Chennai
The absorption trend of residential units in Chennai has considerably improved amid expectation of guideline value revisions by the state government. New launches too were encouraging with significant portion coming from the southern suburbs. Rental and capital values largely appreciated across all the submarkets.
“Demand for residential units improved during the fourth quarter last year with 5,076 units getting absorbed when compared to 4,610 units in third quarter, according to Jones Lang LaSalle survey. Southern suburbs constituted a significant portion of the net absorption at 69% while western suburbs and central submarkets bucked the overall absorption trend.
New launches surged quarter on quarter in the city. However, the trend has significantly slowed down when compared over a year ago. A little over 5,000 units were launched during the quarter, among which southern suburbs alone accounted for around 4,000 units during the quarter.
There are 10 leading developers who have launched projects during the first quarter so far this year besides smaller projects by various developers. Industry sources estimate that one of the factors for the increase in absorption rate was due to expectation of revision of market-based guideline values any time now. Capital values increased across sub-markets in the city with notable appreciation recorded in northern suburbs and the off central sub-markets which increased by 6.1% and 4.0% quarter over quarter.
Market yields remained range bound between 2.5% and 3.5%. With the southern suburbs observing improved capital value appreciation on the back of strong demand for properties, yield in this submarket declined 10bps. Western suburbs witnessed an increase in the yield, while remained stable in other submarkets.
The residential property market is expected to grow at a healthy rate especially at a time when the inflation is coming down and the interest rates are expected to come down in the coming months. While the capital values are expected to stabilise in southern suburbs, a marginal increase may be witnessed elsewhere in the city. Rental values are expected to improve with the influx of skilled professionals necessitating a surge in demand for housing and delay in the delivery of residential projects.
V Nagarajan, Property consultant
Source: http://content.magicbricks.com/chennai-residential-mart-buoyant
