Real estate in Chennai had shown resilience and remained stable in the first half of 2015; it however took a drubbing with the onset of floods in the second half; The later part of 2015 and early 2016 (till May 2016) was a period of uncertainty with the assembly elections scheduled in May 2016 and the market was in the state of ‘wait and watch’. With Amma back with a bang and a clear majority, markets look positive and upbeat; with a forecast of above normal rainfall 2016 could just be the year of revival of real estate in Chennai.
Growth in Real estate market being capital intensive is gauged by hike in the rental segment. The rental growth for 2015 in respect of Chennai is shown in the table below. As is evident from the data, real estate in Chennai has witnessed nil rental growth across all segments; this is the primary reason for a stagnant real estate market in Chennai.
Unfortunately, any stagnation has a cascading affect in the property market; surplus inventory goes up; a cash strapped market is unable to launch new projects; and due to paucity of funds under construction projects get delayed, which further leads to decline in market sentiment. This vicious cycle takes some serious intervention and time to be reversed.
Chennai can be mainly classified into North, East, West and South Chennai from the real estate perspective. The major localities along with their segment domination are given in the table below.
The western region has witnessed limited growth, due to a dull market, whereas the southern region has been able to wade away the negative market sentiment in the last 9 months; the northern and eastern regions have shown stagnation, with very few transactions.
With a stable government in place for the next 5 years and urban development being given a high priority by the central government the Luxury apartments in chennai could look forward to the initiation of a recovery cycle by 4th quarter of 2016.