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CHENNAI RESIDENTIAL MARKET UPDATE APRIL - JUNE 2020

Market Sentiment INSITE acres ’s No.1 Property Portal

FROM CBO’S DESK

A drastic drop in the number of new providing some relief from the residential launches and poor sales volume COVID-19-induced crisis. After some defined the ‘real’ story of residential setbacks, the traffic and responses on realty across metro cities in Apr-Jun 2020. 99acres returned to pre-COVID levels by Shortage of construction workers, liquidity the end of June 2020. A survey by 99acres constraints faced by developers and the revealed that 75 percent of its registered withdrawal of homebuyers impacted market buyers now prefer shortlisting or buying sentiment adversely. a property through real estate portals. Further, 60 percent of the participants Delhi NCR, Mumbai and Hyderabad lost averred that they would prefer undertaking the largest share of new launches and a virtual tour before physically visiting the reported a dip of 80-95 percent, each, project site. QoQ. Cumulatively, the period witnessed an addition of a mere 1,400 units in the Nonetheless, to witness a complete revival, top eight metros. The ensuing credit the industry would need more support from crunch with both buyers and developers the Centre beyond measures such as home is expected to shrink housing sales from loan moratorium and declaring COVID-19 as four lakh units in 2019-20 to 2.8 lakh units a Force Majeure event to witness revival. in 2020-21. While all metro cities reported status quo in average weighted capital prices, experts foresee average ‘asks’ in the resale segment dipping by an average of 10-15 percent in the months to come. To sustain businesses, several developers Maneesh Upadhyaya underwent digital transformation with Chief Business Officer virtual project launches and e-site visits 99acres.com COVID-19 AND NATIONAL REAL ESTATE OUTLOOK

HOME BUYING SENTIMENT Home buying sentiment remained muted during April due to the nationwide lockdown; with enquiries picking up slight pace in June. Genuine homebuyers flocked the market looking for attractive schemes and discounts. NRI demand, too, resurged, with some conversions in the mid-income housing bracket across cities. IMPACT ON INDUSTRY The COVID-19 crisis disrupted the supply chain of realty raw materials, and led to reverse migration of labourers and fund constraints PROPERTY PRICES at developers’ end. The sector went through a major digital While the negotiation window widened up to 10-15 percent transformation as developers shifted online to market their projects across budget segments, any actual correction in prices was and engage with customers, and Government bodies, such as NCLAT not noticed. Barring Delhi NCR, all metros maintained status and RERA started addressing homebuyers online. quo in average weighted capital ‘asks’, QoQ. With wafer-thin The Apr-Jun 2020 quarter saw the lowest number of new launches margins at the hand of developers, any price correction in since 2013 and sales remained 75 percent lower than the previous future is unlikely. quarter. Invoking of Force Majeure brought some relief as ongoing projects got up to a nine-month extension under Real Estate (Regulation and Development) Act, 2016. The suspension of Insolvency RENTAL LANDSCAPE and Bankruptcy Code (IBC) for a year, too, is a relief for developers. Amid restrictions to move around, the rental market remained intact in Apr-Jun 2020. There was no movement in average ‘asks’ across cities, except for some discounts and IMPACT ON HOMEBUYERS leeway offered by property owners to support the tenants With ongoing projects delayed by at least six months, homebuyers struggling financially. PG accommodations and guesthouses expecting possessions received a setback. Job losses and pay cuts took the brunt as people moved to their hometowns due to affected the paying capacity of homebuyers, who shelved their buying an extended lockdown. decisions in the wake of market uncertainties and expectations of price cuts. While reduced home loan interest rates from most banks make it an opportune time to invest in real estate, a large share of prospective SUPPLY homebuyers await more clarity in the ensuing months. New project launches remained nil during the quarter and progress on ongoing projects suffered on account of reverse The extension of the Credit-Linked Subsidy Scheme (CLSS) under migration of labourers and disruptions in the supply chain. Pradhan Mantri Awas Yojana (PMAY) might be a benefit for those Property owners unwilling to sell at a reduced price exited looking for affordable homes. Existing homeowners welcome home from the secondary market. Unsold inventory stood at 6 lakh loan moratorium of six months announced by the Government in April. units at the end of Apr-Jun 2020.

INSITE : 5 acres INSITE : Chennai 5 India’s No.1 Property Portal MARKET MOVERS RERA extends project completion deadline by five months The Tamil Nadu Real Estate Regulatory Authority (TNRERA) extended the completion timeline of real estate projects registered under the Real Estate (Regulation and Development) Act (RERA) by five months, till September 2020, bringing relief to the developer community.

No power connection without completion certificate The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has mandated the submission of the completion certificate (CC) of a building to get a permanent electricity connection. The ruling is not applicable for buildings built on or before Feb 4, 2019, and for residential and other types of buildings up to 12 m in height, 750 sq m in area and comprising of less than three units.

No registration fee, stamp duty for new flats COMMERCIAL In a major relief for homebuyers, the registration department in Tamil Nadu has announced that completed (ready to move in) flats will not attract stamp REAL ESTATE duty and registration charges. However, it is applicable only on the first sale of the property. OUTLOOK

AIIB to fund USD 800 million for Phase 2 • The State government has allowed State Industries Promotion Asian Infrastructure Investment Bank (AIIB) is likely to grant $800 million for Corporation of Tamil Nadu Ltd (SIPCOT) to develop new industrial the development of Chennai Metro Phase 2. A loan of $438.75 million would estates via a joint venture with private land owners, possessing 100 acres be utilised for the civil work on the 47 km-long corridor, connecting CMBT with and above. . The remaining fund would be invested for the development of • Due to the increasing acceptance of Work From Home (WFH) mode, Lighthouse- Bypass stretch. annual office space leasing is likely to go down by up to 30 percent in 2020.

Nearly 1.5 lakh residents to get piped water supply • The Executive Centre (TEC), a premium serviced office space provider, has From August 2020, Chennai Metropolitan Water Supply and Sewerage Board plans to open a new centre in Chennai. The Centre is expected to become (CMWSSB) will supply 23.5 million litres a day through pipes to nearly 1.5 lakh operational by March 2021. residents spread across 1,140 streets in , , , and . acres India’s No.1 Property Portal INSITE : Chennai 7 * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com CHENNAI’S REALTY AT A GLANCE

Property Rental Prices ‘Asks’

Price movement in key micro-markets

Localities Apr-Jun 2020 QoQ YoY Rental % Change % Change Yield Rs 3,840 - 4,320 0% 2% 3% Demand Supply Rs 3,210 - 3,700 1% 3% 3% Rs 4,250 - 5,520 2% 7% 3% Rs 4,860 - 5,850 -2% 0% 3% Kolathur Rs 4,850 - 5,630 -3% -1% 3% Rs 4,765 - 5,850 2% 4% 3% * Property prices represent quarterly change * Rental ‘asks’ represent yearly change * Supply is basis properties listed on 99acres.com * Demand is basis queries received on 99acres.com Rs 4,990 - 5,710 -1% 1% 3% Urapakkam Rs 3,180 - 3,780 -4% 1% 3% Rs 4,680 - 5,230 2% 2% 3% Sholinganallur Rs 4,830 - 5,840 4% 6% 4%

* Average ‘ask’ rates have been calculated as per listings posted on 99acres.com ** Rental Yield has been calculated for a 1,000 sq ft apartment

INSITE : Chennai 9 acres DEMAND & SUPPLY India’s No.1 Property Portal DYNAMICS 99ACRES’ 19% OUTLOOK 14% A few new launches coupled with poor sales volume stated the ‘real’ story of Chennai real estate market in the Apr-Jun quarter. While the nationwide lockdown 40% halted a majority of construction activities in the city, the 22% non-availability of migrant labourers in the city impacted the overall construction cycle in the studied period. Resultantly, several new projects that were planned to be launched in the said quarter have been shelved indefinitely. In Chennai alone, over 24,000 units were 64% scheduled to be completed by the end of 2020. And, with the extension of the lockdown period till July end, the work on these projects is expected to experience a longer halt. In addition to the shortage of construction workers, liquidity constraints and withdrawl of home 41% buyers from the market remained the prime challenges for the developer community.

The Apr-Jun 2020 quarter witnessed an increased affinity of serious homebuyers for projects nearing completion. In terms of housing demand, over 60 percent of the total demand inclined towards residential properties priced below Rs 40 lakh. Areas such as , , and attracted most enquiries. Demand Supply Removal of stamp duty and registration charges on Affordable Housing new and completed flats is expected to revive buyer (Within Rs 40 lakh) sentiment. Several major infrastructure projects such as Mid-income Housing Chennai Metro Phase 2, Metrolite, a 110 km mega streets (Rs 40 lakh - Rs 1 crore) Luxury Housing project, along with commercial expansion, have the (Rs 1 crore and above) potential to lift the residential real estate market in the ensuing quarters.

* Graph depicts demand and supply of residential inventory across budget segments in the studied quarter INSITE : Chennai 11 INSITE : Chennai 11 KEY HIGHLIGHTS

Average property rates in Chennai remained unchanged in Apr-Jun 2020 over the previous quarter. However, the rental graph showed a marginal one percent hike in average ‘asks’, YoY. Localities with good social infrastructure and connectivity in the northern and southern belts remained popular among the tenant community. CAPITAL & The highest demand-supply mismatch was reported for properties priced under Rs 40 lakh. Under this bracket, housing demand surpassed supply by over 20 percent. RENTAL On the other hand, properties priced between Rs 40- 60 lakh showed minimum disequilibrium. Two-bedroom units remained popular among buyers’ community in this quarter, too.

Localities such as Sholinganallur, Thoraipakkam, and 7% 7% remained popular on the back of ample housing inventory priced within Rs 50 lakh and excellent connectivity 6% to National Highway (NH) 4 and 5.

Kelambakkam witnessed a sharp rise of nine percent in rentals, YoY, owing to its proximity to Siruseri IT Park, and 4% 4% 4% 4% excellent road connectivity to all parts of the city. Localities such as , and Porur remained popular 3% 3% 3% among the tenant community, reporting an average rental hike of seven percent, each, YoY. 2% 2%

1% 0% Porur 0% 0% Urapakkam Pallavaram

Ambattur Avadi Thoraipakkam Madipakkam

Capital -2% Rental

-4% -4%

-5%

* %change represents quarterly capital movement and yearly rental movement INSITE : Chennai 13 acres India’s No.1 Property Portal CONCLUDING NEW LAUNCHES 1% REMARKS DELHI NCR Liquidity crunch, shortage of raw materials and labour, 2% and the nationwide lockdown kept Chennai’s real estate KOLKATA 5% market on a back foot in the second quarter of the year. HYDERABAD Several projects nearing completion in the city might help the market regain momentum soon after lockdown is over and the country is out of the ongoing health crisis. 26% Growth drivers such as the existence of IT hubs, competitive AHMEDABAD property prices, and infrastructure development, would also 11% play a vital role in re-structuring the market. CHENNAI

11% MUMBAI

20% 24% BANGALORE PUNE BUDGET-WISE DEMAND SUPPLY The data depicts share of new launches across metro cities in the studied quarter

5% 12% 14% 11% 18% 19% 17% 20% 14% 24% 25% 17% 29% 34% 41% 40% 43% 22% 36% 37% 29% 36% 23% 48% 41% 40% 39% 44% 25% 34% 48% Demand Supply 35% 78% Affordable Housing 48% 64% 53% 51% 57% 40% 47% 40% 34% 37% 34% Mid-income Housing 31% -5% 26% 22% 18% Luxury Housing -6%

DELHI NCR MUMBAI BANGALORE PUNE CHENNAI HYDERABAD AHMEDABAD KOLKATA

INSITE : Chennai 15 * Graph depicts demand and supply of residential inventory across budget segments in top eight metro cities in the studied quarter INSITE : Chennai 15 METHODOLOGY ANNEXURES The Insite Report by 99acres.com captures the quarterly capital trends, the annual rental analysis of residential apartments and rental yield in top 10 popular micro-markets across key real estate markets – Delhi NCR, Mumbai Metropolitan Region (MMR), Bangalore, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad. CAPITAL VALUES RENTAL VALUES In order to assess the prevailing sentiment, the report delves Locality Apr-Jun 2020 Locality Apr-Jun 2020 Locality Apr-Jun 2020 deep into demand and supply of properties across varied budget

Adambakkam 7500 6850 23 segments and occupancy stages. While demand is a function of Adyar 13400 Perumbakkam 4280 22 queries received, supply is based on property listings posted on Ambattur 5000 Perungudi 7700 Kolathur 13 D S PS 99acres.com in Apr-Jun 2020. 10810 Poonamallee 4300 18 U SELL RENT PRPERT Avadi 4280 Porur 5600 Madipakkam 13 Besant Nagar 13900 RA Puram 15250 Medavakkam 14 7700 8100 Mugalivakkam 13 FIND BEST OPTIONS TO Chromepet 5750 4840 30 Egattur 6600 Sholinganallur 5550 15 BUY, SELL, RENT PROPERTY Egmore 14800 Siruseri 4300 Navalur 17 4580 4100 25 Guduvancheri 3680 T.Nagar 11700 Oragadam 12 Price trends and obile pp property advice Iyyappanthangal 5750 Tambaram 4730 Padur 13 on ndroid platorm 5640 11400 Pallavaram 16 and iS 5400 Thoraipakkam 6600 Pallikaranai 15 3940 Urapakkam 4120 Perambur 15 enuine Perumbakkam 13 Kilpauk 11500 9010 ver 9. listings ith photographs Kolathur 5360 6950 Perungudi 19 lakh property listings Korattur 6200 Velachery 7400 Porur 16 6040 Vengaivasal 5100 19 4600 7600 Saligramam 20 4810 Selaiyur 12 RENTAL VALUES Madipakkam 5600 Sholinganallur 18 More than Siruseri 14 5650 Adyar 27 1.7 lakh Medavakkam 5450 32 T Nagar 24 projects West 6250 Ambattur 14 Tambaram 12 Mugalivakkam 5720 22 Thiruvanmiyur 21 Mylapore 14100 Avadi 11 Thoraipakkam 18 Nanmangalam 4450 12 Urapakkam 11 Navalur 4130 Choolaimedu 20 Vadapalani 20 Nungambakkam 15100 Chromepet 13 Valasaravakkam 17 Oragadam 4220 Egmore 32 10 CONTACT US Padur 4380 Guduvancheri 10 Velachery 18 0120 4879400 Pallavaram 5550 Iyyappanthangal 13 Virugambakkam 19 Monday - Friday Pallikaranai 5360 Kelambakkam 12 9:30 AM to 6:30 PM IST Email: [email protected] 17 CNTACT US 9 Monday - Friday 9 to P S mail content99acres.com