hema

Chennai real estate is now on a downward slide.

Market studies have shown that prices of land, apartments and even commercial rentals, particularly that of IT buildings, have come down by about 15 per cent.

Land in Sriperumbudur, which was selling at Rs.7 lakh to 8 lakh per ground, has come down to Rs.5 lakh to 5.5 lakh. Layouts promoted at Vadkapattu, on the outskirts of Chennai, which were selling thick and fast, are stagnating. About 25 per cent of the plots in many layouts, priced at Rs. 650 per sq.ft., remains unsold even after months.

If you are a serious buyer, prices can be negotiated considerably, say brokers. The stagnation is visible. Not that the big builders are finding it easy. One of the upmarket builders near Navalur, on Old Mahabalipuram Road, has about 50 per cent of his apartments unsold. Last year’s euphoria has died down.

Srinivasa Shipping and Property Development Limited Managing Director Prakash Challa estimates about 20 million sq.ft. of IT space will be added to Chennai by 2008 and may put pressure on rentals.

A few promoters confirm off the record that IT companies, which were willing to pay rental of Rs.35 to 40 per sq.ft. until a few months ago, are now offering only Rs.25 to 28 per sq.ft. In August 2006, similar commercial space in T. Nagar was rented out for Rs.70 per sq.ft.

Builders’ Association of India (Southern Centre) chairman A.V. Ramaswamy confirms the downward trend and attributes it to higher land prices, speculation, rising construction costs and higher interest rates.

Experts say the price to earning ratio of Chennai properties is high and has reached unsustainable levels. Such corrections are bound to happen. Some predict that stagnation in property market will lead to further drop in prices. The current market correction, however, has not made housing or land affordable to large sections of people. The biggest gainers will be big realtors, who could buy large tracts of land at a relatively lower price.

- The Hindu
6th July,2007

K.R.Rangarajan

Chennai cannot sustain high price levels for long periods.correction sets in much earlier as the market here is less speculative.Big realtors can take advantage of falling land prices and buy large tracts of land for future development.Chennai is the most promising city of the future what with so much of investments taking place in telecom,auto and IT sectors.

vikram

Such corrections are good for the markets and enforce that the market forces are intact with fundamentals.

amv

Expect more corrections as impact of subprime crises flows through to Indian credit markets and real estate markets. Real estate markets are in general more exposed to subprime/credit crises than equity markets, in my view.

Those looking to buy, bargain hard, wait.....there is no need to panic there is a lot of land out there.

jayanthi1024

When is the right time to buy? We are NRIs and we still find it on the high end. Any suggestions on the right time to buy would be very helpful?

johnson_raj

I do not see any correction as i am following chennai real estate for past 9 months. Actually I am looking to buy. But the rates are increasing everyday.

nlaksham

Hema,

The downward trend you are seeing in chennai real estate prices, do you forsee it continuing for a while. I have been told that at Mylapore the per sq.ft prices could be around 12,000 for relatively new buildings ( 3 years or less). What is your take.

thanks.

Narayan

Jaya

I am watching market for past one year. Seeing everyday news about Forgery cases, I still dont have confidence level in buying property in chennai. News in HINDU this week about the person sold 9 Flats to 18 People.
I am afraid to buy even apartments. I dont live in India. I only make short visits, but tried my level best to find a property for me. Everytime got irritated by this brokers.

doniv

Hi:

I have been looking for properties within the city and south of the city for the past 6 months. I can definitely confirm that prices have stagnated in areas and have come down in other areas of the city. This includes land as well as flats. For instance, a prestigious construction firm in chennai still have flats unsold in vadapalani even after decreasing the per sq. ft prices by 10%. Another evidence is the fact that the sub-registrar for each zones have seen the number of transactions not as high as before and have suggested this trend to continue. In class I areas of the south of the city, prices have come down. It is prudent to wait for another 3-6 months.

Jaya

I am a NRI, looking through my friends. Not able to decide on any place.
My friends always saying about this forgery cases in Chennai.
Looking forward to buy a land. But looks like there is no lands available in the city limit. I dont see the prices coming down also. It is still bit on the higher side. I dont forsee them come down. I get mail from one broker who deals with the auction properties. It seems lot of banks selling flats in auction as their customers fail to pay their EMI's. Let us see how the market is going to go. Hope to buy something in my Home Country