Chennai has witnessed several project launches despite subdued economic conditions. Approximately 26,000 residential units were launched in the city during 2012, signifying an increase of almost 73 per cent over the previous year, according to a survey by Knight Frank India research. This reflects the impact of the improved economic conditions since 2011 and the resultant optimism in the residential market.
An estimated 77,500 units were in varying stages of construction across the city till December 2012. A majority of the residential projects launched are focused in south Chennai, accounting for about 60 per cent of the total units launched in the city. The southern micro-market is followed by west Chennai as the region witnessed the second highest number of new residential launches during 2012.
The northern part of the city accounted for 7 per cent of the total units, an improvement of 17 per cent over the previous year’s share. The central part accounted for a minimal percentage of the total number of new launches in the city. This can be attributed to the dearth of suitable plots for development in the region.
A significant development is the emergence of preference for living in gated township projects promoting the concept of community living. This is one reason which has increased outside developers to opt for integrated township projects in the suburbs and peripheral areas.
On the absorption front, the city witnessed a steady intake in both 2011 and 2012 from 27,500 units in 2011 to 29,000 units in 2012. High absorption was observed in the affordable and mid-end category in locations like OMR that offered an acceptable degree of social infrastructure. However, new launches led to the proportion of unsold under construction units at around 40 per cent up from its previous level of 31 per cent. In many cases, developers resorted to giving away freebies and came up with various schemes to attract buyers during the festive season.
Chennai has been a relatively steady residential property market as compared to what has been witnessed in other metros. While growth momentum may not be sustained, developers are expected to continue executing their projects. Affordable housing projects will continue to rule the roost in areas with social infrastructure lagging and lower capital values.
With improved economic scenario and market sentiments, the city will continue to attract investments from several industries due to its strategic location, availability of skilled manpower and improving infrastructure.