Chennai real estate in 2013: Challenges and Yields
Chennai is any developer’s choice who is expecting a fast return. This is due to the appreciating price of the residential units. One of the main feature of real estate market in Chennai is its stable price trend. The past few years the micro markets in the city didn’t have any abrupt huge fall in prices. There is a gradual price appreciation throughout all the quarters of the year in most of the micro markets.
The Challenges:
Chennai faced several challenges in the year 2013. Lack of workers, Shortage of building materials, Cost of Labour and Unskilled workers and numerous other shotcomings were laid in the paths of real estate advancements. One of the main Crisis chennai faced is the rise of price of Sand.. There is a huge demand for sand still in Chennai. The price has gone over double what it was few months ago. These throttle the development of the real estate market. All this leads to the escalating of price of the apartments.
Affordability:
The prices of apartments have escalated to an extent where the salary of an individual is not enough to afford it. To compensate this apartment sizes shrunk lowering all the expectation. The developers offered discount and ten percent upfront payment while rest in the later period for marketing strategies. None of these helped in the increasing the sales. The sales of apartments keept depreciating. Yet small developers remain unaffected by this dip. The medium and large scale developers are still trying to make up for the loss and make the units affordable for the end users by reducing the size of the apartments.
New rules and its impact:
The new rule that came into existence in October 2013 was also least favourable towards the developers. It required 2% additional registration fees increasing the overall cost of the residential unit more. The buyers have to pay 1% of stamp duty and 1% of construction cost adding to the 8% of registration fee. The lack of infrastructure in the suburbs are also another reason for the slack of sales.
Reader’s take:
To summarize, Every developer is proceeding cautiously over new projects to avoid incurring any loss. Even though the price seems to appreciate considerably the overpriced raw materials and the slack of sales are still being a negative impact. Apart from this the micro markets still see positive price appreciations.
The infrastructure in the suburbs is on the development phase and seeing a rapid development pace by the steps taken by the Chennai corporation. People still invest in this region due to the proximity to the IT hubs and hoping the infrastructure will develop soon faster. Hence there is still a heavy demand which is the main reason for the price appreciation. As a conclusion investing on an already built apartment is a better choice than buildings that are being built which has a fluctuating rates at this point.
