Indian residential segment has witnessed around 200% appreciation since the market slump in the year 2008 and this is the reason why the builders are unable to find the buyers who can afford such high capital values. Chennai is also not untouched from the present downturn. The statistical data fetched from the real estate analysts suggest that the number of unsold homes in Chennai stands at 45,000 units. Confederation of Real Estate Developers Association of India (CREDAI), conducted a research, which suggests that the city as well as the fringes of the city have been facing the problem of unsold housing units.
The only relief has been the increased number of enquiries from the non-resident Indians (NRIs), which is up by 40% because of depreciating value of rupee. However, such a situation is still not fruitful because the enquiries are not converting into sales.
Factors affecting the housing market
Lower demands and restricted supplies of projects, delay in project approvals and land acquisition have curtailed the supply of homes in Chennai. The worst hit sectors in Chennai are the low and mid housing segments. As a result, the private builders, who these days are fighting with the increased number of unsold units, mainly meet the supplies of housing. Besides, the new growth corridors and the increased number of industries were expected to push the housing demand in the city, which is not the case in the current market scenario. In a related development, the interest rates on the home loans and a slump in the affordability of residential properties have forced the buyers to postpone their home buying plans and instead go for rental homes.
Booming rental values
No matter what, but the rental segment of Chennai has also been hit. Though the properties are in abundance, still they are unable to attract the tenants owing to increased rates. The rentals have been up by more than 20-30%, suggest the industry sources, resulting the people to shift in the suburban locations of the city to find cheaper accommodation.
Talking about the prices of the properties, the properties in the peripheral locations of Chennai are no less than Rs. 3,000-3,500 per sq. ft. No wonder the demands of rented flats in Chennai have gone up, across all micro markets in Chennai. The new flats having a built area of 1000-1200 sq. ft. are available at no less than Rs. 50 lakh to Rs 1.5 crore and have been able to fetch rentals of Rs. 12,000-20,000. Definitely, the prices totally depend on the location, total size of the properties, and the facilities available.
For rental homes, the suburban areas, which have been higher in demand, are Ambattur, Kolathur, Thoraipakkam, Pallavaram and East Tambaram. Talking about the main localities in the city, more than 50% of the consumers consider looking for rental homes in areas like Chetput, Alwarpet, Abhiramapuram, Raja Annamalaipuram, Besant Nagar and Anna Nagar, for multi-storied flats. The housing units are also available in the price range of 80 thousands -1 lakh, but are unable to attract tenants in the current realty scenario.
The corporate world has also taken a step forward to pressure on the tenant’s pockets by cutting costs such as benefits on housing, and as a result, the employees have found their homes in the suburb and peripheral localities, where they can get better facilities at affordable rates.
Author Bio: Rashmi Karan is a professional writer who writes about the realty industry of India and focuses on offering location-specific information of the cities. She also offers solutions for the real estate related queries.