CHENNAI: The thumb rule of Demand and Supply is the determining factor for price changes for any commodities – movable or immovable. This is being observed across the globe, especially where buying and selling is done for the purpose of investment or liquidating the same. This is felt more, especially in a very un-organized and un-regulated market like real estate, as this segment has also become a hot and buoyant investment destination these days.
Chennai, a booming metropolis, known for its conservative traditions and predominantly an end-user market in real estate is slowly changing and trying to catch up with other metro destinations like Mumbai-Navi Mumbai, Delhi-NCR, Bangalore and Pune. In the last few years a number of investors are coming to Chennai for real estate shopping. These days, lots of builders and lay-out promoters are trying to showcase their properties as ideal medium to long term investment options in the peripheries and suburbs of Chennai. But the fact remains that a bulk of it are still unsold for obvious reasons.
The recent stagnation in real estate across India has a telling effect in the Chennai realty market too, probably more than its peers and perhaps for some of these reasons:
Chennai market has seen positive growth even during the recession period of 2007-2008. In terms of property prices Chennai was commanding the number one position in South India and prices have been going up unabated, for almost 6-7 years. So, a correction in prices was always expected to happen.
The suburbs especially in the OMR, GST Road and Sriperumbudur belt have been seeing unprecedented supplies and launches of New Projects. But the developmental activities are very slow and snail-paced and have put lots of doubt in the minds of customers.
The prices have been prohibitively high. The moment some new infra projects are announced, the promoters try to cash-in by factoring it in the price, but later it is either shelved or scrapped because of either economical and physical hurdles and hassles or both.
The volatility in Home Loan interest rates is also a contributing factor.
The customers now have a lot of choices. So they are confused too. There are almost 60,000 units available which are either finished or under various stages of development in the OMR belt itself. About 60 per cent of these are unsold. The overall availability, in and around Chennai, could touch about 100 thousand housing units, but only a few are in the affordable segment. There is still a demand for housing units in and around Chennai and this could only go up in the coming years. But most of these are price and location centric (within Greater Chennai).
Some solutions for these problems are:
Speed-up Infra Developmental Activities in suburbs like improvement in the road and transport network, build underground sewerage and water lines and bring quality and affordable hospitals and medical facilities etc.
Build more of smaller sized especially 1 & 2BHK housing units and make them more affordable without any add on costs.
Offer concessional home loans at around 8 per cent per annum and completely do away with other hidden costs like processing fees etc for small sized units of up to 800 sq ft.
Implementation of solutions, more than the realization of the problems is what the need of the hour is.