Chennai’s real estate market remained under pressure with plummeting sales volume and a limited number of new launches. The city closed the quarter with the sale of 2,620 housing apartments and the addition of 48 new residential projects, amounting to just 10 percent of the total new launches across the top eight metros.
Not surprisingly, the city witnessed a two percent drop in property registrations in the last one year. Kancheepuram and Tiruvallur districts accounted for 45 percent of the total property transactions, owing to their proximity to the IT hubs. South Chennai remained the most active rental market with areas such as Medavakkam and Sholinganallur emerging as the front runners. Popular localities such as Pallavaram, Kodambakkam, Perambur, and Porur, too, witnessed an appreciation of 7-9 percent, each, YoY.
While weak home buying demand and subdued sentiment cloud the market this quarter, infrastructure and policy reforms by the State government may work as Chennai’s realty lifelines. The plan to develop a multi-deck elevated transport corridor along the Old Mahabalipuram Road (OMR) is anticipated to strengthen housing demand in areas such as Siruseri, Perungudi, Thoraipakkam, and Sholinganallur. Further, the development of a Financial City in Sholinganallur is expected to generate more employment in the region, which will eventually lift the residential market, too.
With as many as 8,131 delayed housing units worth Rs 4,474 crore, Chennai’s real estate remained in doldrums. Average weighted prices of residential apartments have been stagnant for many quarters now despite the addition of 2,000 new housing units in Jul-Sep 2019 alone. While residential demand from domestic buyers remained low, Chennai continued to attract investors from across the globe on the back of competitive realty rates compared to other Southern cities - Bangalore and Hyderabad.
Affordable housing continued ruling the roost with nearly 55 percent of the buyers preferring flats priced under Rs 40 lakh. As a result, demand outweighed supply in the category by 15 percent. Areas such as Perungudi, Thalambur and Perumbakkam, which offer a short commute to job hubs and an upmarket lifestyle at an affordable price tag, attracted most buyers.
The average property prices in Perungudi are around Rs 7,000 per sq ft, almost half the rates in Adyar, and significantly lower than in Thiruvanmiyur, where property rates are around Rs 11,100 per sq ft.
Perumbakkam, another affordable housing micro-market located close to Shollinganallur ELCOT SEZ, also magnetised buyers. Property prices here range between Rs 3,700 and Rs 5,100 per sq ft. Porur, Iyappanthangal and Gerugambakkam also emerged as some prominent micro-markets offering ample housing options. Demand for compact 2 BHK units remained high in these areas. Popularly known as employment hubs, Perungalathur, Maraimalai Nagar and Mahindra World City garnered healthy traction from office-goers.
Chennai witnessed the launch of around 48 new housing projects in Jul-Sep 2019 against 33 in the previous quarter. Despite this, price points did not alter due to subdued demand from buyers and growth inhibitors such as political turmoil, sand paucity, regulatory reforms and the catastrophic droughts. The city needs government’s push to fast track infrastructure development around the city including Chennai-Kanyakumari industrial corridor and Chennai-Bangalore industrial corridor-Ponneri node, and the multideck elevated transport corridor.