INSITE REPORT Chennai
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99acres India’s No.1 Property Portal INSITE REPORT Chennai January - March 2018 www.99acres.com 99acres 99acres 2 INSITE : CHENNAI India’s No.1 Property Portal India’s No.1 Property Portal INSITE : CHENNAI 3 Methodology FOREW0RD The Insite Report by 99acres.com captures the quarterly capital trends and the annual rental analysis of residential apartments in key The first quarter of 2018 countersigned a revival in market real estate markets – Delhi sentiment and enquiries, amid a modest impact on overall sales NCR, Mumbai Metropolitan volume across metros. Supply in the ready residential segment Region (MMR), Bangalore, outstripped demand, particularly in case of luxury and ultra- Pune, Chennai, Hyderabad, luxury units. The under-construction market, too, narrated a Kolkata and Ahmedabad. In similar tale putting a downward pressure on average weighted order to assess the prevailing capital ‘asks’. With new launches down by around 40 percent, sentiment, the report delves YoY, any improvement in property prices is now dependent on the deep into demand and absorption of excess housing stock, which ranges between 15 and supply of properties across 48 months for different metros. Additionally, the increasing cost varied budget segments and of compliance resulting from stringent rules and adherences may occupancy stages. While push the real estate prices up, especially for new launches. Resale demand is a function of segment, however, may not witness any substantial change in ‘ask’ queries received, supply is rates due to the inherent competition characteristic to the segment. based on property listings posted on 99acres.com in On a micro-level, Hyderabad, Pune and Bangalore exhibited Jan-Mar 2018. resilience and showed signs of revival more prominently than other metros. Low inventory levels and fast-paced commercial expansion serve as demand and sales catalysts for these markets. Mumbai and Delhi NCR maintained status quo w.r.t. prices and sales velocity despite multiple infrastructural overhauls ranging Impact of Union Budget Demand-Supply Analysis from metro rail project to new airports and redevelopment drives. Contents 06 10 Any noteworthy improvement in the realty ambience of these Impact of Union Budget 2018-19 on the Demand-supply trends of residential cities now relies on an effective RERA implementation. Plausibly, Indian real estate market apartments in Jan-Mar 2018 RERA-compliant projects might command a premium over others because of the additional costs borne by the developers in the process. Marketers could employ buyers’ trust while Market Movers Annexures Foreword 03 07 11 deciding the price and sales strategy for RERA-approved projects. 99acres’ perspective on current market News that impacted Chennai’s sentiment realty market in Jan-Mar 2018 The raft of reforms and legislations passed in the last two years – Demonetisation, RERA and GST – have now started coxswaining the market into a consolidation mode. This could mean fewer National Outlook 04 Chennai at a Glance 08 new project launches across budget segments. The increasing preference for affordable homes, however, would drive realty Snapshot of real estate ambience across Capital price movement in key dynamics in the long haul. Apart from a healthy end-user demand, top 8 metro cities micro-markets of Chennai the Government’s thrust through incentives such as granting infrastructure status in Union Budget 2017-18 and the setting up of Market Indicators Chennai an affordable housing fund in this year’s Budget announcement will 05 09 ensure a rising appetite and supply for such projects across country. Changes in capital rates and inventory Key highlights - Chennai’s capital and status QoQ; and rental values YoY rental market in Jan-Mar 2018 99acres 99acres 4 INSITE : CHENNAI India’s No.1 Property Portal India’s No.1 Property Portal INSITE : CHENNAI 5 National Outlook Market Indicators HOME BUYING SENTIMENT Capital Values Rental Values Supply With the industry getting accustomed to RERA and GST, market was seen regaining normalcy in the first quarter of 2018. Enquiries from fence-sitters resurfaced across metros with a reinstated interest in the under-construction category. Growing transparency and improved processes are expected to fuel BANGALORE this trend in the future. DELHI NCR PROPERTY PRICES MUMBAI Despite burgeoning enquires, piling inventory restricted price appreciation, particularly in Delhi NCR. Infrastructural overhauls, a few new launches and incremental ‘asks’ in the resale market, fuelled price growth in some micro- markets of Mumbai, Pune and Bangalore. Affordable pockets will monopolise CHENNAI end-user demand, keeping capital growth in check in the forthcoming quarters. PUNE HYDERABAD RENTAL LANDSCAPE The obtuseness in the buying market has unabatedly benefitted the rental landscape over multiple quarters. Lease values burgeoned across metros, YoY. Affordable pockets and areas in proximity to transport corridors ruled the KOLKATA roost with maximum traction, pushing rental ‘asks’ further. Speculations of an improvement in the rental values in the ensuing quarters are rife. AHMEDABAD * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com SUPPLY Stringent laws under RERA circumscribed new supply; however, progress on project registrations spiked under-construction inventory across cities. The resale market swarmed with properties across budget segments. RERA-approved supply in the affordable segment remained low this quarter. New launches are anticipated to resurface with increased compliance in the months to come. 99acres 99acres 6 INSITE : CHENNAI India’s No.1 Property Portal India’s No.1 Property Portal INSITE : CHENNAI 7 - IN F CUS Market Movers BUDGET 2018-19 Sand paucity stalls realty projects Acute scarcity of river sand in Tamil Nadu has brought real estate activities to a The real estate sector expected Union Budget 2018-19 to address concerns pertaining to concessional GST standstill, delaying construction of ongoing projects across the State. While a few for housing sector, regularisation of stamp duty charges, and changes in income tax slabs. While these were left unanswered, a slew of announcements pertaining to ‘Housing for All’ counterbalanced the lack of attention small-scale developers have parked their projects, others have opted for substitutes to real estate expectations. such as gypsum and M-sand. Centre approves Chennai-Salem green expressway INFRASTRUCTURE UPGRADES The Central Government announced a 274-km long green expressway corridor Focus on infrastructure development is anticipated to create new real estate pockets and boost housing between Salem and Chennai at an estimated cost of Rs 10,000 crore. The proposed demand with Funding worth Rs 5.97 lakh crore to infrastructure upgradation expressway will reduce travel time between two cities to three hours from the present A capex of Rs 5.35 lakh crore to Bharatmala project Phase I for strengthening road network six hours. Tenders will be floated in Q2 2018. National highway budgetary allocation of Rs 71,000 crore State proposes Phase 2 of Chennai Metro Tamil Nadu government proposed three metro rail corridors covering 107 km AFFORDABLE HOUSING FUND under Chennai Metro Phase 2. The first phase of the project will cover two routes Increased focus on the affordable segment is evident from the establishment of a dedicated affordable housing - Madhavaram to Chennai Mofussil Bus Terminus (15 km) and Madhavaram to fund worth Rs 60,000 crore under the National Housing Bank (NHB) Sholinganallur (35 km). In another development, CMRL began trial run on an A target of 37 lakh homes in urban areas and 51 lakh homes in rural India in 2018-19 Access to cheaper and alternative funds to boost low-income housing underground 4-km stretch from Saidapet to AG-DMS. Reduction of GST to an effective eight percent from earlier 12 percent on homes purchased and constructed under Credit linked subsidy scheme (CLSS) State allocates funds for Chennai Peripheral Road project State government sanctioned Rs 200 crore for the first phase of Chennai Peripheral Road, connecting Ennore Port with Thatchur. The 129-km long corridor is aimed at DISINVESTMENT decongesting northern section of the Chennai Industrial Corridor. A disinvestment target of Rs 80,000 crore for FY 2018-19 will open new pockets for private developers This will offer aid to private developers for buying landlocked parcels The move is expected to address the housing shortfall that India currently faces Tamil Nadu slum board plans 3,000 houses under PMAY Under PMAY, Tamil Nadu slum clearance board has proposed to develop 3,000 houses at Manali New Town to accommodate slum dwellers in North Chennai. Till now, around 288 slum dwellers have already been allotted houses. 99acres 99acres 8 INSITE : CHENNAI India’s No.1 Property Portal India’s No.1 Property Portal INSITE : CHENNAI 9 CHENNAI Chennai at a Glance In line with the previous quarters, Jan-Mar 2018 remained testimony to fewer launches, truncated sales volume and negligible price movement. While developers continued to struggle with the ambiguous norms of the Real Estate Act, prospective buyers abstained from entering the market. Price movement in key micro-markets Key Highlights Political instability and inefficient implementation of The industrial district, Guindy, witnessed property Average ‘Ask’ Rate QoQ YoY Locality RERA and the online property registration system, prices firming by two percent