Chennai Insite Report Oct-Dec 2015

By
2502

  • Share on
Chennai Insite Report_Oct-Dec 2015

City Highlights

Before the real estate market was severely hit by the floods towards the concluding part of the fourth quarter, a few positives such as the AMRUT funding and the smart city project imbued hopes for a better future in the coming year. The city witnessed no upward movement in average capital rates in Oct-Dec 2015 as against the previous quarter.Chennai_Q-o-Q price index

  • Like its other southern counterparts, Chennai’s real estate market held up well against the slowdown that crippled real estate markets in North and West India, until the torrential rains struck. The real estate business is one of the worst-hit sectors in the city.
  • Some of the most impacted locations due to the floods include Anna Nagar, Mylapore, Nungambakkam, Ambattur, Guindy, K K Nagar, Sholinganallur, T. Nagar, Velachery etc.
  • The capital market of the city is on the threshold of a price correction with developers launching new projects at prices lower than current market rates. This kept the average capital values from picking up in the last quarter of 2015 as opposed to what was witnessed in the beginning of the year.
  • Developers who were reluctant to slash prices despite low sales volumes finally let their guards down in Oct-Dec 2015. Those facing a fund crunch launched new projects at prices lower than the existing market rates to enhance cash flow. The central government’s decision to levy taxes on unsold residential buildings also compelled them to reduce rates in order to offload existing inventory.
  • There were some positive developments that are expected to keep the city’s realty market floating post the devastating floods. The Chennai Corporation selected three localities - T Nagar, Sholinganallur and Mylapore for development under the smart city project. This pushed capital rates up in T. Nagar and Mylapore.
  • The infrastructure upgrade announced for Chennai and eight suburbs under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme acted as a moodlifter. The areas selected under the scheme will get funds to improve basic infrastructure services such as water supply, sewerage, storm water drains, transport and development of green spaces and parks.
  • Ambattur, Tiruvottiyur, Alandur, Madhavaram, Pallavaram, Tambaram, Avadi and Kancheepuram are the suburbs nominated under the AMRUT scheme.

Chennai_Key Influencers

Capital Analysis

  • Chennai_Top performers_CapitalAs opposed to the five per cent rise that was noted in the average capital values during the first quarter of 2015, the last quarter of the year ended on a more subdued note. In line with the quarter ending September 2015 , Oct-Dec 2015 too recorded no change in the average capital values of housing units in the city. 
  • Just over 40 per cent of the tracked localities recorded a rise in capital values in Oct-Dec 2015 as against the previous quarter. More than 50 per cent of the localities either recorded a drop in values or the prices remained stagnant.
  • The capital values in T. Nagar grew to the tune of six per cent, the highest in the city during the last quarter of 2015. It is one of the three localities to get nominated for development under the Centre’s smart city project. Mylapore is another location that registered a growth of five per cent in capital values due to the same reason.
  • Proximity to premium localities such as K K Nagar and Anna Nagar and comparatively lower property prices ensured a consistent demand for localities in the western quadrant of the city. These included Virugambakkam, Arcot Road, Porur and Valasarvakkam, where average capital rates grew by four to five per cent in the last quarter of the year.
  • In the last few months, occupancy levels in Oragadam improved with over 2000 families moving in during the last six months, leading to a rise of five per cent in the capital values.
  • Locations that witnessed a negative trend in capital values were either those where the flood created a havoc or where developers were compelled to slash rates due to over-supply. These included Velachery, Sholinganallur, Siruseri and Navalur.

Rental Analysis

  • Chennai_top performers_rentThe rental market of Chennai was driven by the age of the property and the facilities offered in the project and not by the location of the property. The tenant community largely looked for new properties in gated societies and seemed willing to move slightly away from the city center for the same. 
  • Pallikaranai, where a lot of new inventory has been added in the last six months, garnered high demand from tenants. This meant a rise of 15 per cent in rental values in the last one year (Oct-Dec 2015 vs. Oct-Dec 2014).
  • Proximity to the IT hubs of OMR and lower rentals as compared to Velachery, the most preferred residential destination near OMR, helped Pallikaranai grow as a preferred destination among tenants.
  • Price competitiveness kept rental demand high in Madipakkam and Valasaravakkam. The localities clocked an average rise of seven to eight per cent each in the year-on-year rental values.
  • Nungambakkam recorded a significant rise of 11 per cent in rental values since Oct-Dec 2014. Commercial market in the city has been witnessing an upward trend in the last one year. Nungambakkam, being the central business district (CBD), reaped a lot of demand for commercial space. This infused demand for residential units as well.
  • Rental values in Navalur, a suburban locality, surged up by seven per cent in the last one year owing to the presence of a few premium projects. This is not a commonly observed trend in peripheral areas. The recent project deliveries in the segment ensured high rentals in the locality.

Supply Analysis

As observed in Jul-Sep 2015, the last quarter of 2015 also witnessed a cumulative availability of ready residential units in the market, indicating a slow rate of absorption. Buyers’ growing preference for better amenities within a limited budget ensured that apartments in the price bracket of Rs 40-60 lakh continued to rule the roost.

Availability of Different Property Types

  • The preference for value-for-money homes that offer better security and more amenities shifted demand towards society apartments in Chennai over the last decade or so. Thus, the segment now captures almost 70 per cent of the market share in the city. Chennai_Property Type
  • South Chennai had the highest share of apartments in the city, a factor experts believe has resulted in their over-supply, restricting the growth of average capital values in the zone.
  • End-user demand coupled with limited sales volume forced developers to keep the ticket size of their offerings within Rs 25-60 lakh. Thus, nearly 60 per cent of the apartments in the city were priced within this range. The Chennai residential market is flooded with 2BHK units, reclaiming the trend.
  • Even though, demand for apartments has surpassed the demand for independent homes, the category still forms more than 20 per cent of the total residential stock in the city. However, most of the available inventory was concentrated in the re-sale market as nearly 70 per cent of the supply was ready-to-move.
  • Saturation in South and Central Chennai propelled residential development towards the North almost two years back. North Chennai offered the second highest supply of both apartments as well as independent houses in the city.

Availability of Property by Budget

  • Due to the ever-dwindling demand for luxury properties in the city, developers focused on building mid and highincome housing largely priced at Rs 25-60 lakh. The two categories together formed more than 50 per cent of the total residential inventory in the city.
  • Most of the units that were priced between Rs 25 and 60 lakh were configured as 2BHK units. Chennai_Budget
  • In the last one year or so, the western part of the city endorsed burgeoning real estate activity as buyers actively looked out for investments in the micro-markets of Porur and Virugambakkam. Developers catered to this demand by offering units in the Rs 25-60 lakh category, making West Chennai the largest contributor of homes in the mid and high-income segments in the city in the last quarter of 2015.
  • The supply of luxury (Rs 60 lakh-1 crore) and ultra-luxury properties (Rs 1-5 crore) noted a negative trajectory as developers restrained from building these units due to depleting traction. Central Chennai, due to the presence of large number of re-sale properties, had the maximum availability (over 60 per cent) of properties in the luxury and ultra-luxury categories.
  • A rise of three per cent in supply of affordable units (priced below Rs 25 lakh) was witnessed in Oct-Dec 2015 quarter as against the previous one. This may be attributed to the fact that developers have been slashing prices of their projects by 15-25 per cent in the city. The budget category offered almost equal supply of 1 and 2BHK units, together forming more than 80 per cent of the market share.

 BHK-wise Distribution of Property

  • Supply of all configurations - 1, 2, 3 and 4BHK remained almost unchanged in the last six months with only minor variations. Even though the 2BHK category recorded a nominal dip in supply in the quarter ending December 2015, the category continued to capture more than half of the total market share. Chennai_BHK
  • Nearly 80 per cent of the total 2BHK units in the city were available in societies and were largely priced at Rs 25-40 lakh. A large number of these units were also available in the price bracket of Rs 40-60 lakh, depicting the developers’ intent of targeting the young and middle aged IT crowd, opine experts.
  • The 3BHK category was the second most supplied in the city with more than one-fourth of the total market share. Almost one-third of these units were priced between Rs 60 lakh and Rs 1 crore, while a quarter of these were available in the price bracket of Rs 40-60 lakh. Prime residential stretches such as OMR and GST offered the maximum supply of these units.
  • The supply of 1 and 4BHK units remained subdued across the city. More than 60 per cent of the 4BHK units were available as independent villas or houses, which were largely priced over Rs 1 crore.

 Ready to move in vs Under-construction

  • Chennai_ready to move vs under constructionThe year 2015 saw a steady supply of ready units in the market as compared to under-construction units. The last quarter of the year was no different with almost two-third of the total residential stock in the city being ready to move. 
  • This validates that the developers consciously held back new launches in a bid to offload their ready stock. In addition to this, heavy discounts and freebies were offered to expedite the sale of existing inventory.
  • Builder floor units had the maximum percentage of ready units as compared to any other property type, clearly indicating a lack of new launches in the segment.
  • Out of the total residential stock in the city, the 2BHK category had the highest share of ready units (68 per cent) while 3 and 4BHK categories recorded the maximum share of under-construction properties.
  • Properties in the price bracket of Rs 60 lakh to Rs 1 crore recorded the highest supply of ready-to-move units with more than 70 per cent market share.

 

Annexures

Capital Values

Locality

Oct-Dec 2015

% Change

 

Capital Values

Locality

Oct-Dec 2015

% Change

 

 

Adambakkam

6300

-3

 

Pammal

4500

-3

Adyar

13200

1

Perambur

5500

-3

Ambattur

4000

-4

Perumbakkam

4250

0

Anna Nagar

8000

1

Perungalathur

3500

-4

Arcot Road

7000

4

Perungudi

6100

2

Ashok Nagar

9000

1

Poonamallee

4200

5

Avadi

3450

0

Porur

4950

4

Besant Nagar

15000

3

Rajakilpakkam

4650

0

Choolaimedu

7800

2

RA Puram

15350

3

Chromepet

4950

-3

Saidapet

7900

3

ECR

6100

2

Saligramam

8800

2

Egattur

7350

-2

Selaiyur

5000

0

Gerugambakkam

4200

-5

Sholinganallur

4700

-2

GST Road

4400

-2

Siruseri

4450

-2

Guduvancheri

3400

3

Sithalapakkam

3900

4

Guindy

7950

0

T. Nagar

11100

6

Hastinapuram

5000

-5

Tambaram

4500

0

Iyyappanthangal

4200

-2

Tambaram (East)

5300

2

Karapakkam

5850

-4

Thiruporur

3700

0

Kattupakkam

4350

-3

Thiruvanmiyur

10800

-4

Keelkattalai

5300

0

Thoraipakkam

6400

3

Kelambakkam

3450

-4

Urapakkam

3500

-1

Kilpauk

11600

-3

Vadapalani

8500

5

K K Nagar

7500

1%

Valasaravakkam

6250

4

Kodambakkam

8050

2

Vandalur

3850

1

Kolapakkam

4500

-4

Vandalur-

Kelambakkam Road

3600

-4

Kolathur

5400

-1

Velachery

6750

-4

Korattur

6450

-2

Vengaivasal

4250

0

Kotturpuram

17000

1

Virugambakkam

7000

5

Kovilambakkam

4600

0

 

 

 

Kovur

4150

0

Rental Values

Locality

Oct-Dec 2015

% Change

 

Koyambedu

6500

3

 

Adyar

24

-4

Kundrathur

3800

0

Alwarpet

35

6

Madambakkam

3800

-5

Anna Nagar

22

0

Madanandapuram

4600

-8

Arcot Road

18

6

Madhavaram

4300

2

Ashok Nagar

21

5

Madipakkam

5100

1

Chromepet

13

-8

Mambalam (West)

8600

4

Guduvancheri

9

11

Manapakkam

5750

-7

KK Nagar

18

-6

Maraimalai Nagar

3500

0

Kilpauk

22

0

Medavakkam

4600

0

Madipakkam

12

8

Mogappair (West)

5800

-2

Medavakkam

11

0

Mudichur

3650

-6

Navalur

15

7

Mugalivakkam

5500

4

Nungambakkam

27

11

Mylapore

13100

5

Pallikaranai

13

15

Nanganallur

8000

0

Porur

14

-7

Nanmangalam

4300

2

Pudupakkam

8

13

Navalur

4300

1

RA Puram

32

6

Nungambakkam

11500

0

T Nagar

24

4

OMR

4600

5

Thoraipakkam

16

-6

Oragadam

4000

5

Urapakkam

11

9

Padur

4100

1

Valasaravakkam

14

7

Pallavaram

5250

-1

Vandalur- Kelambakkam Road

9

11

Pallikaranai

5100

1

 

 

 

*All prices are per sq ft rates
*Capital values represent quarterly change
*Rental values represent yearly change


Copyright 99acres.com


  • Share on
Rate it 1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...Loading...