Unsold stock of luxury units goes up by 33% in city: study

The top areas with maximum unsold luxury stock are Anna Nagar, Adyar, Perambur, Thiruvanmiyur and Besant

The top areas with maximum unsold luxury stock are Anna Nagar, Adyar, Perambur, Thiruvanmiyur and Besant   | Photo Credit: M_Karunakaran

Demand tilting towards affordable and mid-segment housing

While the city’s unsold luxury stock increased by 33% in a year, the tilt has been towards affordable and mid-segment housing, according to a recent analysis done by Anarock Property Consultants.

The unsold luxury stock rose from 2,480 units in 2018 to nearly 3,300 units by 2019-end, the analysis claimed. The value of the unsold stock is pegged at ₹5,730 crore at the end of 2019. The average size of the unsold luxury unit is approximately 2,000 sq ft, while the average property price is at ₹13,000 per sq ft.

“The city’s housing demand has moulded itself over the last few years, and it now largely tilts towards affordable and mid-segment housing. Even investors are keeping away from the luxury residential segment,” said Sanjay Chugh, city head-Chennai, Anarock Property Consultants.

“Further, even while the overall new supply, across various budget segments, declined in Chennai by as much as 17% in 2019, against 2018, new supply in the luxury segment saw an uptick of 29%,” he said. Developers added more than 1,100 new luxury units in 2019, priced above ₹1.5 crore.

Drop in rentals

As per Anarock research, the top areas with maximum unsold stock in luxury category (>₹1.5 cr.) are Anna Nagar, Adyar, Perambur, Thiruvanmiyur and Besant Nagar.

Srinivas Anikipatti, senior director-Tamil Nadu and Kerala, Knight Frank India, said in the luxury segment, floors were not innovative and did not cater to demand. He added, “Sizes planned are too large with smaller bedrooms and larger living spaces, and this layout is not preferential to customers.” According to him, rentals have dropped. “A high-end customer can pay rental and live in a luxurious community, without paying the cost of it. For a luxury apartment, the ROI via rental is sub 2%. So rent v/s buy, a rent option is a financially sensible one,” he said.

Siva Krishnan, managing director-Chennai, Jones Lang LaSalle, said: “You cannot cut prices after a point in luxury projects. That’s one reason why such inventory is stagnant. But we are seeing good traction in certain properties. It depends on the location too,” he added.

The managing director of a real estate firm, who wished anonymity, agreed that stock has been piling up in the luxury segment. “They will find takers in the coming months. This is also not happening just in Chennai. This has been the trend across the country,” he said. He also pointed out that the term luxury varies from each location. “What is luxury in Anna Nagar will be a mid-segment in Nungambakkam,” he said.

In India, unsold luxury stock had increased by 10% y-o-y in the top 7 cities by 2019-end. There were 89,200 units of unsold luxury stock (homes priced > ₹1.5 Crore) by 2019-end, as against 81,290 units in 2018. The overall value of unsold luxury stock, as on 2019, is estimated to be nearly ₹1.59 lakh crore, which is 34% of total unsold stock value.

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Printable version | Mar 29, 2020 2:40:15 AM |

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