Recovering from the demonetisation effect in H12017, Chennai’s residential market has launched nearly 5,300 residential units’ showing a rise of 19 per cent from H22016. Out of this 33 per cent were concentrated in peripheral locations of the city's south quadrant along Old Mahabalipuram Road (OMR), Grand Southern Trunk (GST) and East Coast Road (ECR). Seventy per cent of the total launches were from the reputed developers belonging to the mid-market category with small developers remained watchful. The data is based upon the recent research by Colliers - India Residential Property Market Overview.
“RERA has acted as a catalyst for the much-needed consolidation in the industry particularly the Chennai market. It is expected that this will bring better funding into the industry thus tackling supply side issues including timely delivery. With the overall health of the real estate industry improving, it will also result in increased flow of funds from foreign institutional investors in South as well as, in the rest of the country,” says Vineet Relia, Managing Director, SARE Homes.
The developers completed their projects on time and cleared their listing projects too. After RERA, the market is expected to witness the exit or consolidation of small builders and fly-by-night developers while the organised developers benefit from the improved buyer sentiment brought by RERA. In H12017 capital values remained constant across the micro markets, only 3-4 per cent plunged in off central location. The stability is expected to continue in the following quarters also.
It is expected that there will be an improvement in the metro corridor and the prices will remain stable this year as both the developers and buyers are cautions in the post-RERA market scenario. Rents are set to increase in south micro market by 5-10 per cent in next one year owing to growing demand from the Information Technology (IT) sector population.
It is expected that an increment in the price of building materials like sand and cement are likely to delay the construction activities. Affordable housing projects are likely to gain traction. In support of the central government's ‘Housing for All’ vision, the Government of Tamil Nadu granted various incentives and announced development plans for affordable housing in H12017. One such significant incentive is a 15-50 per cent higher Floor Space Index (FSI) for apartment projects in size ranging between 40 sq m and 70 sq m catering to the EWS, LIG and MIG segments. The Tamil Nadu Housing and Urban Development Ministry has announced that the state will construct 0.3 million houses for the urban poor under the Pradhan Mantri Awas Yojana (PMAY) - Housing for All (Urban) in 2017-18. The state level incentives along with infrastructure status to affordable housing will attract more private participation in this sector.
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