Business

Chennai realty’s abysmal performance

Sales, launches were hit with H1 2020 becoming the lowest performing period for the Chennai residential market in the last decade.

migrator

Updated:17th Jul, 2020 at 5:43 AM

Chennai

But, new office space completion saw an unprecedented growth of 1064 % YoY to 0.3 mnsq m (3.3 mnsq ft) in H12020. This was due to one large commercial space deal in Q12020

ONGOING COVID-19 CRISIS IMPACT H12020

HOME SALES IN CITY

67% sales decline YoY in H12020, while launches saw a 55% YoY decline in same period
Rs sub-5 million (Rs 50 lakh) ticket size sales comprised 51% of total units sold
City recorded a further 5.5% YoY fall in weighted average prices

REALTY SCENARIO PRIOR TO PANDEMIC

Chennai’s residential market had just begun to show some promise of recovery in 2019, especially during the H2 of the year
Onset of COVID-19 sabotaged all recovery hopes
H12020 lowest performing period for Chennai residential market in last decade
A lacklustre demand scenario coupled with lockdowns caused this drop in launches
Most launches, 65% of the total in H1 2020, belonged to the Rs sub-5 mn ticket size segment in sync with current demand trends
Over Rs.10 mn ticket size units contributed a minor share of 4% in total launches

LOCATION PREFERENCES

Rs. 2.5-5 mn ticket size segment highest sales recorded in terms of ticket size split
South Chennai preferred choice, accounting for 56% of total launches and 54% of total sales in H12020
Sholinganallur, Mogappair, Chembarambakkam and Thiruninravur were micro-markets, where most of the action was concentrated during H12020
Demand in Chennai residential market had been gradually slowing down since 2015 with a few spurts of growth in between
Unsold inventory numbers dipped by 21% YoY to 14,149 units in H12020
Developers offering discounts and attractive schemes to lure buyers

0.1 mnsq m (1.3 mnsq ft) was total absorption, a 28% YoY decline
Weighted average transacted rentals however grew by a modest 2% YoY
Highest transaction activity seen in IT/ITES sector accounting for 54% in total transactions
IT-ITES sector registered largest single deal this half-year
Co-working sector activity severely hit resulting in a 77% YoY slump in office space absorption

Chennai realty’s abysmal performance

Sales, launches were hit with H1 2020 becoming the lowest performing period for the Chennai residential market in the last decade.

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