INSITE CHENNAI RESIDENTIAL MARKET UPDATE JULY - SEPTEMBER 2020 Market Sentiment WHAT’S INSIDE? • Impact of COVID-19 on Indian Real Estate • National Outlook Snapshot of real estate ambience across top 8 metro cities • Market Movers News that impacted Chennai’s realty market in Jul-Sep 2020 • Commercial real estate outlook • Residential demand and supply dynamics • 99acres’ Outlook Our perspective on the current market sentiment • Key trends in the buying and renting landscape • Price trends across key micro-markets FROM CBO’S DESK The Jul-Sep 2020 quarter set the pace for the recovery of Indian developers have further fueled the penchant for ready or near-ready residential real estate market. Post an initial lull in sales and new housing units. There seems to be a newfound demand for independent launches in the previous quarter, the current quarter came as a breather houses and builder floors, which offer increased privacy and scope for as sales resurged by almost 2.5 times of the pre-COVID levels. Both Delhi social distancing, as opposed to residential apartments. NCR and Mumbai saw a significant improvement in transactions, QoQ, as end-users flocked to leverage the lucrative deals floating in the market. A gradual improvement in the realty market was also evident from the Price correction, unlike anticipated, remained a far cry; however, with owner listings posted on 99acres, which went up by seven percent against a negotiation window of up to 10-15 percent, the deals closed in at a the pre-COVID times. Buyer responses also reported a 30 percent surge in reduced price of 2-5 percent of the pre-COVID levels. the same time period. New launches went up, QoQ, but remained lower than the previous year. On the policy framework front, a fiscal stimulus of Rs 10,000 crore for Majority of the developers focused on completing the ongoing projects, Maneesh Upadhyaya stuck realty projects, along with the sustenance of Repo Rate at four which were stuck during the nationwide lockdown. While work on Chief Business Officer percent, an all-time low, are likely to push the market towards a revival almost all housing projects resumed in the current quarter, a lot of them 99acres.com in the ensuing quarters. The upcoming festive season may see a further continue to face delays spanning quarters. Liquidity constraints with the improvement in the absorption of residential units, across cities. COVID-19 AND REAL ESTATE NATIONAL OUTLOOK IMPACT ON HOMEBUYERS IMPACT ON INDUSTRY HOME BUYING SENTIMENT PROPERTY PRICES After an initial set back amid pay cuts Even as supply chain reopened in Home buying sentiment improved The resale segment remained under and job losses, homebuyers were seen Jul-Sep 2020, a ban on Chinese imports as public sector banks and private pressure with deals closing at a returning to the market in Jul-Sep 2020. impacted the cost of development in players slashed home loan interest 2-5 percent discounted rate on average. Reduced home loan rates, sweetened the realty landscape. Developers cited rates to a 15-year low. This, along Developers also kept new unit prices deals by developers and more scope of increased expenses, and thus, little with resumption of construction unchanged even as some spoke of negotiations in the resale segment were scope to reduce prices in the primary work, helped take the enquiries up by increased costs amid a ban on Chinese seen as the key drivers. The quarter market. Yet, in a bid to offload the 80 percent of the pre-COVID times. imports. However, initial speculations of continued witnessing the popularity existing inventory, several schemes Developers reported a 50 percent hefty price corrections did not hold true of ready housing units, and improved were introduced in the quarter. recovery in the number of transactions. for either of the segments. demand for independent houses and Digital transformation continued as builder floors in most metro cities. developers took to the online medium RENTAL LANDSCAPE SUPPLY Window shoppers exited and genuine to interact with potential homebuyers Rental market remained in doldrums With an addition of over 31,000 units homebuyers were seen leveraging at various stages of the buying cycle. despite the opening up of the in metro cities, new launches went up the discounts available in the market. Several governmental procedures nationwide lockdown. Tenants avoided by 4.5 times, QoQ. The resale segment, Noticeably, the quarter reported shifted online as organisations adopted moving as the majority of offices too, reported an improvement as renewed interest from the NRI homebuyer to the new normal. The infusion of continued with the work-from-home several property owners returned to community against the backdrop of Rs 10,000 crore to aid the completion model. Resultantly, the rental rates the market after lockdown restrictions depreciating rupee and attractive deals of stuck realty projects was hailed by did not see any movement and offtake were gradually lifted. Unsold inventory in the new home category. the industry. was meek in both residential and stood at 4.40 lakh units at the end of commercial segments. September 2020. KOLKATA 1% DELHI NCR 3% SHARE OF NEW LAUNCHES AHMEDABAD 16% MUMBAI The quarter witnessed the launch of about 240 new residential projects in top eight metro cities. Despite being 25% severely hit by the Coronavirus pandemic, Mumbai led all cities with a 25 percent share in new and re-launched projects. Pune, Hyderabad, Bangalore and Ahmedabad followed suit with a 16-19 percent share, each. Delhi NCR made a meagre three percent share of the total new launches, with a few projects in Greater Noida, Ghaziabad and Gurgaon. CHENNAI Kolkata and Chennai reported minimal new activity from developers. 1% BANGALORE 17% PUNE 19% Note: The data depicts share of new launches across metro cities in the studied quarter The numbers include re-launched projects HYDERABAD 18% MARKET MOVERS COMMERCIAL REAL ESTATE OUTLOOK Civic body commences Work on Washermenpet- re-laying of 2,600 roads Wimco Nagar Metro • Office space leasing fell to • Increased demand for e-commerce The Greater Chennai Corporation corridor back on track 0.7 million sq ft in Jul-Sep 2020 led to a spike in rentals of from 3.2 million sq ft in warehouses, which jumped by 30 (GCC) commenced re-laying of Delayed by the COVID-19 pandemic, Jul-Sep 2019. percent, YoY, in Jul-Sep 2020. The around 2,600 internal roads in the city, the construction work on the which would cover all 15 zones of average rent of storage spaces went 9 km-long Washermenpet-Wimco • Between April and August 2020, Chennai. Under the first phase of up from Rs 20 per sq ft to Rs 25 sq Nagar Metro corridor in North more than 12.55 lakh sq ft of office the project, around 750 internal ft during Jul-Sep 2020. Chennai has resumed. Expected space in Chennai has been lapped roads covering Royapuram, to become operational by the end up, predominantly by IT/ITeS • One of the prominent upcoming Tondiarpet, Teynampet, Anna Nagar, of 2020, the metro stretch will companies. deals in the warehousing space is Kodambakkam, Thiru-Vi-Ka Nagar, connect northern end to the central by Avigna Space, which will develop and Adyar would be revamped. • The Central Government plans to parts of Chennai. Grade-A warehousing capacity build a multi-modal connectivity of two million sq ft in Chennai by hub in Chennai. For this, the December 2021. Government will acquire land parcels at a distance of 20-30 km from the main city. Water supply in Pallavaram Major road stretches to to improve be widened Under Chembarabakkam water supply The State government approved the scheme, Chennai Metropolitan Water proposal to widen Grand Southern Supply and Sewerage Board would Trunk (GST) Road till Paranur, and provide a daily water supply of 135 the existing four-lane road from litres per person to around 2.5 lakh Guduvanchery to Paranur. The residents of Pallavaram. The move has road projects would ease traffic significantly impacted home buying movement between the city and the sentiment in the locale. southern region beyond Tambaram. 99acres India’s No.1 Property Portal CHENNAI’S REALTY AT A GLANCE Property Prices Rental Rates Demand Supply BUDGET-WISE DEMAND AND SUPPLY Key micro-markets across budget segments Budget Localities based on Average Average Rental Jul-Sep 2020 Range Consumer Demand and Property Prices Rental ‘Asks’ Yield Active Listings (Rs per sq ft) (Rs per sq ft/month) Within Rs 40 lakh Guduvancheri 3,100-3,700 11 3.30% -28% Urapakkam 3,300-3,900 11 3.50% Rs 40 lakh - Rs 1 crore Avadi 3,800-4,500 11 3.10% Medavakkam 4,600-5,818 13 3.19% 20% Porur 4,700-5,700 18 3.67% Rs 1 crore and above Velachery 6,200-7,500 18 2.77% 8% Thoraipakkam 6,400-7,300 18 3.02% Demand Perambur 5,700-6,800 15 2.77% 66% 38%0% 22% 42% 12% 20% Supply Note: Rental Yield has been calculated for a 1,000 sq ft apartment. Within Rs 40 lakh Rs 40 lakh - Rs 1 crore Rs 1 crore and above Average property prices and rental rates have been calculated as per listings posted on 99acres.com in the studied quarter. The range of property prices may vary by 10 percent depending on the age and furnishing status of the residential apartments. BHK-WISE DEMAND AND SUPPLY Key micro-markets across BHK-configurations Configuration Localities based on Average Average Jul-Sep 2020 Consumer Demand and Unit Size Property Prices Active Listings (Sq ft) (Rs per sq ft) -15% 1 BHK Madipakkam 500-610 4,500-5,600 Mogappair West 450-480 5,400-6,400 2 BHK Porur 900-960 4,700-5,700 Chromepet 830-950 4,900-5,800 Keelkattalai 830-920 5,000-5,600 2% 11% 3 BHK Perumbakkam 1,250-1,300 3,900-4,700 Medavakkam 1,170-1,300 4,600-5,800 Demand 2% Gerugambakkam 1,130-1,200 4,500-5,200 18% 20%0% 63% 48% 16% 27% 3% 5% Supply Note: Average property prices and rental rates have been calculated as per listings posted on 99acres.com in 1BHK 2BHK 3BHK 4BHK the studied quarter.