CHENNAI: After the downturn in the second half of last year, the residential realty market in Chennai is gradually limping back onto the path of recovery, said international property consultant Knight Frank.
The residential sector in Chennai had a 4% growth in the number of launches, which, while modest, is a better scenario compared to the top seven cities in the country, said a report by the firm that was released here on Wednesday.
The number of residential launches in the first half of 2017 stood at 6,035, a single digit growth from 5,815 units launched during the corresponding period last year. However, this had dropped to 4,800 in the second half of last year, making this small rise a significant recovery.
This is significant when compared to cities like Mumbai, National Capital Region, Bengaluru, Pune, Hyderabad, Kolkata and Ahmedabad where the residential launches have failed to outgrow the growth experienced in the first half of 2016.
Sales, too, recorded a rise — from 8,450 residential units in the first half of 2016 to 8,850 units this year so far.
A look at the numbers reveals that this growth was fuelled by affordable homes. According to Kanchana Krishnan, director of Knight Frank India, Chennai, a majority of the new launches this year were priced below `50 lakh. “This indicates the shift in the developers’ focus, who are considering affordable housing projects.”
Among areas in the city that saw the maximum development were Pallavaram, Mahindra World City, Siruseri, Pudupakkam, Navalur, Thalambur and Sholinganallur in south Chennai. This was due to the proximity to office hubs, well-rounded social infrastructure and also because they were affordable, she added.
Interestingly, south Chennai also has the highest inventory of unsold residential units. Of the 28,110 unsold units in the city, south Chennai alone has 16,642 units. However, the overall unsold inventory in the city has fallen by about 30% in the last two years, Kanchana added.
The office space, on the other hand, is facing a supply crunch in Chennai, that has resulted in a hike in rentals. For instance, the Old Mahabalipuram Road business district saw a rental growth of 8%.
Despite the 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, compared to 12.2 million square feet of transacted office space,” Kanchana said.
Overall, the year has not lifted the gloom surrounding the housing sector in the eight cities where the residential price index remained low.