By Gireesh Babu
The real estate market in Chennai is said to be conservative, compared with the aggressive growth witnessed in other major cities. This trend continued in 2012, according to industry experts.
The city market, both for commercial and residential space, posted growth during the year, while in many other cities the options for growth became limited. The commercial market was at around 4.1 million sft this year, which is normal considering the growth has been of 3.5-4 million sft every year, says Badal Yagnik, managing director – Chennai & Coimbatore of real estate consultant firm Jones Lang LaSalle India.
The residential market also posted growth and for the first time in Chennai, developers started thinking of building huge apartments in premium segments in the city, a sign of maturity. "The city is expected to see launch of 4-5 premium residential project with 100-200 apartments priced from Rs 20,000 per sft, in 2013," he adds.
Sharing similar views, N Hariharan, office director- Chennai, Cushman & Wakefield, says all the segments of the Chennai realty market were cautiously optimistic. "In comparison with last year, lesser number of residential launches or supply of malls has taken place, with only office supply bucking the trend. Still, Chennai fares better than other cities."
The city's mid-end residential segment was quite upbeat, with 80 per cent of the projects launched during 2012 belonging to this category. Augmented hiring and spill over demand were the growth drivers.
"In spite of the huge slew of launches, of about 21,000 residential units during this year, Chennai saw the highest increase in average percentage capital value change over last year in the mid-end segment at 16 per cent among the other top cities of NCR, Mumbai, Pune, Bengaluru, Hyderabad and Kolkata," he adds.
In 2012, office space recorded the influx of 2.52 million sft of Grade A space -- almost double the supply of 2011, while 27 per cent of the total supply was in special economic zones. The net absorption was around 2.74 million sft, 48 per cent lower than last year, as a result of the global economic slowdown. The IT and IT-enabled sector led the leasing of office space with 68 per cent, according to Hariharan.
Both the firms are upbeat on the demand for commercial and residential markets for 2013.
The commercial space market would see oversupply next year while the demand would continue to be at 4-4.5 million sft -- there will be an availability of nearly six million sft of which the majority would be in SEZs, points out Yagnik.
"The demand and supply of residential units are expected to increase over the next year due to the anticipated favourable bank rate movement and liquidity scenario in 2013," says Hariharan. Upcoming infrastructure projects and retail are expected to increase the momentum of residential capital value in the city.