Residential market trends over the last five years across India, including Chennai, indicate that 2013-14 was the year when the sector looked vibrant.
After that, sales began plummeting and there are no clear revival signs.
Chennai saw average sales decline by 45%. In 2013, Chennai sold 24,700 units, and the following year, the number came down to 23,000 units. Only around 13,100 units were sold in 2017.
In India, residential unit sales have dropped by around 40% from the average of 2013-2014 to 2017. An analysis done by ANAROCK property consultants shows that in the last five years, an average of 3.3 lakh units were sold annually.
Declining demand
Source: ANAROCK Property Consultants
Thereafter, with too many project launches, unsold inventory began piling up across top seven cities.
Older areas stable
Commenting on the Chennai market, Anuj Puri, chairman, ANAROCK property consultants, said, “Unlike some other cities, Chennai’s real estate market has many ofi the ndustry fundamentals firmly in place, with the IT/ITeS, manufacturing and the services sector continuing to contribute to its overall growth.”
According to him, the areas most affected by the slowdown were growing peripheral areas like OMR and coast-facing areas. But the established areas are stable. “For these reasons, Chennai’s market recovery depends on the resolution of these factors,” he added.
Several factors
During 2015-16, housing sales dropped significantly nationally. On an average, only 2.7 lakh units were sold across the top seven cities during this period, recording a significant drop of 17% from the average sales of 2013-14.
Mr. Puri said, “When demonetisation hit the nation during the fourth quarter of 2016, the situation turned from grave to savage. The real estate sector was battered with RERA and GST, which severely shook up the sector.”
“The new market dynamics and strengthened regulatory environment have now more or less eliminated this unwholesome dynamic,” Mr. Puri said.
“Reduced buyer confidence due to irrational project delays and diversion of capital also contributed significantly to the decline in sales in some parts of the country. RERA is gradually reversing this unwholesome aspect; however, our cities’ real estate markets will continue to pay the price of speculative activity for some more time to come,” he said.
