There has been a sharp dip in the launch of residential projects as well as sales of finished houses in Chennai in 2014, largely due to the Moulivakkam building collapse.
According to the findings of a survey released on Wednesday, the trend is expected to continue for some more time.
There was a reduction of 25 per cent in new project launches in 2014 compared to the previous year, while the number of residential units sold in 2014 fell by 14 per cent as against 2013, according to the India Real Estate Outlook by Knight Frank India.
This is in keeping with the nationwide downward swing in launch of new residential projects as well as sale of new properties.
Increase in project costs and inability to invest in property among the salaried class and other sections have also been cited as important reasons.
In Chennai, the Moulivakkam building collapse was an important reason for the slowdown in the construction industry, leading to a reduction in the launch of new projects, which at 25 per cent was high, yet much lower than Mumbai (43 per cent) and Hyderabad (30 per cent).
“There were a combination of factors that led to reduction in sales volume of completed projects and new launches — the economy did not revive and sand buyers were waiting for the rates to come down, which did not happen,” says Kanchana Krishna, head, Knight Frank, Chennai.
The survey reveals some positive aspects too — there has been a reduction in vacant office property but this year will witness increased absorption of office space.
Absorption of office space was the maximum in secondary business districts — Guindy and Velachery — and surrounding areas.
Ms. Krishna says the housing sector is hopeful of 2015 being a ‘year of recovery’. With the Reserve Bank of India’s cuts on policy interest rates and other measures from the Centre, there are positive signs of a turnaround to the pre-2012 global financial crisis situation.
