State proposes projects to enhance road network
The State has proposed nine Greenfield infrastructure projects under Bharatmala Pariyojana. Out of the nine road projects, Chennai – Salem Highway is an ambitious eight-lane project for which the government plans to acquire about 1,900 hectares of land. The road projects are anticipated to fillip the realty market, improving the liveability quotient.
Civic body revises property tax
After two decades, Chennai Corporation has revised the property tax for both residential and commercial properties. While tax for residential buildings increased by up to 50 percent, the tax for commercial and rented residential buildings has increased by up to 100 percent. However, semi-permanent properties will be given a 20 percent tax concession.
Metro expansion brings relief to western suburbs
The proposed expansion of the Phase-2 of the Metro project from Valasarawakkam to Poonamallee is touted to benefit thousands of residents in the western suburbs of the city. The 13 km-long extension will reduce the travel time from Poonamallee to the Central Business District, bolstering the real estate sentiment.
Government streamlines issuance of property certificates
The State made the Completion Certificate a prerequisite for obtaining water and electricity connections. In another move, the government digitalised the application process of the encumbrance certificate using QR codes, instilling transparency in the system.
After several quarters of stagnancy, Chennai’s housing market seemed to turn corners in Q2 2018 on the back of subsidised home loans and improving buyer confidence.
It was after a prolonged lull that unsold inventory ticked a declining trend and housing sentiment turned positive, especially for properties priced within Rs 40-60 lakh.
New supply remained meek at the hands of delayed project approvals and slow-paced RERA registrations. Approximately 10,000 housing units launched before 2013, worth Rs 6,500 crore, are running behind delivery schedule in the city.
While property transactions gained some momentum, inordinate delays in the registration process impacted the sales realisation of residential properties. However, the scenario is likely to streamline with the introduction of the First-In-First-Out (FIFO) registration mechanism in September.
Overall, Chennai’s residential market witnessed some green shoots of recovery. Infrastructure projects on the radar played a crucial role in setting the realty tone right. Road projects under Bharatmala Pariyojana, and metro expansion to the western suburbs seemed to moderate the ripples of slowdown, QoQ. Moreover, the booming retail sector, too, infused the much-needed positivity to the city’s realty sentiment. However, an unstable employment scenario, particularly in the IT sector, hit office space absorption in the city. This subsequently marred demand for housing units, both for sale and rent.
As the economic slowdown wears off, Chennai’s housing market takes to the route of recovery. Affordable belts in proximity to the IT hubs and industrial centers continued to be the preferred choices of the homebuyer community. However, while demand fortified, supply failed to record an uptrend. Elongated monsoon cycle, delay in project approvals and slow-paced RERA registration had a significant bearing on new project launches and deliveries.
Chennai’s real estate market has come to terms with RERA and GST and ensured steady growth in the sales volume in the last two quarters. Across zones, ‘ready-to-move’ units and projects ‘nearing completion’ priced under Rs 40 lakh and between Rs 40 lakh and Rs 60 lakh remained the flavor of the season.
While developers primarily focused on completing existing projects, ready-to-move housing stock recorded a three percent increase in the total market share this quarter. On the contrary, limited number of new launches restricted the availability of under-construction properties.
Approximately 65 percent of the tracked housing localities recorded a positive price movement in the city in Jul-Sep 2018 vs. the previous quarter. Of all, the IT-driven southern zone continued to be the most favored. Additionally, the northern landscapes, which earlier despaired for buyers, also seemed to be gaining traction.
The IT belt of the South magnetised maximum homebuyers. Perungudi, Selaiyur and Thiruvanmiyur recorded robust demand and price appreciation to the tune of five percent, QoQ. While Perungudi and Selaiyur saw increased momentum from affordable and mid-income buyers, Thiruvanmiyur, an upscale locality, rose to the popularity charts for the second time in a row and remained the sought-after choice of the affluent business segment.
Adyar and Perambur clocked a four percent growth in the average capital values each, QoQ. While healthy demand for residential properties pushed average capital values in the posh locale of Adyar, Perambur benefitted from improved market sentiment. Amplified enquiries helped sellers quote higher ‘asks’ in Perambur.
Although the capital values recorded only miniscule changes periodically, average annual rentals grew by three percent in the city. The widespread trend to stay in proximity to employment hubs - IT centers and industrial set-ups, and in affordable locales ensured buoyancy in the rental landscape of micro-markets such as Siruseri, Oragadam, Iyyappanthangal and Ayanavaram. Average rental values in these southern locales grew at the rate of nine percent each, YoY.
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