Water paucity delays construction activities
Deleting groundwater either stalled the real estate activities or reduced the pace of construction across Chennai. Against the requirement of 50,000 litres of water per day, housing developers are able to procure only 24,000 litres a day.
Owners to relinquish 0.5 percent land for power infrastructure
The revision of the Tamil Nadu Combined Development and Building Rules has mandated the owners of the newly approved housing layouts to transfer 0.5 percent of their land parcels to the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) for the development of power infrastructure.
Chennai authority raises development charges
Chennai Metropolitan Development Authority (CMDA) has raised the infrastructure development charges by Rs 15 per sq m. The revised development charges will be effective till March 31, 2020, for real estate structures classified as special buildings, group developments and multi-storey buildings falling within the CMDA limits.
State extends registration deadline under the Tenancy Act
Citing poor response, the State government has extended the registration deadline for applicants under the Tenancy Act until September 22, 2019. Reportedly, only 200 rental agreements were registered in Chennai until May 2019.
Chennai to get a second airport at Mamandur
The Airport Authority of India (AAI) has given the nod to another airport in Chennai at Mamandur, 80 km south of the city. The proposed airport will be developed in three phases on over 3,500 acres of land at an estimated budget of Rs 4,500 crore.
Chennai’s realty market remained subdued in Apr-Jun 2019. New supply increased marginally, QoQ. However, the construction sector was adversely hit by the acute paucity of water and sand, delaying completion timelines and subsequently, project deliveries. Not surprisingly, the average weighted property prices remained under pressure and unaltered in Apr-Jun 2019.
Housing demand continued to incline towards the affordable segment as over 50 percent of the buyers preferred homes priced under Rs 40 lakh. Notably, demand outweighed supply by 17 percent, exhibiting the highest mismatch across budget segments. On the flip side, the luxury housing segment continued vying for buyers, impacting average ‘asks’ adversely.
While housing demand from the native population remained low-key, the city continued to attract investors from across the globe owing to its active IT/ITeS, manufacturing and trading sectors. Accounting for over 41 million sq ft of housing space sold in the last 2.5 years, the city has emerged as one of the most preferred residential markets down South.
In a bid to trigger a revival in the realty landscape, Chennai needs a fast-paced overhaul in its infrastructure, especially projects such as MRTS Phase II and Outer Ring Road, which have faced inordinate delays over the last few years. Moreover, the revised corridor project from Chennai Port to Maduravoyal is in development phase. Progress towards these along with the Government’s intervention to tackle water and sand paucity could show the city the light of day.
New supply in Chennai increased marginally in the quarter with the majority of the inventory concentrated around the IT/ITeS hubs of South Chennai. As the city battered with continuing sand and water crisis, project construction and deliveries suffered. The housing sector, thus, saw property prices maintaining status quo, QoQ. The rental values, however, jumped by an average of three percent, YoY.
The housing belts of Perumbakkam, Thoraipakkam, and Perambur emerged as the forerunners on the capital charts with an average price appreciation of 2-3 percent, each, QoQ. Thoraipakkam garnered buyer interest on the back of its proximity to prominent industrial zones and IT parks. A plethora of housing options, coupled with planned infrastructure projects, has made Thoraipakkam a sought-after region among aspiring homebuyers.
Chennai drew over 75 percent of its end-user demand from properties priced below Rs 60 lakh. Interestingly, units priced within Rs 40-60 lakh enjoy a demand-supply equilibrium. Much like the previous quarters, the housing supply in the luxury segment, i.e. the availability of homes priced between Rs 60 lakh and Rs 1 crore outweighed its demand by 15 percent in this quarter.
The city might witness improved housing demand across the newly launched flyover in Salem – the longest in the State. Spanning across 2.5 km, the flyover is built between Ramakrishna Road and AVR Roundana, and helps reduce traffic congestion in areas such as Five Roads, New Bus Stand, Four Roads, Alagapuram Main Road, Saradha College Road and Swarnapuri. Residential demand in Chennai is known to be concentrated along transit routes such as Old Mahabalipuram Road (OMR) and Grand Southern Trunk (GST) Road.
South Chennai, the IT/ITeS hub, remained a hotspot amongst the tenant community. Continuing the trend, Siruseri, Selaiyur, Tambaram, and Kelambakkam emerged as some of the prominent areas which witnessed a surge in the average rentals, YoY. Popular localities such as Pallavaram, Kodambakkam, Egmore, and Porur, too, witnessed an appreciation of seven percent, during the quarter ending June 2019.
Of all the major metro cities in India, Chennai is gradually becoming the most popular warehousing hub. Since 2017, the city reported 80 percent jump in investments made in logistics and warehousing sector, YoY. Consequently, areas such as Sriperumbudur-Oragadam cluster and National Highway 16-Periyapalayam are becoming favourite spots among investors.