CHENNAI: The stability in Information Technology (IT) and Information Technology Enabled Services (ITES) and the dip in inflation are expected to spur the demand for residential properties in Chennai, according to a real estate research firm.
Siva Krishnan, Head of residential services (Chennai), Jones Lang LaSalle India, told City Express on Friday that Chennai’s residential real estate market this year looked quite rosy. The increased job security in the sector has helped the real-estate market to maintain buoyancy and a positive outlook, he said.
“Over the last 12 months, it has become increasingly evident that Chennai’s residential real estate market is significantly dependent on the IT/ITES sectors. With employment stability in these sectors looking a lot better now than it did in 2010, demand for homes has now reached a comfortable and dependable growth trajectory from which developers are taking their market cues,” he said.
“We expect overall demand for residential properties in Chennai to increase once the interest rates stabilise from their current peak,” Krishnan said, in his report. He also said FAIRPRO 2012 ( the annual real estate expo of Tamil Nadu) will give a fillip to the real estate market in Chennai in terms of clarity and benefits to the developers.
During the last six months, the real estate sector had taken a hit, as approvals were not happening. T Chitty Babu, President of Confederation of Real Estate Developers’ Associations of India (CREDAI), also highlighted this problem recently.
However, during the last two months, things have improved and Babu said he feels that FAIRPRO will ride on the stability of the IT and ITES sectors. “We have been receiving a lot of queries from the IT sector since last quarter and this is due to the stability in this sector,” said Babu. He is also hopeful that the timing of the expo, which will begin just before the budget, will give ample time to customers to think and plan their buying decisions accordingly.
Interestingly, the preferred size for three BHK flats in Chennai has increased from 1,200-1,300 square feet during the recession to 1,400-1,500 square feet in the revival phase. The preference size for 2BHK flats has also increased from 850-950 square feet to about 1,100-1,200 square feet.
“The main reason for this upgrade in preferences is increase in budgets, which was made possible by improvement in the performance of the IT/ ITES sectors,” Krishnan said.
There is a very healthy demand in the primary and secondary markets, since supply is scarce in both due to the severe lack of land within the city. Land pricing has, in fact, surpassed the buying capacity of developers and this has put pressure on their ability to come up with viable residential products.
“Lack of supply and exorbitant pricing are causing both the end users and the investor segments to take a closer look at suburbs with decent infrastructure,” Krishnan said.