Homes below Rs 50 lakh to come up in Chennai

Chennai’s residential property prices have been gradually inching high over the last four years. The budgetlevel of the market has also moved in a similar fashion. The share of flats below Rs 50 lakh in the total units launched has been on a continuous rise moving from 64 per cent in 2010 to more than 75 per cent in 2013.

In a recent survey by Knight Frank India analysis, it has been revealed that 75 per cent of the total units released during 2013 in the city cost less than Rs 50 lakh, which is significantly higher than the 64 per cent figure in 2010. Increasing range of new launches in the peripheral markets where the prices are still below Rs 4,000 per sq ft definitely illustrates this trend.

In a related development, resistance among home buyers towards large-sized apartments in the peripheral markets over the years has also compelled developers to reconsider on the ideal size of an apartment. The average size of 2 and 3 BHK units has been brought down to 650-1300 sq ft during the last couple of years from the previous 900-1800 sq ft. There is another reason for the sudden shift in the pattern.

The development control rules of Chennai mandate residential projects of over 1 hectare in land area to earmark a minimum area of 10 per cent of the project size for lower earnings group with unit size not exceeding 484 sq ft. Since most of the new projects in the peripheral markets are being developed on the land area above 1 hectare, source of smaller sized apartments has been rising continually since 2008 since the rule came into effect.

The demand supply dynamics have a direct bearing on the price movement and Chennai housing market is by no means an exception to this rule. The pace of price rise in the various places of South Chennai has been relatively slow when compared to other micro markets of the city. Property prices in west and north Chennai have been having steady especially in locations that are closer to the city centre. Locations such as Tondiarpet, Madhavaram, Perambur and Ayanavaram have experienced significant price increase in the last two years backed by the confined supply of new projects.

Central Chennai has been able to carry on to the existing price level with certain locations witnessing minor appreciation despite slowing sales volume. Since most of the tasks on offer cater to the luxury segment with ticket size upwards of Rs 1.0 crore, developers are willing to hold on to the unsold inventory in anticipations of achieving higher prices at a later date.