Chennai Real Estate Market Forecast 2022- How will the market recover?
The pandemic was an unforeseen crisis that fell upon us in March 2020. While most of us had hoped the lockdown would have lasted 21 days only, it did not. And before we knew it, India was living through the second most dramatic migration and mass movement in its history.
As laborers and workers moved back home, builders were left helpless and estranged which affected the supply chain. Investors started pulling their money back and deals were terminated due to loss of liquid money, leading to one of the darkest 5 months for the Indian real estate sector.
Therefore, several developers have taken efforts to bring back the construction workers by arranging private bus service to meet the deadlines despite the extension of six months granted by Tamil Nadu Real Estate Regulatory Authority on the grounds of ‘Force Majeure which is provided under Section 6 of the Real Estate (Regulation and Development) Act 2016. The annual reports have also shown that by the end of 2020, the real estate market has almost bounced back to normal, and the momentum is expected to continue in the year 2021.
Chennai Real Estate Market Analysis
The Chennai real estate market is driven by targeting the end-users and is supported by the growth and development of several industries and other commercial activities. Dominant market players such as Indian Oil, Chennai Petroleum Corporation, and Manali Petrochemicals, and IT and ITeS corporate houses have been large contributors to the real estate market in North Chennai. The research report of ANAROCK showed the launch of 5,150 housing units between 2015 and 2019. The development made in the infrastructure and connectivity, such as metro rails has also fueled the real estate sector’s growth.
Chennai is one of the leading markets for the real estate sector. In 2019, Chennai witnessed a yearly rise of 8% in residential property sales with south Chennai seeing the maximum sales number. The primary demand in the Chennai market arose for Ready to move-in homes and nominal housing units. In the year 2019, the office space rentals also showed prominent growth of 50% year-on-year sales.
However, the year 2020 led to the decline of the real estate market, which resulted from the pandemic and lockdown induced by it. The government has taken several measures to ensure that the real estate market is revived. The Tamilnadu RERA has extended the deadline for the completion of projects by five months to bring the developers certain relief. Relaxations were also granted to the mandate of submitting a completion certificate for availing permanent electricity connection. Relations were granted to any property that was up to 12 m in height, 750 sq. m in area, and less than three units. The registration department also announced that the completed ready-to-move-in flats would not be levied stamp duty tax and registration fee on the first sale of the property.
It is to be noted that there was no remarkable development in the price in 2020. However, the rental graph showed a hike of 1% on average year-on-year. The tenants preferred localities with better infrastructure and connectivity in both the northern and southern regions of Chennai. The real estate highlights of Chennai showed that there had been a remarkable change in the demand and supply graph of affordable segment properties in comparison to other segments as the demand surpassed the supply by almost 20%. However, the Rs.40-60 lakhs bracket portrayed minimum disequilibrium.
Chennai Real Estate Market Forecast 2021
The advent of the pandemic has led consumers to prefer energy-sufficient and eco-friendly homes. Buyers have shown interest in societies that work towards residents’ welfare by focusing on health and wellness, green amenities such as solar panels, rainwater harvesting, waste management, and high-efficiency lighting. The Integrated gated townships are another factor that has contributed to the increase in demand. These communities have provided the buyers with an option to live in a properly organized real estate setup and a holistic mix of housing opportunities that include modern amenities, green open spaces, and commercial centers connectivity. The integrated township is expected to increase the sales rate in 2021 as well.
It is also interesting to note the buyer’s preferred large property to accommodate work from home. The government has also taken several relief measures to mitigate the impact of Covid-19 and improve liquidity, facilitate credit flow and ease the project delivery pressure on builders. The government has undertaken these measures to permit the developers to carry out their operation without any added financial burden and reduce the homebuyers’ fear by delivering the project within the stipulated period. The supply of affordable housing is also a crucial focal point in the real estate market’s reinvigoration in the year 2021. The market analysis has shown a potential need for incentivizing to regain and widen the market opportunities.
Despite the prevailing COVID constraints and uncertainties, individuals have been open to securing long-term financial investments. Investors have viewed the real estate sector as one of the safest and most secure forms of investment. The owning of a property has been instrumental in bringing about a sense of security for owners in times of economic uncertainty.
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Chennai Real Estate Market FAQ's:
Reports have shown that the property’s price may fall by 3% in early 2021 as the main focus of the market is to regain the market and invoke the sentiments of consumers, making it more affordable. However, an increase is expected in the latter half of the year.
The market experts have projected a mixed view on the real estate market being a buyer’s market in 2021. Considering the current environment, there are chances of the real estate market in 2021 being a buyer’s market with buyers influencing the property’s price.
Chennai is an excellent spot for real estate investments. The city has good infrastructure and excellent connectivity. It also brings economic incentives for the buyers as Flats in Thoraipakkam or villas in OMR will always be beneficial. Investment in Chennai also has a high rate of ROI.
The construction cost in Chennai varies between Rs 1450 per sq. ft. to Rs 4500 per sq. ft. The cost of some localities in Chennai are Veppampattu with Rs 3298 per sq. ft., Avadi at Rs 3454 per sq. ft., Guduvancheri at Rs 3474 per sq. ft., Chromepet at Rs 4256 per sq. ft., Medavakkam at Rs 4442 per sq. ft., etc.
Medavakkam is also an excellent place to invest as it is reported as the fastest developing place in Chennai.