CHENNAI: The water crisis plaguing Chennai could slow down construction activity by about six to nine months, according to the 11th edition of Knight Frank’s flagship half-yearly report - India Real Estate.The report said the number of residential launches in Chennai increased by 19 pc in the first half of 2019 on the back of the February notification of the Tamil Nadu Combined Development Regulations (TNCDR) and Building Rules, 2019.
The number of residential launches in the period was 7,762, compared to 6,523 in the first half of 2018. The report said 74 per cent of the new launches were in the sub-5 million category.
Joseph Thilak, senior director, Occupier Solutions, Chennai, Knight Frank India, said, “The Chennai residential market is showing modest signs of recovery with considerable growth in launches and a slow but steady momentum in sales.
The ‘right sizing and right pricing’ trend is a reflection of prevalent market needs, mostly the sub-5 mn category, and is a significant boost to the affordable housing segment.” The report said the housing units sold also saw an increase of 5 pc in the first half of 2019 (8,979 from 8,585 in first half of 2018). The sales grew on the back of demand for affordable housing units. Residential prices have corrected by 3 per cent year-on-year in the first half 2019 to Rs 47,110 per square metre (Rs 4,377 per square foot) from Rs 48,567 per square metre (Rs 4,512 per square foot) in the first half of 2018.
Meanwhile, Chennai’s office market witnessed six per cent increase in volume of office space transacted in the first half of 2019 to 0.2 million square metre (1.9 mnsqft) from 0.2 mnsqm (1.8 mnsqft) in the first half of 2018. Increased co-working activity is driving office space absorption in the first half of 2019 and has contributed to the growth in share of the other services sector, from 34 pc in the first half of 2018 to 61 pc in the first half of 2019. However, supply crunch continues as office space completions recorded a 76 pc drop year-on-year in the first half of 2019.
The weighted average rentals remained steady at a modest 3.5 pc year-on-year growth. Stable demand from Chennai occupiers has helped keep vacancy levels steady at 10.2 pc for the first half of 2019. The report also stated that share of IT/ITeS sector’s office space consumption declined to 29 pc in the first half of 2019 after a brief recovery in the second half of 2018 while banking, financial services and insurance (BFSI) sector accounted for only 2 pc of the office space transacted during the period.