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For the first time in this decade, in 2017, residential launches in Chennai dropped below 10,000 units due to demonetisation and GST coupled with concerns over job security in the IT/ITeS sector and ambiguity over Real Estate (Regulation and Development) Act, 2016 (RERA), which took effect on May 1, 2017.
Annual home launches dropped by 13 per cent to 9,200 units in 2017 as against 10,615 units in the previous year. In the second half of 2017, only 3,200 new homes were launched, which was 33 per cent drop when compared with a year ago, said Kanchana Krishnan, Director - Chennai, Knight Frank LLP, a London-based property consultancy firm.
Political instability, recurring natural calamities and overall gloom in market sentiment stagnated signs of recovery noticed in the first half of 2017.
Buyers’ marketIt is now the buyers’ market and the most opportune time for home buyers who can negotiate and get great deals. Developers were focussed on offloading existing inventories in the second half by re-launching old products at lower prices and smaller configurations wherever possible. This resulted in reduction in average ‘asking’ price by 3 per cent year-on-year, she said.
Share of launches in the less than ₹5 crore bracket increased by 68 per cent. The highest share of launches was witnessed in the ₹25 lakh to ₹50 lakh bracket, she said giving a synopsis of Knight Frank’s Chennai real estate report.
Commercial marketChennai’s office market too witnessed a gloom with transactions of 2.6 million sq ft in the second half, which was down 17 per cent year-on-year. This space continued to be plagued by acute shortage of viable and good quality office stock, she said.
Share of IT/ITeS sector, which is the largest consumer of office space in Chennai, nearly halved from 43 per cent in the second half of 2016 to 25 per cent in the same period of 2017. BFSI and other services, including e-commerce and co-working sector, almost doubled their share of absorption with the latter accounting for nearly 1 million sq ft of total space transacted in the second half of 2017, she said.
On real estate trends across India, she said home launches in 2017 plummeted 78 per cent from the peak of 2010. Volume of new projects entering the market in the second half of 2017 stood at around one-fourth of the supply levels witnessed in 2015.
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