir industry in Pollachi getting people from Orissa and Bihar to work for exporting to China, business is good.
February 7th, 2007 at 7:14 am
guys, I would say its just purely a speculation, there is nothing special about coimbatore. Simple reason is, it is increasing everywhere and so in coimbatore. May be like for the middle class NRI’s the prices in bangalore and Mumbai is not affordable and so they are looking cities like coimbatore…
February 24th, 2007 at 2:11 am
Real Estate in Coimbatore…
Everyone who has someone in Coimbatore will know about the skyrocketing real estate prices there.If Chennai was bad enough, Coimbatore was just insane! The only reason people could come up is that some IT companies are planning to set up operations the…
April 22nd, 2007 at 2:09 pm
Real Estate prices told by brokers are not real. Check with the land registration department and ask other trusted local people before investing. There are lot of things that has to be done before selecting a land. Roads, Water, Electricity, Neighbors, last year value of land, last sold value, find need of the seller to sell the land and other contributing factors are the ones to look for before investing.
As of now.. there is a slowdown in housing plots because current land value and loan rates are beyond the reach of common middle class and even upper middle class families. Hope it will come down soon to Pre 2005 level in some areas.
Coimbatore cannot become Bangalore or Chennai in IT. It has traditional businesses like textiles, foundry, engineering, jewellery education and agriculture running as strong as IT in India. There is a rumor that businessmen are holding back their lands and are not willing to accept IT companies in Coimbatore. They fear there will be a wage increase and shortage of manpower will ruin their business.
January 27th, 2008 at 10:13 pm
A very good article.
This kind of hype, has become a craze among people. The parents of NRI are the ones who send out this kind of rumours. They had created an artificial demand.
The worst thing is that our parents also put pressure on us to buy them.
A few months ago, I did have a similar experience. I went with a broker to a place off Vadavalli called Onapalyam. It looks very much like “Vettiyaddu Villayadu”’s place of first murder. Full of thorns and bushes
No houses could be seen in the horizons in all the four directions.
That real estate agent had a map of the sites, accornding to him only 3 sites were available out of 60+ odd sites in his map.
He also predicted that the proposed ring road would come very near to the property. He said that the prices were around 1.10 L per cent, while he can finalize that for 1 L and also promised me that he would be able to resell it for 1.30 L in a time of 3-4 months from then.
April 9th, 2008 at 3:14 pm
Hi guys,
What is the trend(real estate market) in coimbatore??Is it up??Or down??
Thanks
Shri
April 9th, 2008 at 8:35 pm
shri,
No idea!!. I once read Umashankar of ELCOT mentioning that companies are looking at places like salem because of the high real estate cost in coimbatore.
Not sure where cbe stands now.
One place to check out is the www.r2iclubforums.com website
May 30th, 2008 at 9:15 pm
Hi,
Its true coimbatore reality prices is high. Higher end projects like sahara city homes increasing prices and demand is high for higher end project. Eventhough they have start the project people are buying like anything
June 12th, 2008 at 3:06 pm
What are the new developments in Kovai?
Is the 6 lane Avinashi road and fly-over complete?
What is happening with the airport? New one coming up? Expansion is complete?
Where do I find info like this?
June 25th, 2008 at 7:07 am
covai contact details reply my email thank u.