Chennai’s real estate inventory piles up
CHENNAI: The increasing number of unsold housing stocks which have been piling up within the recent months, has been the apprehensive cause of anxiety for builders across the length and breadth of our country.
In accordance to a study conducted by internationally acclaimed realty consultant Jones Lang LaSalle, the unsold housing stock of Chennai for instance, has elevated to approximately 45,000 units as compared to 20,000 units in the fiscal of 2012. Within the first quarter of 2013, sales have soused across the seven major markets of India.
Adverse to the 80,000 apartments that were sold within the last quarter of 2012, 65,000 units alone were sold within the first quarter of the current fiscal. An enormous portion, roughly 39 per cent of these sales occurred in the National Capital Region (NCR). Bangalore accounts for 15%, Chennai – 13%, Mumbai – 18% and Pune – 8%.
As per real estate specialists, among the seven major Indian cities, the waiting period for unsold inventory within Chennai is the lowest. While the typical waiting period from the completion to the sale date of a completed apartment within the country is fifteen months, in the city of Chennai it averages to 10 months. The cities of Kolkata and Hyderabad have an imperceptibly higher waiting period of twelve months, Gurgaon and Pune observe an average of 14 months while Bangalore sees the sales only after 23 months. In the city of Mumbai, where an average apartment endowed with the highest waiting period, gets sold after an average of 34 months from the date of completion. The real estate sector of Chennai city rebounded expeditiously after the 2008- 2009 realty slump due to this comparatively higher demand for residential apartments.
The demarcating factor between the city of Chennai and its outlying areas, is that while the demand for housing within the core city is relatively high even now, it has comparably reduced within the suburbs. The depreciation in the suburbs can partly be attributed to an unprecedented nimiety in supplies and partly to a declivitous increase in prices, especially on the Old Mahabalipuram Road (OMR) within a short duration of six to nine months.
Just a year ago, prices of apartments constructed on the OMR were in the region of Rs 4,000 per square feet. Which abruptly escalated to Rs 5,500 per square feet within localities such as Sholinganallur and Thoraipakkam, where appropriate social infrastructure is still lagging.
Almost 35 per cent of unsold housing stocks within Chennai’s suburbs are located on the OMR. A market crash similar to the one in the case of Delhi NCR could be inevitable in the event where investors who have funded the projects find it difficult to exit.
The ultimate cause of misery for Chennai’s realty is the focus on OMR by builders both small as well as big. Infrastructure pertaining to transportation and facilitating adequate and appropriate social livability is required to be improved manifold in order to support the heightened development taking place on the OMR.
Besides some traction during the last twelve months, the OMR belt did witness commendable absorption levels for projects launched along certain stretches of this 26 kilometer road. Currently, pricing relative to the location remains the key factor in determining the success of a product.
