Residential realty crawls to normalcy

Sales volume was similarly down by 11 pc YOY, being the lowest first-half sales in the past five years. The residential market had barely come out of the demonetisation shock when the need for RERA compliance put breaks on new projects. But, things are starting to look up in Chennai. 

Kanchana Krishnan, Director, Chennai, Knight Frank India said, “The year began on a positive note with sales and launches seeing a modest bounce back. The 14 pc growth in sales during H1 2017 compared to the preceding period indicates the impact of demonetisation. Increasing commercial office space demand is a good indicator for employment growth in any region and points at increasing incomes and a consequent requirement of new housing units for the growing workforce. The ticket size split of units launched since H1 2016 depicts a strong supply-side response to the changing tastes of consumers as developers have progressively increased launches in lower ticket sizes over the past three periods.” 

She added, “While the city’s residential market has overcome the demonetisation gloom, it remains to be seen if the current bounce is the beginning to a more sustained recovery. The Chennai office space market could not maintain the momentum in transactions it had gained over the last three analysis periods that culminated with H2 2016 experiencing the highest transaction volumes in history.” 

Paucity of quality office space caused the current period to witness a drop in transaction activity with H1 2017 recording 1.9 mn sq ft of transactions while only 1.1 mn sq ft of new office space came online. While the IT/ITeS sector continues to be the largest consumer in the Chennai office space market, the market has seen a rise in share from BFSI and other services sectors. However, the share of IT/ITeS and manufacturing sectors has dipped in H1 2017 since most built-to-suit deals are scheduled for 2019, she said.

A significant chunk of new launches took place below the Rs 50 lakh bracket – indicating an emphasis on the affordable housing.

Pallavaram, Mahindra World City, Siruseri, Pudupakkam, Navalur, Thalambur and Sholinganallur in South saw max developments. 

Southern and western Chennai together accounted for a massive 96 pc of the residential products coming online during H1 2017.

Unsold inventory levels plummeted 30 pc over the last 2 years to 28,110 units

Vacancy levels plummet to 10.8 pc in H1 2017 due to low supply of quality spaces. 

The IT/ITeS sector continues to be the largest consumer in the Chennai office space market and accounted for 0.7 mn sq ft of office space transactions in H1 2017. 

OMR attracted 55 pc of the demand  during H1 2017 as occupiers took up space  in lower priced SBD OMR, PBD OMR and GST biz districts. 

Rentals grew by 6 pc during H1 2017. The PBD OMR business district saw the strongest rental growth at 8 pc