Following relaxations in lockdown restrictions, the residential market in Chennai, which had witnessed a slump due to the pandemic, is now slowly showing signs of recovery. Real estate firms are even queuing up new launches.
Estimates provided by real estate firm Knight Frank show that city-based developers managed to sell over 3,085 new properties between July and September, when compared to 4,240 during the same period last year. The analysis done by Knight Frank pointed out that with developers innovating on marketing prowess to include financial benefits, discounts and easy payment options to attract buyers during the lockdown, sales have seen an uptick in the third quarter of 2020 over the preceding one.
‘Demand for housing’
“The lockdown resulted in a pent-up demand for housing. Homebuyers who were fence-sitting before COVID-19 are back in the market to take advantage of the reduction in interest rates on home loans and the availability of ready-to-move-in properties,” said Sanjay Chugh, city head (Chennai), ANAROCK Property Consultants.
“Residential properties [apartments/plotted land] priced at ₹25 lakh-₹75 lakh are witnessing maximum traction from homebuyers in suburban areas. The work-from-home option has changed preferences towards larger apartments in the suburbs. Homebuyers are willing to travel a little further to buy a larger home to accommodate a dedicated working space within their houses,” he added.
Padam Dugar, vice-chairman and managing director of Dugar Housing Limited and president of the Confederation of Real Estate Developers’ Associations of India (CREDAI)-Chennai chapter, said the post-pandemic home had become a necessity rather than an investment.
“Lower home-loan interest rates have helped sales in the city. It will get a better boost if the Tamil Nadu government comes out with some incentives by reducing the stamp duty,” said Prakash Challa, chairman and managing director of SSPDL.
Chennai’s residential real estate market also witnessed an increase in launches, from 182 units in the second quarter of 2020 to 1,487 in the third, according to data provided by JLL Research (the comparison pertains only to the last two quarters, since the current crisis has no parallel, and has infused uncertainty that has not been witnessed in the past decades).
The western suburbs (Porur, Ambattur and Padi) accounted for nearly 80% of the launches during the quarter. JLL’s data showed that residential real estate witnessed pent-up demand, translating into sales, and 1,570 units were sold during Q3 2020. Sales were concentrated in the southern (Padur, Navalur, Perumbakkam and Kilkattalai) and western suburbs, which contributed over 80% to the quarter.
Maximum sales traction was witnessed in the affordable and lower-mid segments. Subsequently, enquiries for larger-sized homes from a certain section of prospective buyers also increased, as preferences shifted towards homes with more open spaces and study rooms.
“There has been a marginal decline in unsold inventory during the quarter, as sales outpaced launches. While quoted residential prices remain stagnant, developers are offering various financial schemes, low booking amounts and other freebies to attract homebuyers,” said Siva Krishnan, managing director, Chennai, JLL India.
Two real estate developers said they had managed to sell properties after relaxations in lockdown norms, but consumers were on a bargaining spree. One of them said he had to dole out lucrative incentives to ensure that the consumer picked his space. “Enquires are coming in, and demand is picking up at a slow pace,” he added. Most developers said with work-from-home options, consumers now wanted better spaces of their own.