Chennai
Only 3,200 new homes were launched in the second half of last year, reaching the lowest in the decade, says the India Real Estate report launched by Knight Frank India. The eighth edition of the flagship half-yearly report gives a comprehensive analysis of the residential and office market performance of Chennai for the period July–December 2017 (H2 2017).
Residential takeaways: Just 3,200 new homes were launched the Chennai market in H2 2017, recording 33% fall YoY and the lowest in this decade. The annual launches
dropped to 4 figures for the first time as well at 9,200.
Residential sales also fell by 14% YOY for H2 2017 amid ambiguity over RERA and concerns of job security in the IT sector Average asking price weakened by 3% as developers re-offered existing unsold units at discounted rates.
Office takeaways: The supply crunch in the office space market eased slightly with 1.8 mn sqft coming online during 2017 but this is still not enough to stem the fall in vacancy.
The lack of viable, good quality office stock led to 17% YoY decline in transactions volume during H2 2017 and a 12% decline for the entire year Traditionally, the largest consumer of office space in Chennai, the share of IT/ITeS sector nearly halved from 43% in H2 2016 to 25% during the same period of 2017 BFSI and Other Services Sector almost doubled their share of absorption with the latter accounting for nearly 1 mn sq ft of the total office space transacted in the second half of 2017 Chennai recorded strong rental growth of 4.5% YoY in 2017 on the back of a supply crunch that caused vacancy levels to nearly halve to 10.2% in H2 2017 over the past two years.
Kanchana Krishnan, Director – Chennai, said “After showing signs of a promising recovery during H1 2017, the Chennai residential market once again hit new lows in terms of sales and supply numbers during H2 2017 The lacklustre demand scenario in addition to the implementation of the Real Estate Regulation Act and the GST Act led to a 33% YoY drop in new projects in H2 2017 thus bringing down the annual supply number under 10,000 units for the first time during this decade. The residential market also witnessed a drop of 86% and 56% in the half-yearly launches and sales respectively, from the peak levels during H12011.”
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