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Changes In The Fair Market Value Of Residential Properties In Two Different Places Of Chennai during 2005 2011

PROJECT REPORT ON STUDY ON THE CHANGES IN THE FAIR MARKET VALUE OF RESIDENTIAL PROPERTIES OF CHENNAI DURING 2005 2011 STUDY AREA: ADYAR AND TAMBARAM- CHENNAI, TAMIL NADU Submitted By P. BALAJI PRASAAD, B.E, M.B.A Under the Guidance of Mr. NELSON MACWAN., M.Val (R.E.) & M.Val (P & M/c), A.M.I.S.(Valuation Surveying), F.I.V.,

To The Director CENTRE FOR DISTANCE EDUCATION SHIVAJI UNIVERSITY OCT 2011

INTRODUCTION AND BRIEF DESCRIPTION ABOUT REAL ESTATE VALUATION


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Changes In The Fair Market Value Of Residential Properties In Two Different Places Of Chennai during 2005 2011

INTRODUCTION In reality, Valuation is the process of estimating what something is worth which can either be an asset or a liability. Readers should realize that Market Value is not exact science, but an introduced concept from individuals and companies as a business tool. Value is subject to seller and buyer's perception and interpretation of parameters that they decide to take into consideration, while other people usually refer to their very own perceptions and interpretations of what those people think is important. Any article should be explained in this context, because people pay what they want in spite of whatever advice. The Objective and the Scope of Work is the first step in any appraisal process. Without a strictly defined Scope of Work an appraisal's conclusions may not be viable. By defining the Scope of Work an appraiser can begin to actually develop a value for a given property for the intended user, which is the intended use of the appraisal. Methodology doesn't describe specific methods; nevertheless it does specify several processes that need to be followed. These processes constitute a generic framework. They may be broken down in sub-processes, they may be combined, or their sequence may change. However any task exercise must carry out these processes in one form or another. Methodology may be a description of process, or may be expanded to include a philosophically coherent collection of theories, concepts or ideas as they relate to a particular discipline or field of inquiry.

BRIEF DESCRIPTION ABOUT REAL ESTATE VALUATION Real Estate is a business as well as an investment for those who intend to own, buy or sell an Immovable Property. Such investments are made generally to hold an income and to hold a resale expectancy of an increase in value. This is the prime reason for Real Estate Valuation. Real estate valuation is the practice of developing an opinion of the value of real property, usually its Market Value. International Valuation Standards defines market value as "The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.. The need for appraisals arises from the heterogeneous nature of
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Changes In The Fair Market Value Of Residential Properties In Two Different Places Of Chennai during 2005 2011

property as an investment class: no two properties are identical, and all properties differ from each other in their location which becomes one of the most important determinants in their value. The absence of a market-based pricing mechanism determines the need for an expert appraisal valuation of real estate property. In finance, valuation is the process of estimating the potential market value of a financial asset or liability. Valuations can be done on assets such as investments in marketable securities like stocks, options, business enterprises, or intangible assets such as patents and trademarks or on liabilities. Although some areas require no license or certification at all, a real estate appraisal is generally performed by a licensed or certified appraiser (in many countries known as a Property Valuer or Land Valuer and in British English as a "Valuation Surveyor"). If the appraiser's opinion is based on Market Value, then it must also be based on the Highest and Best Use of the real property. Appraisals of such property (e.g. income producing, raw land) are usually reported in a narrative appraisal report. The appraisers are required to identify the scope of work needed to produce credible results. The appraisers were to identify six key parts of the appraisal problem at the beginning of each assignment: Client and other intended users Intended use of the appraisal and appraisal report Definition of value (e.g. -- market, foreclosure, investment) Any hypothetical conditions or extraordinary assumptions The effective date of the appraisal analysis The salient features of the subject property

Based on these factors, the appraiser must identify the scope of work needed, including the methodologies to be used, the extent of investigation, and the applicable approaches to value. The rule provided the explicit requirement that the minimum standards for scope of work were:
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Changes In The Fair Market Value Of Residential Properties In Two Different Places Of Chennai during 2005 2011

i. ii.

Expectations of the client and other users The actions of the appraiser's peers who carry out similar assignments.

CASE STUDY AT CHENNAI GENERAL Chennai, formerly known as Madras, is the capital city of the Indian state of Tamil Nadu, located on the Coromandel Coast of the Bay of Bengal. Chennai being the fourth most populous metropolitan city in India area, is also the World's 36th largest metropolitan city having an area of 172sq.Km. Chennai had a population of 4.68 million in the 2011 census released by the Directorate of Census Operations, Tamil Nadu within the area administered by the Corporation of Chennai and an extended Metropolitan Population of 8.2 million. According to an A.C. Nielsen survey, Chennai is regarded as one of the cleanest cities in India. Chennai's economy has a broad industrial base in the automobile, computer, technology, hardware manufacturing, and healthcare industries. The city is India's second largest exporter of software, information technology (IT) and information-technology-enabled services (ITES). In education sector, Chennai District is having average literacy rate of 90.33 percent. Male literacy and female literacy were 93.47 and 87.16 percent respectively. A major chunk of India's automobile manufacturing industry is based in and around the city. Chennai Zone contributes 39 per cent of the State's GDP. Chennai accounts for 60 per cent of the country's automotive exports, which leads it to be called as 'The Detroit of Asia'.

LOCATION, SIZE AND AREA Chennai is on the southeast coast of India in the northeast of Tamil Nadu on a flat coastal plain known as the Eastern Coastal Plains. Its average elevation is around 6.7 metres, and its highest point is 60 m (200 ft). The co-ordinates of Chennai district are 13 5 2 N and 80 16 12 E. The
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Changes In The Fair Market Value Of Residential Properties In Two Different Places Of Chennai during 2005 2011

City covers an area of 174 sq.Km and more than 300 sq.Km adjoining suburban areas from the Kancheepuram District. Chennai is divided into four broad regions: North, Central, South and West. North Chennai is primarily an industrial area. Central Chennai is the commercial heart of the city and includes an important business district, Parry's Corner. South Chennai and West Chennai, previously mostly residential, are fast becoming commercial, home to a growing number of information technology firms, financial companies etc., CLIMATE Chennai has a tropical climate, specifically a tropical wet and dry climate. The city lies on the thermal equator and is also on the coast, which prevents extreme variation in seasonal temperature. The weather is hot and humid for most of the year. The hottest part of the year is late May to early June with maximum temperatures around 3842 C (100108 F). The coolest part of the year is January, with minimum temperatures around 1820 C (6468 F). The average annual rainfall is about 140 cm (55 in). The city gets most of its seasonal rainfall from the north-east monsoon winds, from mid-October to mid-December. The highest annual rainfall recorded is 257 cm (101 in) in 2005. Prevailing winds in Chennai are usually southwesterly between April and October and northeasterly during the rest of the year. POPULATION The Population of Chennai has increased from 4.34 million in 2001 to 4.68 million in 2011. There was a 7.8% increase in Population in the past ten Years. Chennai Population constitutes 6.49% of total Tamil Nadu Population. According to the 2011 India Census, male constitute about 51% and female constitute about 49% of the population of about 4.68 million.

The average literacy rate has increased from 85.33% in 2001 to 90.33% in 2011. There has been a phenomenal increase in the adjoining suburban areas in population
as it has increased from 6.5 million in 2001 to 8.2 million in 2011. There has been a 26.1% increase in population in the past ten years. These areas include the suburban areas like Alandur, Tamabaram etc., CASE STUDY
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Changes In The Fair Market Value Of Residential Properties In Two Different Places Of Chennai during 2005 2011

Adyar Adyar is a large neighbourhood in Southern Chennai (formerly Madras), Tamil Nadu, India which comes under Chennai District. It is located on the southern banks of the Adyar River at a distance of 10 Kilometres from the Central Business Area of Chennai. Adyar locality which comes under the Corporation of Chennai, has developed significantly through the late 1970s and early 1980s as a residential area to accommodate Chennai's sprawl. Since the late 1990s, it has become part of the IT corridor, the part of southeast Chennai that houses several IT companies due to globalisation policies of India. Tamil Nadu's first IT centre - TIDEL Park is located at the southwest boundary of the neighbourhood. Adyar comes under Mambalam-Guindy Taluk bordering Sardar Patel Road, another artery main road of Chennai. Adyar also commands the basic infra-structural facilities like asphaltic roads, electricity, telephone lines, Corporation water supply and Underground sewerage lines. Tambaram Tambaram is a southern suburb of Chennai of Kancheepuram District in the Indian State of Tamil Nadu. It is located at the distance of 27 Kilometres from the Central Business Area of Chennai, bordering National Highway 45 (Great Southern Road) which is one of the artery main roads of Chennai. It is a thickly populated suburb having an active small scale industrial belt which is gradually turning to new economy companies. Tambaram is a hub to all major destinations in South Tamil Nadu as it lies on the busy ChennaiTrichy National highway (GST). The railway line from Chennai to Kanyakumari divide the town into East Tambaram and West Tambaram. The Chennai suburban railway network operates a suburban railway service from Chennai Beach to Tambaram. Its central location makes it an attractive proposition for new business. This is one of the suburbs of Chennai which has come up with much planning contribution from Municipality over a long period of time. Prior to 1964, Tambaram was a small panchayat. In 1964 it was constituted as a Grade III Municipality comprising the Village Panchayats of Pulikoradu, Irumbliyur and . Due to rapid development and growth of the town commercially and residentially, the Municipality is now classified as a 'Selection Grade Municipality'. The extent of the municipality is 20.72 km. Tambaram is considered to be a satellite town as it caters to the needs of hundreds of suburbs like Padappai, Selaiyur, Agaram, Madambakkam, Mudichur and Mannivakkam. Tambaram is 6

Changes In The Fair Market Value Of Residential Properties In Two Different Places Of Chennai during 2005 2011

geographically divided into West, East and Tambaram Sanatorium. East Tambaram is well known for its many educational institutions. Tambaram also commands the basic infra-structural facilities like asphaltic roads, electricity, telephone lines, Municipal water supply and Underground sewerage lines. A brief account of the above prospective urban and suburban areas is provided in order to gain basic knowledge about these areas and to enhance a vision in the minds of the readers in accordance to better perception. Statistical data regarding the instances of sale and rentals in the above areas of Chennai for the past six years (2005 2011) will be taken into account on behalf of Physical Aspects Legal and Policy Aspects Economic Aspects

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