Besides demonetisation and GST, location of the units in places affected by December floods a reason for poor uptake

Chennai has 20% completed unsold inventory in real estate, the highest percentage in the country, according to a recent survey by real estate services firm, Jones Lang Lasalle (JLL).

As per a JLL survey, as many as 42,500 units are unsold, of which nearly 8,500 are in ready-to-move-in condition.

The southern suburbs of Chennai including Old Mahabalipuram Road and East Coast Road have approximately unsold 30,000 units, which account for 75% of the total unsold inventory, while western suburbs, including NH 4 and GST road, recorded the second largest volume of unsold inventory of 8,000 units. Both these locations are driven by end-user demand, which has been slow in uptake last year.

A close scrutiny of the data shows that most of the unsold inventory is in locations that were impacted in the deluge of December 2015, which drastically brought down the attractiveness of such projects.

Having said that, Chennai has seen a strong trend in the uptake of commercial office space in the last few quarters. “If the trend continues to remain strong, we should expect to see a simultaneous uptake in residential sector, albeit, the trend usually takes a few quarters to follow,” said, Ramesh Nair, CEO & Country Head, JLL India.

Buyers’ market

“Largely end-user driven, the Chennai residential market has tried to maintain its balance by limiting the unit launches in the last few quarters. Capital values have remained stable, indicating it to be a buyers’ market. The prolonged period of low activity in this asset class is, however, impacting the market, which is not witnessing investments to its true potential,” he said.

Suresh Krishn, President, Credai Chennai,said the unsold inventory would soon find takers. It is just a matter of time. “Currently, the market trend is customers are looking at ready-to-move homes. They want projects which can be delivered soon and occupied immediately.”

He said other real estate firms also felt this trend during FAIRPRO 2018, a real estate expo organised in the city last week. “The expo generated revenues of around ₹176 crore, which indicates the positive sentiments in this sector,” he said.

“Demonetisation, RERA and GST hit the realty sector hard in Chennai in 2017. Also, there was an impact on the inventory because of natural calamities like Cyclone Vardah, flood in the city, and the overall decrease in the number of jobs being created,” said T. Chitty Babu, Chairman and CEO, Akshaya Pvt. Ltd.

“With the advent of new sectors like affordable housing and smart homes, the real estate sector is on a revival mode now. We have seen a steady growth in the demand from homebuyers in the past few months and this is the right time for homebuyers to invest in homes as we expect the prices and home loan interest rates to go up due to the constant rise in input costs and reduced new launches.”

The survey showed that as many as 4,40,000 residential units remain unsold across key cities of India at the end of 2017.