A decline in demand for Chennai’s luxury apartments

Chennai

Suburban Chennai’s residential apartment market is feeling the heat of the job market slump and poor increments given by most corporate houses. Industry sources say signs of softening of the market are evident, especially in the premium and luxury segment. “Apartments above 50 lakh per unit are hard to sell in the suburbs and those above 1 crore are moving sparingly,” said Kevin William Albert, associate director of Jones Lang LaSalle (JLL), an international realty firm.

The residential division of JLL, which sells about 1,500 apartments a year for major builders, does about 70% of the sales in the 40 lakh to 50 lakh bracket, he said. About 30%of sales happen in the 50 lakh to 60 lakh bracket. “We hardly promote anything above 60 lakh,” said Albert.

Right pricing of residential projects holds the key to successful marketing, said Albert. “Many builders take the last selling price of previous projects in the area as the benchmark price for their launch,” he pointed out. At times, it can go terribly wrong. Builders cannot charge the rate of a ready-to-occupy apartment on a project which is yet to be started. “Wherever there is such anomaly in pricing, buyers develop cold feet.”

Still, Chennai is better off than other cities, claims Isha Homes managing director Suresh Krishn.The macroeconomic implications are a matter of concern, but they have not yet impacted the city in a big way. But compared to last year,sales have dipped,he said.

Chennai market is facing many influences, which are specific to the city. While the supply was low last year, primarily because there was an inordinate delay in according approvals to residential projects, this year has seen many new projects flooding the market.

Source: The Times of India, Chennai