Chennai commercial realty is picking up, residential is slow

From News Today

Chennai: There may not be much to cheer about Chennai residential market but office space leasing activity is picking up in the city.

As for Chennai, oversupply of units, compounded by a sudden hit in buyer confidence after the December deluge, has pushed the supply and demand of real estate in residential market to a five-year low, said a report by Knight Frank, a global property consultancy.

Annual demand and supply levels dropped to five-year lows in 2015 as home buyers and developers continued to shy away from the market, waiting for more concrete signs of revival, said the report.

The number of residential units sold in Chennai during the calendar year 2015 has been pegged at 18,511, against 20,556 in 2014. Price growth has been at the lowest in 10 years and sales in the premium segment has stooped by 36 per cent year-on-year making it the hardest hit segment.

Residential market continues to be affected as both buyers and developers continue to shy away from the market. I would suggest this would be the right time for home buyers to go ahead as the prices have plummeted. However, it is recommended for investors to wait,” said Kanchana Krishnan, director – Chennai, Knight Frank.

On the other hand, demand for Chennai’s office market rose for the third consecutive year with absorption of 5.1 million sq ft, against 3.7 million sq ft in 2014.

According to the report, large-sized deals from players like Yes Bank, Astra Zeneca, Sutherland and Ericsson have helped to maintain the office market growth trajectory in tact.

“Chennai’s office absorption during 2015 has gone up by a whopping 26 percentage, compared to the previous year. We expect demand to pick up in the coming months,” Kanchana said.

West Zone (Ambattur, Porur, Mugappair) performs well.

Units sold in second-half of 2015 – 3,008, against 2,385 in first-half. Reasons: Increased uptake of low-priced inventory and good connectivity and infrastructure.

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