Top developers have now started selling plots. Is the situation so bleak?
Well, plots help generate quick money. The cost of acquiring plots is also fairly low. This tells me that developers are keen to finish their existing projects, and are not in a hurry to bite off more than they can chew.
The number of new projects has come down greatly in the last few months. But yes, I agree that the market is pretty stagnant at the moment.
What has caused this?
Let’s remember that Chennai had somehow remained insulated from all the vagaries between 2008 and 2013. Even in the face of recession, the city registered an annual growth of about 20 per cent. It also helped that Chennai’s investors behave like end-users. They don’t buy without doing much research, and when they do, they aren’t in a hurry to sell. This creates stability in the market.
The present slump is a result of several factors: the floods, the Mugalivakkam disaster, delivery issues, delay in the procurement of approvals, reduced economic activity…
Do you think the elections played a part too?
In Tamil Nadu, power has always oscillated between the DMK and the ADMK. Hence, elections don’t really have a significant effect on the residential market. What I’m more excited by is the possible promulgation of RERA (Real Estate Regulatory Authority), which will ensure transparency and allay consumer concerns over factors like delivery and project quality.
Given the stagnancy of the market now, is it wise to invest?
Absolutely. This is the best time for a smart investor to step in. This is what we call a perceived bad market.
Developers are keen to clear their stock, and will be happy to provide discounts, which could help offset the steep prices in some pockets.
Is there more the developers can do to bolster customer sentiment?
They should focus more on the finer aspects of their project: the quality of floor tiles, for example. They cannot just hope to distribute brochures and sell units as they have done for years now. Do you know that almost 30 per cent of units in any project is sold through references?
Any new promising localities in the city?
Well, IT has traditionally been the prime mover in Chennai. Considering the city grows linearly, as opposed to Bengaluru which grows concentrically, the focus continues to be on OMR and GST Road. But Ottiambakkam that lies parallel to OMR is a promising area to invest in. It is affordable too, with the price being around Rs. 3,000 a sq ft. Ambattur and Oragadam could be other options too.
But a story in wait surely?
I know what you mean. While the developers have done their share, the social infrastructure hasn’t really kicked in.
But I’d not write it off yet. It’s just a matter of time before the Chennai market witnesses a turnaround.
