Chennai Realty. Whats in Store

I just got to my senses after a tiring 2 week trip to India and undergoing all the pain of travelling back on Air India. After spending 2 weeks at chennai, i could only come to conclusion that the market is slump but not weak. People are buying properties but lesser in number.
 

Everybody is probably waiting for the big slump in real estate prices but i don’t think so there would be slump of more than 10% overall if at all it happens. A lot of areas have witnessed appreciation and showing no signs of slowing down. One area where there is disappointing slump is OMR, the much touted IT corridor of Chennai.

Heavy traffic, poor infrastructure, STPI concessions ending by 2009 and lot of space availability has only added to its problems. Builders are finding it hard to sell their property for the current prices. With economy priced flats DLF,Olympia on the cards people prefer to wait rather that buy now.

I got to hear DLF will be there any time but its having a tough time getting its OMR project approval. Nevertheless price for sure will be in the range of 3200- 3400. I really doubt if its a good idea to invest in OMR because i feel there will be huge supply of apartments there by 2009 end when biggies like Jains,Purva,Mantri, Victoria Towers, Akshaya, Vishranti, Lancor would be complete their projects and i feel there might be a more supply less demand scenario.

A lot depends on STPI tax rules which ends on 2009. I sincerely hope it would be at least extended for another 5 years given the fact that IT companies are already battling rupee rise and tax exemption is the last thing they wanted to lose. Remember a lot of IT parks in OMR is registered as STPI and not SEZ. Presence of very few SEZ on the OMR region is a another worrying factor. Remember all SEZ has 15 years tax holidays.

Velachery is raising with out any stop and this is one area which has appreciated nearly 100% in the last 2 years. All apartments which were selling for Rs 2400 per sq ft is now quoted at Rs 4500 -5000.

Traffic has increased 3 times compared to last year. I could see visible difference in the traffic compared to last year and had tough time driving there. I sincerely hope investing any where in City would only fetch rich dividends. Chennai is fast expanding and there is not much place available in City and the only area to expand is outskirts like Avadi, Ponnamalee, Vandalur, Urappakkam.

I have lived all my life in Avadi and i can see that there is a tremendous scope for price appreciation for that area given the fact that its right in the middle with easy access to Ambattur IT parks, DLF and Sriperumbadur. Land rates are going cheap now at Rs 10-15 Lakhs and its worth considering a land there.

Overall i feel the market is current taking a short breath only to start moving once home loans and other factors become favorable. Builders are ready for a price cut now and this is the best time to bargain and strike a deal with them.

As i always say never time the market,be it stocks or property.

 

 
 

3 Comments

  1. Yes SV,

    I too read this today. This is will be the exact scenario in atleast one region in Chennai. OMR. Huge properties, lot of them and high prices would only result in low intake and high vacancies.

  2. srinivas

    what do you people think the ideal pricing should be for premium apartments in sriperumbudur? right next to st johns international and nokia and opposite to proposed airport.

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