Chennai’s residential property market buoyant

Chennai

Chennai’s residential property market has witnessed a steady growth in terms of pricing, demand and supply in the past two years post the economic recession. The city has typically been a base for the automobile/auto ancillary industry and is one of the premier port cities in the country.

With the advent of the IT sector, Chennai’s residential real estate market has become increasingly dependent on its growth and expansion for continued residential demand. The current scenario of job stability in this sector is at a much better position than it was during 2008- 2010, according to a recent survey by Knight Frank India.

Despite the subdued economic conditions, developers have gone ahead with their plans and several large scale projects have been announced during FY 2012. The period witnessed the launch of approximately 14,900 units which are scheduled to be completed in the next 2-3 years. This optimism shown by developers may be due to the fact that the Chennai market is primarily self-sustained and not much affected by the upheaval in global markets.

On the pricing front, nearly 74 per cent of the total number of residential units launched in FY 2012 fell within the Rs 5 million ticket size categories. Several prominent developers strove to tap the affordable housing segment with their new launches. Another 14 per cent of the residential units launched in FY 2012 belonged to the Rs 5.0-7.5 million ticket sizes, catering to the needs of the upper mid-end segment. On the other hand, just 9 per cent of the total units launched in FY 2012 surpassed the ticket size of Rs 10 million to fall into the premium segment.

As of March 2012, nearly 82,000 residential units are under various stages of construction in the Chennai market. While southern region will account for a significant share of around 59 per cent, west Chennai will contribute 33 per cent, followed by the northern region with 5 per cent and central Chennai with 3 per cent.

An important trend witnessed is the change in the preference for unit size. The preferred size for 3BHK flats has increased from 1250 sq ft to 1450 sq ft while for 2BHKs from 900 sq ft to 1150 sq ft. The vacancy level as on March this year was recorded at approximately 31 per cent with the southern part alone constituting 30 per cent while north and west Chennai have vacancy levels of 32 per cent and 33 per cent respectively. Central Chennai has a lower vacancy rate of 22 per cent.

Chennai’s residential market has been quite resilient to the looming threat of global economic turmoil but the market witnessed a dip in sales velocity in Q3 FY2012, compared to the previous two quarters. It has been envisaged that the corridor between Sholinganallur and Tiruporur in the southern belt will be the next investment destination for residential property in the city. Yet another option is the Sriperumbudur-Oragadam belt towards the west which is one of the best options with large manufacturing companies and MNCs expanding their footprint there.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/chennais-residential-property-market-buoyant