Rate rationalisation offers realty check in posh areas

A property measuring 1.86 grounds (1 ground = 2,400 sq ft) in the upmarket RA Puram neighbourhood in the city is being picked up by an industry chamber. The deal is said to be finalised for Rs 5.75 cr, signalling a rationalisation in a realty market that has been facing a lull. 

This deal could set a new trend in the realty sector, where a property in a ‘posh’ locality is selling at its official guideline value (revised by 33 per cent in June this year), unlike previous deals where such properties were being sold at a premium. 

However, builders and realtors in the city maintain that realty prices have bottomed out and that there is no room for any more price correction. Two years ago, the Hindustan Chamber of Commerce (HCC) began negotiations for the 63-year-old property that belongs to a doctor’s family.  The transaction is in the last leg of finalisation with the registration expected soon, says M Razzack, President, HCC. It was later learnt from an informed source that the property is in RA Puram (Canal Bank Road, a few buildings away from an outlet of a well-known chain of restaurants). 

The registration is expected to be completed in less than a fortnight, after which the blueprint for housing the new office would be prepared. Razzack adds that the price of the property was indeed a ‘steal,’ given the state of realty in Chennai. Realty players say that this deal is reflective of the real valuation. 

“The Chamber has approved the purchase and intends to dispose of an existing premise in Kondichetty Street in Parry’s to fund this deal,” adds the source. “In micro-markets such as RA Puram, the property price is indicative of the true valuation as land prices in the Canal Bank region hover around Rs 4 crore per ground,” says Sanjay Chugh, Founder, Skyline Property Consultants. He also brings up the fact that infrastructural amenities are not on a par in some of these areas despite being part of an upmarket location. In view of the accurate valuation and the rationalisation of prices, it’s fair to say that property prices have bottomed out in the city, he says. 

Sanjay adds, “A gradual increase is expected in property registrations, as the absorption of existing inventory by buyers is on the climb in the last quarter.” Prakash Challa, CMD, SSPDL, says the deal in the offing indicates the appetite among buyers to close transactions. This is true, especially in a market that has been crawling for almost three years now. 

“Small transactions are happening despite several challenges. The GST regime, for instance, has been totally unfair to developers in the city as one-sided decisions have been taken,” he says. Incidentally, SSPDL’s residential project on Prithvi Avenue in the otherwise posh RA Puram area is going upwards of Rs 22,000 per sq ft.