Mint Explainer: What retains Chennai’s inexpensive housing market momentum going

Chennai stays considered one of India’s most inexpensive housing markets among the many high eight cities in response to Knight Frank India’s Affordability Index. While Ahmedabad baggage the highest place throughout India when it comes to affordability within the housing area, Chennai stands third subsequent to Pune nationally and it stays high in South India.

Since H2 2020, the Chennai residential market has been steadily enhancing, with gross sales momentum progressively rising to six,951 items bought in H1 2022, a 21% YoY improve, the Knight Frank report mentioned.

Mint spoke to specialists within the housing business to grasp what makes Chennai distinctive to proceed to function on the listing and the way the way forward for inexpensive housing appears to be like like.

“Chennai’s property market has been constantly doing effectively through the years. The metropolis thrives in manufacturing significantly the automotive business and serves as a hub for ITs and logistics with its effectively unfold out and higher infrastructure providing tens of hundreds of jobs making it a most well-liked alternative,” Rajesh Lund, Joint Secretary, Confederation of Real Estate Developers’ Association of India (CREDAI) South said.

Home builders also point out that the city’s mixed economy and reasonable cost of living when compared to other metros in India as primary reasons for people to move in here.

There has also been a growing trend towards premiumization across Indian cities in almost every sector and the housing market is no exception. Industry experts say Chennai has a different approach towards this.

“Affordable homes in Chennai usually come with most of the amenities provided in premium properties such as more open spaces, swimming pools and others. These are generally priced between ₹60 lakh to ₹1.2 cr. Upmarkets on the other hand are priced between ₹1.2 cr to ₹5 cr. The hyper luxury properties have started picking up too,” Rajesh Lund additionally mentioned.

Kumar, founder and Chief Managing Director of Navin Housing & Properties Ltd, considered one of Chennai’s high builders, mentioned that the housing sector in Chennai is predominantly an finish consumer market.

“Purchasers look out for liveability and there are a selection of necessities. Builders attempt to match facilities equal to the premium markets and that is potential due to proper pricing. There aren’t any flats within the metropolis as little as ₹4,000/sq ft and it goes on until ₹30,000/sq ft and actually the typical property worth in relation to flats is increased in Chennai than Bengaluru,” Kumar adds.

The industry also has deep concerns over inflation and the RBI’s repo rate hikes which has made home loans costlier.

The central bank has raised benchmark repo rate by 190 basis points since May to tackle inflation and it is expected to raise rates further till March. The inflation rate is estimated to fall under RBI’s tolerance band of 4-6% only during the first quarter of the next fiscal year.

Kumar however maintained an optimistic tone while talking about inflation and its impact on housing businesses.

“There isn’t any effect in the short term and I am confident over inflation getting back to normalcy in the next six months,” he mentioned.

“Builders too are cautious and are taking measured choices with an understanding of the exterior setting by not getting themselves dedicated in too many tasks to maintain the demand and provide balanced,” he adds.

Kumar in fact calls this the prime time for people especially the NRIs looking out to invest in appreciating assets.

Knight Frank’s report interestingly points out that the sales were concentrated in the south and west micro-markets and together accounted for 93% of the total sales during H1 2022. Mint therefore spoke to builders who work on affordable housing projects particularly in these emerging markets.

These builders too had a sanguine view towards the future of affordable housing though they find the market a bit sluggish for the last three months because of the uncertainty in the job market and the increase in home loan EMIs.

“Affordable housing is expected to thrive in the coming years, particularly those in the emerging markets as they largely cater to first time buyers. The properties built in these areas are sold at ₹40 lakh to ₹60 lakh and these are compact 2 BHK homes with basic amenities,” Saravanan, Director, Venus Homez Pvt Ltd mentioned.

While speaking about gross sales and advertising and marketing methods in an more and more digital world, Saravanan mentioned that it has change into obligatory to have a strong on-line presence of your small business significantly after the pandemic. He had dominated out the thought of mediators because it hasn’t labored out personally for him in contrast to the attain and enquiries he will get by way of on-line and different types of out of house and print promoting.

Business sentiment within the inexpensive housing phase stays robust and a beneficial environment for homebuyers is seen as pandemic recedes with lowered hazard of disruption. With hopes of inflation getting again to normalcy within the coming months from each builders and patrons, Chennai’s inexpensive housing is predicted to growth additional.

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