Recovering from the demonetization effect in H1 2017, Chennai’s residential market has launched nearly 5,300 residential units’ showing a rise of 19% from H2 2016. Out of this 33% were concentrated in peripheral locations of the city’s south quadrant along Old Mahabalipuram Road (OMR), Grand Southern Trunk (GST) and East Coast Road (ECR). 70% of the total launches were from the reputed developers belonging to the mid-market category with small developers remained watchful. The data is based on the recent research by Colliers – India Residential Property Market Overview.
“RERA has acted as a catalyst for the much-needed consolidation in the industry particularly the Chennai market. It is expected that this will bring better funding into the industry thus tackling supply side issues including timely delivery. With the overall health of the real estate industry improving, it will also result in the increased flow of funds from foreign institutional investors in South as well as, in the rest of the country,” said Vineet Relia, Managing Director, SARE Homes.
The developers completed their projects on time and cleared their listing projects too. After RERA, the market is expected to witness the exit or consolidation of small builders and fly-by-night developers while the organized developers benefit from the improved buyer sentiment brought by RERA. In H1 2017 capital values remained constant across the micro markets, only 3-4% plunged in off central location. The stability is expected to continue in the following quarters also.
It is expected that there will be an improvement in the metro corridor and the prices will remain stable this year as both the developers and buyers are cautious in the post –RERA market scenario. Rents are set to increase in south micro market by 5-10% in next one year owing to growing demand from the Information Technology (IT) sector population
It is expected that an increment in the price of building materials like sand and cement is likely to delay the construction activities. Affordable housing projects are likely to gain traction. In support of the central government’s ‘Housing for All’ vision, the state government of Tamil Nadu granted various incentives and announced development plans for affordable housing in H1 2017. One such significant incentive is a 15-50% higher Floor Space Index (FSI) for apartment projects in size ranging between 40 sq m and 70 sq m catering to the EWS, LIG and MIG segments. The Tamil Nadu Housing and Urban Development Ministry has announced that the state will construct 0.3 million houses for the urban poor under the Pradhan Mantri Awas Yojana (PMAY) – Housing for All (Urban) in 2017-18. The state level incentives along with infrastructure status to affordable housing will attract more private participation in this sector.
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