40,000 homes remain unsold as prices of Chennai properties skyrocket

C Shivakumar

Chennai:

Chennai has around 40,000 units of unsold homes and around 10 months of its inventory is unsold due to sudden spurt in the real estate prices, according to Jones Lang LaSalle, a global real estate firm.

Interestingly, the news may be bad for the city’s developers but then they have something to cheer about as a study done by Jones Lang LaSalle ha sstated that the city has the lowest unsold investory when compared to other cities.

Anuj Puri, chairman and country head of Jones Lang LaSalle, said that a study conducted by his firm states the city has a 10 month of unsold inventory when compared with cities like Gurgaon (14 months), Hyderabad (12 months), Kolkata (12 months), Pune (14 months), Mumbai (34 months) and  Bangalore (23 months).

“The inventory is lowest when compared to other cities,” he added.

Interestingly, the unsold inventory was hovering around 25,000 units in the first half of 2012 but then in the last six to nine months it rose to 40,000 units.

He said that the lull in sales of residential properties is attributed 15 to 20 per cent increase in capital values over the last six months, which in turn has caused prospective home buyers to delay their purchase decisions.

Moreover, the anticipation of interest rate cuts further into the year and home buyers expectations on price stability has reduced sales velocity, said Puri.

Badal Yagnik, Managing Director - Chennai, Jones Lang LaSalle India, said that the preference to the projects closer to the city has been the trend as developers at faroff locations promote their products through innovative financing schemes, discounts and freebies. “Developers brought around Rs 1,500 crore worth of prime land parcels in Chennai during the last six months which develops developers’ confidence in the city’s residential market.

Earlier,  Alastair Hughes, chief executive officer of Asia Pacific said that the prices of residential properties have gone up as people are now investing in properties rather than the stock exchange as they consider it a safe bet during the inflation. However, India and particularly Chennai is a price sensitive market unlike the far-east markets, said Puri on the rise of unsold inventory in India.

With major infrastructure projects such as the metro rail, Phase III of MRTS from velachery to st Thomas Mount and the Outer Ring Road appearing closer to reality, rapid capital value appreciation is estimated across the city. Furthermore, the proposed monorail, prepherial Ring Road project, Greenfield Chennai-Bangalore Expressway and the new Greenfield airport is also triggering capital appreciation in these locations.