Key Chennai areas witness increase in property prices

 K Ramanathan

Chennai, June 4: Though Chennai has witnessed a dip in number of housing units launched in the last three months, a few areas in it like Velachery, T Nagar, Anna Nagar, Kotturpuram and Mylapore have recorded the highest appreciation in terms of capital value across India, according to a report. 

Velachery in mid-end segment has witnessed the highest year-on-year rise of 40 per cent in property prices. This rise is attributed to the surge in demand and due to upcoming infrastructure projects. Also, T Nagar and Mylapore recorded 21-26 per cent rise in capital value after the launch of new projects at high capital values, a report released by property consultant Cushman & Wakefield, said. 

In the high-end segment, Anna Nagar saw the highest increase of 38 per cent followed by Kotturpuram (25 per cent) and Nungambakkam (22 per cent), the report said.  

On the flip side, Chennai recorded 39 per cent fall in fresh supply during the last three months with only 2,285 units compared to 3,730 units launched in the last quarter. 

Most of the micro-markets are likely to have stable capital and rental values in the coming months, predicted the report which, however, said that certain locations such as Velachery, T Nagar and Adyar in the mid- segment are expected to witness an increase in capital values due to high demand whilst East Coast Road, Rajiv Gandhi Salai and GST would witness a number of new launches in the next quarter.

The report said that developers launched an estimated 38,000 residential units in the first quarter of 2013 in major cities registering a marginal decline of approximately two per cent over the previous quarter.

Of all the cities, Bangalore recorded the highest number of launches in  the first quarter of 2013 at 11,622 units contributing close to 31 per cent of the overall new supply in the top eight cities followed by NCR and Mumbai. 

Shveta Jain, executive director (residential services), Cushman & Wakefield, said, 'The country’s residential market witnessed some vibrant launch activity during the quarter despite the sluggish economic environment. Funding will remain a major challenge for developers while executing these projects. Given the rise in construction cost, cost of land and funding no major price cuts have been possible in the current subdued business environment. Developers are now following different strategies like the 20:80 scheme and selling smaller configurations at lower overall ticket prices to boost their sales.'

On capital value appreciation, Shveta said, 'Capital values have largely remained stable across most micro- markets except for some key locations in NCR, Chennai and Bangalore. Prices are expected to remain largely stable in the coming months as developers will be looking mainly to boost sale and increase cash flows in projects being currently executed.'

Bangalore tops the chart

Large projects launched in the affordable segment in peripheral locations of north, south-east and south-west Bangalore was the reason for the substantial increase in launches. Also, infrastructure development initiatives have resulted in increased preference for the northern locations which contributed to 25 per cent of the total units launched. 

Pune recorded an increase of around 109 per cent compared to the last quarter of 2012 due to a spillover of project launches from last year while NCR witnessed the launch of approximately 7,600 units but recorded a 39 per cent decline in new launches over last quarter. 

Mumbai too witnessed a decline, but marginally. The western metropolis saw the launch of close to 7,200 units during the first quarter of 2013, a marginal decline of three per cent compared to the last quarter of 2012. 

All major cities saw a decline in new launches compared to the previous quarter, except for Bangalore, Pune and Kolkata. The highest decline in units launched was witnessed in Hyderabad which saw an 89 per cent decline in number of launches during the quarter, the report further stated.