The growth is moderate here
The Hindu : The growth is moderate hereMany potential buyers adopted a “wait and watch” approach in 2007 preferring to live in rented accommodation than buy property, writes Ramesh NairAfter a record 50 per cent plus price increase per annum in 2005 and 2006, the Chennai residential real estate market witnessed moderate growth in 2007 with prices increasing 8-12 per cent across various micro markets. However most of this price increase was seen in the first quarter of the year when prices stagnated. Although the office market saw a record 7 million sq ft absorption in 2007 indicating new job creation and a strong economy, this did not translate into direct increase in prices and volumes in the residential market as witnessed over the last three years.Many potential buyers adopted a “wait and watch” approach in 2007 preferring to continue staying in rented accommodation than buy. The number of apartments being sold in 4Q 2007 was also lower than 4Q 2006. Also, the home loan market, which was growing at 30 per cent plus in 2005 and 2006, saw a growth of only 10-15 per cent.The key reason behind this slowdown has been higher prices and interest rates, impacting affordability, and to a lesser extent excess supply in a few micro markets, rather than slow down of economy. Developers, who were selling their entire projects in a few days, are now taking months to sell their unsold stock. But no major drop in prices is expected immediately as the vacancy rate of unsold completed residential real estate stock is still negligible. Developers have started offering a variety of offers such as free car parks and flexible financing options such as interest waiver during construction period so that they do not have to bring down the prices.NegotiabilityThe year 2007 saw Chennai’s residential market returning to more normal levels of activity. Properties with deficiencies in location or overly optimistic asking…More
