State revises FSI for residential buildings
The Tamil Nadu government revised the Floor Space Index (FSI) for all residential multistorey buildings from 2.5 to 3.25, which can further be increased to a maximum of 3.62 on paying a premium. The FSI for ordinary residential buildings has also been increased from 1.5 to 2. The move is anticipated to propel housing development in the State.
Chennai Metro Phase II receives a shot in its arm
The development of Chennai Metro Phase II overcame a major hurdle with the Centre allowing the use of foreign-made components. The project will span across 108 km and have 116 stations. Additionally, Chennai Metro Phase I is expected to be completed in the next two months. Its commencement will bolster real estate sentiment across connected locations.
Inefficient RERA implementation mars realty growth
With just 840 projects registered till December 2018, Tamil Nadu Real Estate (Regulation and Development) Authority (TNRERA) emerged as one of the most inefficiently working regulatory authorities in the country. Moreover, the State still needs to appoint a permanent Chairman. The tardy implementation of RERA is expected to strip the homebuyers of the gains and protection guaranteed under the Act.
State proposes to mandate pattas for property registration
With an intent to curb property scams, the State government proposed making pattas mandatory for property registrations in Tamil Nadu. The move is anticipated to benefit both the buyer and the seller community along with making the property registration process transparent and secure.
Chennai’s realty market remained subdued in the Oct-Dec 2018 quarter. With apparently no new launches, the city failed to report any significant improvement in the number of enquiries or the sales volume, which unquestionably remained truncated in the last quarter of 2018. There was a negligible increase in the property prices and the developers, taking cognizance of the prolonged slowdown in the market, continued to focus more on clearing out the existing inventory, hence keeping a lid on the number of new launches. This led to a decline in the number of unsold inventory during the quarter, which now stands at around 30,000 units.
There was no progress towards any infrastructure projects in the quarter and therefore, resurgence of the market remained a far cry for real estate in Chennai. Despite all the odds, the market attested the homebuyer’s affinity for affordable housing units, priced below Rs 30 lakh.
While the developers continued to struggle with the policy overhauls, the month of Margazhi marred the demand for residential units further. Going ahead, factors such as the upcoming metro between DMS – Washermenpet, end of Margazhi by the mid of January and discounts offered by the developer community on the occasion of New Year are likely to improve demand and sales velocity in the ensuing quarters.
Impaired by the massive structural reforms starting from demonetisation to Goods and Services Tax (GST), Real Estate (Regulation and Development) Act (RERA), 2016 and other political factors, new launches and the sales volume remained almost equivalent to the figures of the previous quarter. However, notwithstanding the slow-pace of revival in the market, affordably priced units continued to garner maximum traction from the homebuyer community.
The property market in Chennai continued to trudge this quarter, exhibiting modest recovery from the turbulence of the regulatory reforms. There was a rock-bottom increase of one percent in the average property prices in Oct-Dec 2018, and nearly 50 percent of the tracked housing localities reported an uptick in the capital values.
Braving the tide, localities such as Iyyappanthangal, Sembakkam, Gerugambakkam and Oragadam topped the charts, exhibiting a hike of four percent each in the capital prices, QoQ. Dotted with a wide range of residential projects, ranging from affordable to mid-segment housing units, the localities succeeded well in luring the homebuyers. Accessibility and smooth connectivity to other parts of the city also worked well in favour of these housing pockets.
Situated in proximity to the industrial zones and the IT corridor of Chennai, Siruseri is an economically feasible choice for the homebuyers. Consequently, the locality recorded a growth of three percent in the present quarter, mirrored by Pallavaram in the South, QoQ. Well-connected to the neighbouring areas of Madipakkam, Medavakkam, Velachery, and Perungudi along with Old Mahabalipuram Road (OMR) and East Coast Road (ECR), Pallavaram is home to a large working populace. Dynamic job market, presence of ample housing options, and upcoming infrastructural developments such as the IT Park, makes Pallavaram an attractive property destination for the end-users.
The rental market in Chennai narrated a merrier tale in comparison to the capital market. Average rentals in the city registered a growth of two percent, YoY. Owing to the presence of corporate offices in its vicinity, adequate social infrastructure and robust connectivity to prime locales, Guduvancheri, clocked a growth of eleven percent in Oct-Dec 2018, followed by Pammal in South with a hike rate of ten percent. Popular localities such as Medavakkam and Madipakkam, too, reported an upsurge of four percent each, YoY, during the quarter ending December 2018.
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