CHENNAI 2018 July - September
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www.99acres.com INSITE REPORT CHENNAI 2018 July - September 99acres India’s No.1 Property Portal 99acres India’s No.1 Property Portal Contents From CBO’s Desk 03 CBO’s perspective on current market National Outlook 04 Snapshot of real estate ambience across top 8 metro cities Market Indicators Changes in capital rates and inventory 05 status QoQ; and rental values YoY Market Movers News that impacted Chennai’s 06 realty market in Jul-Sep 2018 99acres Outlook 07 99acres’ perspective on current market Chennai 08 Key highlights - Chennai’s capital and rental market in Jul-Sep 2018 10 Annexures INSITE : CHENNAI 3 From CBO’s Desk The Indian real estate sector finally bid adieu to the prolonged impasse which started with demonetisation and worsened with RERA and GST ambiguities. Recovering property enquires, sales volume and prices were testimony to a progressive market sentiment. Barring Chennai and Pune, where average Maneesh Upadhyaya weighted property prices remained unchanged this quarter, Chief Business Officer all other metro cities witnessed the capital rates increasing 99acres.com marginally versus the previous quarter. Hyderabad remained at the forefront with a two percent rise in ‘ask’ rates. While unsold inventory trimmed in both new projects and resale markets, project launches in affordable housing segment gained momentum. Multiple efforts towards strengthening infrastructure, a pro-buyer regulatory environment in the country and unchanged interest rates are expected to push the housing sector on a growth trajectory with improvement in fresh supply and sales volume in the ensuing quarters. Methodology The Insite Report by 99acres.com captures the quarterly capital trends and the annual rental analysis of residential apartments in key real estate markets – Delhi NCR, Mumbai Metropolitan Region (MMR), Bangalore, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad. In order to assess the prevailing sentiment, the report delves deep into demand and supply of properties across varied budget segments and occupancy stages. While demand is a function of queries received, supply is based on property listings posted on 99acres.com in Jul-Sep 2018. 99acres India’s No.1 Property Portal NATIONAL OUTLOOK HOME BUYING SENTIMENT Buyer sentiment remained upbeat in all metros barring Kolkata where the ambiguous regulatory environment restricted sales. While Hyderabad witnessed increased property enquiries in the pre-election period, Delhi NCR, Mumbai and Bangalore merrily marched towards the festive quarter in hope of a realty revival with property sales improving this quarter. PROPERTY PRICES Except Chennai and Pune where prices remained unchanged, average capital ‘asks’ remained buoyant across metros in Jul-Sep 2018. Capital values in the premium segment remained under check due to a cumulative inventory overhang of over four lakh units. Hyderabad led all metros with two percent growth in prices, QoQ, owing to the recently launched RERA website. RENTAL LANDSCAPE The seven-quarter growth spree of the rental market continued in the eighth quarter with all metros reporting a spike in the average rentals by 3-5 percent. Mumbai, Bangalore, Pune and Hyderabad emerged as the frontrunners in the rental market. With a slow-paced revival in the capital market, rental growth is anticipated to continue in the forthcoming quarters. SUPPLY Cities continued to swarm with unsold inventory, albeit lower than the previous quarters but sufficient to restrict capital growth. Hyderabad had the lowest unsold stock, whereas Delhi NCR and Mumbai led the pack with 1.5 lakh and 80,000 units lying unsold, respectively. The controlled pace of new launches and slow-paced RERA registrations curtailed the saleable primary inventory. INSITE : CHENNAI 5 MARKET INDICATORS Capital Values Rental Values Supply Bangalore ˄ ˄ ˅ Delhi NCR ˄ ˄ ˅ Mumbai ˄ ˄ ˄ Chennai ˄ ˅ Pune ˄ ˅ Hyderabad ˄ ˄ ˄ Kolkata ˄ ˄ ˅ Ahmedabad ˄ ˄ ˄ * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com IN FOCUS GST ANNIVERSARY June 1, 2018 marked the first anniversary of the replacement of the archaic tax policy with the unified tax system - Goods and Services Tax (GST) in India. The realty sector, which landed in the 12 percent tax bracket, was freed of multiple taxes such as VAT, Service Tax and Central Excise. Input Tax Credit (ITC) and the anti-profiteering clause were the two most benefitting features of the new tax system. PROPERTY PRICES Ambiguities regarding Input Tax Credit and its mode of payment kept the buyers wary of investing in under-construction properties. Despite causing a shift in buyer preference towards ready homes, GST did not trigger a downward price correction. Exclusion of Stamp Duty and Registration charges from GST increased the total cost of owning a house by 3-4 percent. AFFORDABLE HOUSING The slash in the GST slab from 12 to eight percent firmed buyer’s confidence and demand for the country’s flagship program – Pradhan Mantri Awaz Yojana (PMAY). Although a significant impact on property sales has not been noted, the rate cut has helped improve buyer sentiment. The move is expected to propel transactions in the affordable housing segment in the longer run. RENTAL MARKET The extension in the monthly limit of maintenance charges to Rs 7,000 for levying 18 percent GST, and on the annual threshold limit from Rs 10 lakh to Rs 20 lakh for the applicability of GST on rent attracted from a commercial property or from a residential property used for commercial purposes, eased the tax liability on property owners. 99acres India’s No.1 Property Portal Market Movers State proposes projects to enhance Poonamallee is touted to benefit thousands of road network residents in the western suburbs of the city. The State has proposed nine Greenfield The 13 km-long extension will reduce infrastructure projects under Bharatmala the travel time from Poonamallee to the Pariyojana. Out of the nine road projects, Central Business District, bolstering the real Chennai – Salem Highway is an ambitious estate sentiment. eight-lane project for which the government plans to acquire about 1,900 hectares of Government streamlines issuance of land. The road projects are anticipated to property certificates fillip the realty market, improving the The State made the Completion Certificate a liveability quotient. prerequisite for obtaining water and electricity connections. In another move, the government Civic body revises property tax digitalised the application process of the After two decades, Chennai Corporation has encumbrance certificate using QR codes, revised the property tax for both residential instilling transparency in the system. and commercial properties. While tax for residential buildings increased by up to 50 percent, the tax for commercial and rented residential buildings has increased by up to 100 percent. However, semi- permanent properties will be given a 20 percent tax concession. Metro expansion brings relief to western suburbs The proposed expansion of the Phase-2 of the Metro project from Valasarawakkam to INSITE : CHENNAI 7 99ACRES OUTLOOK After several quarters of stagnancy, Chennai’s housing market seemed to turn corners in Q2 2018 on the back of subsidised home loans and improving buyer confidence. It was after a prolonged lull that unsold inventory ticked a declining trend and housing sentiment turned positive, especially for properties priced within Rs 40-60 lakh. New supply remained meek at the hands of delayed project approvals and slow-paced RERA registrations. Approximately 10,000 housing units launched before 2013, worth Rs 6,500 crore, are running behind delivery schedule in the city. While property transactions gained some momentum, inordinate delays in the registration process impacted the sales realisation of residential properties. However, the scenario is likely to streamline with the introduction of the First-In-First-Out (FIFO) registration mechanism in September. Overall, Chennai’s residential market witnessed some green shoots of recovery. Infrastructure projects on the radar played a crucial role in setting the realty tone right. Road projects under Bharatmala Pariyojana, and metro expansion to the western suburbs seemed to moderate the ripples of slowdown, QoQ. Moreover, the booming retail sector, too, infused the much-needed positivity to the city’s realty sentiment. However, an unstable employment scenario, particularly in the IT sector, hit office space absorption in the city. This subsequently marred demand for housing units, both for sale and rent. Price Movement in Key Micro-markets LOCALITY AVERAGE ‘ASK’ RATE (PER SQ FT) QOQ CHANGE YOY CHANGE Medavakkam 4,100 - 4,800 0% 4% Perambur 4,600 - 6,300 4% 4% Porur 4,600 - 6,100 0% 0% Avadi 3,200 - 3,800 0% -1% Madipakkam 4,200 - 5,100 2% 0% Poonamallee 3,500 - 4,200 -1% -2% T Nagar 8,700 - 10,700 -2% -3% Ambattur 3,900 - 4,900 0% -5% Anna Nagar 8,700 - 11,100 3% 4% Velachery 5,500 - 7,200 -1% 1% * Average ‘ask’ rates have been calculated as per listings posted on 99acres.com in the current quarter 99acres India’s No.1 Property Portal CHENNAI As the economic slowdown wears off, KEY HIGHLIGHTS Chennai’s housing market takes to the route of recovery. Affordable belts in Chennai’s real estate market has come to terms with RERA and GST proximity to the IT hubs and industrial and ensured steady growth in the sales volume in the last two quarters. centers continued to be the preferred Across zones, ‘ready-to-move’ units and projects ‘nearing completion’ choices of the homebuyer community. priced under Rs 40 lakh and between Rs 40 lakh and Rs 60 lakh However, while demand fortified, remained the flavor of the season. supply failed to record an uptrend. While developers primarily focused on completing existing projects, Elongated monsoon cycle, delay in ready-to-move housing stock recorded a three percent increase in the project approvals and slow-paced RERA total market share this quarter. On the contrary, limited number of new registration had a significant bearing on launches restricted the availability of under-construction properties.