STA­BLE MAR­KET DOWN SOUTH

Ac­cord­ing to a Knight Frank re­port, the sops an­nounced in the last Bud­get have mit­i­gated neg­a­tive sen­ti­ments in western Chen­nai where a 12-storey build­ing had re­cently col­lapsed

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The Chen­nai res­i­den­tial mar­ket is one of the stead­i­est mar­kets in the coun­try. It proved its re­silience dur­ing one of the tough­est pe­ri­ods in 2008–09, when it re­mained rel­a­tively sta­ble in terms of sales vol­ume and price, as com­pared to ci­ties like Mumbai, NCR, Ben­galuru and Hy­der­abad.

Ad­di­tion­ally, the de­vel­oper com­mu­nity in the city has his­tor­i­cally been cau­tious in its ap­proach to­wards buyer sen­ti­ment, and has time and again re­sisted the temp­ta­tion to in­crease prices sharply, even dur­ing buoy­ant times.

The in­dige­nous de­mand for res­i­den­tial apart­ments kept the Chen­nai res­i­den­tial mar­ket afloat till 2013. The world eco­nomic tur­moil due to the global fi­nan­cial cri­sis com­pleted its fifth year, but head­winds con­tin­ued across the global econ­omy. In­dia and its real es­tate sec­tor were not ex­cep­tions.

After be­ing re­silient to neg­a­tive global fac­tors till 2013, the Chen­nai res­i­den­tial mar­ket suc­cumbed to the de­clin­ing trend phe­nom­e­non.

All ma­jor eco­nomic pa­ram­e­ters, such as bank in­ter­est rates, mort­gage rates and in­fla­tion con­tin­ued their up­ward move­ment, com­pelling con­sumers to post­pone their dis­cre­tionary spend­ing plan, in­clud­ing buy­ing a house, says the Knight Frank re­port.

The cau­tion­ary mood of end-users i s re­flected i n t he vol­ume of t he Chen­nai res­i­den­tial ab­sorp­tion, which re­ported a 35% de­cline in the first half of 2014, as com­pared to the cor­re­spond­ing pe­riod ( first half of 2013) in the pre­vi­ous year.

Tak­ing cog­ni­sance of this trend, the Chen­nai res­i­den­tial de­vel­oper com­mu­nity has pru­dently re­duced the num­ber of new launches dur­ing the last 12 months.

The growth in de­mand for res­i­den­tial units wit­nessed in 2010–2011 boosted the con­fi­dence of Chen­nai de­vel­op­ers and prompted them to launch larger projects.

How­ever, in sub­se­quent years, this trend could not sus­tain it­self, and the an­nual ab­sorp­tion lev­els re­turned to their long- term av­er­ages of 23,000– 25,000 units.

Ab­sorp­tion was not able to keep pace with the num­ber of new launches. This re­sulted in a grad­ual build-up in un­sold inventory.

The de­vel­oper com­mu­nity in Chen­nai has his­tor­i­cally been cau­tious in its ap­proach to­wards buyer sen­ti­ment and has re­sisted the temp­ta­tion to in­crease prices sharply

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