CHENNAI: Builders across the country have been worried as unsold housing stock have been piling up in the recent months.
Chennai’s unsold housing stock, for instance, has risen from 20,000 units a year ago to 45,000 units now as per a study conducted by international realty consultant Jones Lang LaSalle. Sales have dipped across seven major markets in India in the first quarter of 2013, said JLL chairman and country head Anuj Puri. As against 80,000 apartments sold in the last quarter of 2012, only 65,000 units were sold between January and March this year. A sizeable portion, about 39% of these sales happened in the National Capital Region (NCR). Mumbai accounts for 18%, Bangalore 15%, Chennai 13% and Pune 8%.
The waiting period for unsold inventory in Chennai is the lowest among seven major Indian cities, said Puri. While the average waiting period for a completed apartment to get sold in the country is 15 months, in Chennai it is only 10 months. Hyderabad and Kolkata have a slightly higher waiting period of 12 months, Pune and Gurgaon 14 months and Bangalore 23 months. An average apartment in Mumbai, which has the highest waiting period, gets sold after 34 months of completion. It is this comparatively higher demand for residential apartments that helped Chennai rebound soon after the 2008-09 realty slump, noted Puri.
Differentiating between Chennai city and outlying areas, JLL MD Badal Yagnik said, “While the demand for housing in the core city is quite high even now, it has slowed down in the suburbs.” He attributes the slump in the suburbs partly to an unprecedented glut in supplies and partly to a steep hike in prices, especially on the Old Mahabalipuram Road in a short span of six to nine months. “Until a year ago, apartment price on the OMR was in the region of Rs 4,000 per sq ft. It suddenly went up to Rs 5,500 per sq ft in areas like Sholinganallur and Thoraipakkam, which still lag in good social infrastructure. Naturally, sales dipped”.
About 35% of Chennai suburbs unsold housing stock is on the OMR, said India Property CEO Ganesh Vasudevan. “If investors who have funded the projects find it difficult to exit, the market may crash as it happened in the case of NCR,” he said. Too much concentration by builders on OMR is the bane of Chennai, noted Arun Excello CMD P Suresh. “When so much of development is happening on the OMR, transportation facility and social infrastructure need to be improved manifold.”