Upmarket localities see spurt in projects

The number of residential units launched in central Chennai seems to have increased in the first half of the year (H1-2016). According to the India Real Estate (Residential and office) report for January-June 2016 released recently by Knight Frank, 160 units were launched in central Chennai during H12015, the number went up to 235 in H2-2015 and in H1-2016 it touched 1,615. 

Kanchana Krishnan, Director (Chennai), Knight Frank India says, the Chennai market had a significantly larger appetite for premium residential products. The increasing redevelopment of bungalows in central locations and the dearth of lifestyle residential products have been the strong drivers for this segment. 

“The shortage of developable land and high prices prevent sizeable development activity in central Chennai. But it remains to be the most sought-after residential micro market for high net worth individuals (HNIs) in the city. Central Chennai generally has premium housing,” she said. Krishnan says the Chennai residential market was stabilising as home sales had improved a bit alongside a slowdown in new launches. 

“While the overall markets witnessed a dip in new launches, the premium segment has interestingly bucked the overall market trend and seen a spurt in supply during H1 2016. Prices in this segment have increased 42 per cent since H1 2013 compared to the overall residential market which was at 11 per cent. Positive economic scenario and steady demand have encouraged developers to increase the supply in this micro market,” she added. 

With a word of caution, the director said that this market would face increasing pressure as the quarter to sell sees a steep rise. “Traditionally, the premium segment quarterto-sell (QTS) has done better than the overall market but the sluggishness of sales in recent years has pushed QTS levels above the overall market. Also delayed project timelines have dampened the stakeholders’ confidence and curbed price appreciation in certain pockets in central Chennai,” Krishnan said. 

Commenting on the trend, President of Confederation of Real Estate Developers’ Association of India (Credai), Chennai, Suresh Krishn said that developers had launched few big projects with more units in central Chennai this year, which reflects in the increase in number of units launched in the area. “These projects in the luxury segment were planned long ago and were launched in H1-2016. Being in the heart of the city, central Chennai has good connectivity and also has proximity to various places. This is the area where people look at apartments in the price range of Rs 2 crore,” he said.