Chennai’s residential market witness 4pc growth in launches

CHENNAI:

Chennai’s residential market in realty sector is witnessing a four per cent growth in launches when compared with top seven cities across the country, according to International property consultant Knight Frank.

The report states that residential launches in the city which dipped from 5,815 in the first half of 2016 to 4,800 units in second half has shot up to 6,035, a gowth of 4pc.

This is significant when compared with cities like Mumbai, National Capital Region, Bengaluru, Pune, Hyderabad, Kolkatta and Ahmedabad where in the residential launches have failed to outgrow the growth experienced in first half of 2016.

Even the sales in Chennai residential market has picked up when compared with the residential market in six other other cities. As per figures available in the report, residential sales in Pune has gone up from 15,688 units in the first half of last year to 17,480 units this year. The sale of residential units in Chennai had gone up from 8,450 during the first half of last year to 8,850 units in the first half of this year.

Kanchana says that majority of the new launches that took place during the first half of this year was below Rs 50 lakh. “This indicates the shift in the focus of developer who is now cosidering affordable housing projects,” she added.

She said that Pallavaram, Mahindra World city, Siruseri, Pudupakkam, Navalur, Thalambur and Sholinganallur in South Chennai saw maximum development. This was due to proximity to office hubs, well rounded social infrastructure and lastly they were affordable.

Interestingly, South Chennai also has the highest inventory of unsold residential units. As per statistics, the city has 28,110 unsold units of which South Chennai alone has 16,642 unsold units. Kanchana said that the unsold inventory in the city has currently fallen by 30pc during the last two years.

Interestingly, Chennai’s office space is also facing a supply crunch as a result rentals have increased significantly. Kanchana says that Old Mahabalipuram Road business district saw a rental growth of eight per cent.

Despite, new completion of office space projects nearly tripling year on year, it is much below the market appetite. “The supply of office space is 3.7 million square feet of office space when compared to 12.2 million of transcated office space,” says Kanchana.

The vacancy level in OMR during 2015, which was once 50pc has nearly halved. Similarly, OMR witnessed 55pc of transacted office space during first half of 2017 with occupiers taking up space in relatively lower priced business pockets.

Overall the year had continued to be gloomier for the realty housing sector in the eight cities with the residential price index being lower than the price index.

Factfile:

--A significant chunk of new launches took place below INR 50 lakh – indicating an emphasis on the affordable housing sector

-- The share of projects launched with an average ticket size under INR`50 lakh has expanded from 39% in H1 2016 to 69% in H1 2017, while the share of those projects with average ticket sizes under INR75 lakh has grown from 52% to 89% during the same period

-- Pallavaram, Mahindra World City, Siruseri, Pudupakkam, Navalur, Thalambur and Shollinganallur in South saw maximum developments

-- Southern and western Chennai together accounted for a massive 96% of the residential products coming online during H1 2017

--- Unsold inventory levels have plummeted nearly 30% over the last 2 years to 28,110 unit

-- Residential price growth has been weakening in the Chennai residential market and H1 2017 prices were in line with this trend, growing by a modest 1% YoY