Chennai has somehow turned out to be a pricey real estate market over the years. Luxury segment and mid segment home are mostly out of reach by many. The market for luxury and mid segment apartments in Chennai has been very slow. And sky high pricing has created a gap between the demand and supply here. Buying an independent house in Chennai is definitely out of bounds for many, and a very restrictive percentage of the population can invest in residential properties of this kind. Things seem very slow in these two sectors, but Chennaiites have more to look forward to. Affordable housing sector might just be the next big thing that would revive the real estate market in the city.
Suburban Chennai is what will see the most real estate activity in the next few years. Builders have already started looking for large parcels of land in the outskirts to build affordable housing projects in the city’s suburbs. There has been an increasing demand for smaller housing units of under INR 20 lakh. However builders over the years have failed to cater to the needs to this demand generated. High cost of construction and even higher land prices in the city has compelled the builders to charge much higher for apartments in Chennai suburbs in comparison to its counterpart like Bangalore or Hyderabad.
The concept of affordable housing across the country is flawed in many ways. For example, affordable price band in different cities mean different things. This is because housing is affected my several factors like land prices, cost of construction etc. Land prices in different cities vary to a large extend. Affordable or low cost homes in Mumbai and its suburbs will be nothing less than INR 40 lakhs. Similarly, you can buy low cost homes in cities like Hyderabad for as less as INR 25 to 35 lakhs. This creates a lot of disparity and takers of these projects suffer on the financial end of it. In Chennai the concept is catching up and we are yet to see where it goes. This segment has been much ignored by builders is now all set to see a revival. “Identifying developable land at the right price in the right place is the key to success of a budget housing project,” said a builder from Chennai. “All developers doing big projects in the suburbs are stuck owing to poor sales and they are looking at alternatives to sustain the business”, said Rajesh Babu, of Recs Group, a Chennai-based realty firm.
“Going by the experience of developers who promote budget housing projects, they are by and large cash-surplus projects as long as the promoter sticks to medium sized developments in the range of 2-3 acres.You can raise funds from the market (customers) and do projects. As long as the budget housing segment is treated as a separate entity and the money collected for it is used for the same project, it will work. But if the money is diverted to service bad loans or to complete other stuck projects, then things will miserably go wrong,” said Sarita Hunt, MD- Jones Lang LaSalle.
Suburban Chennai is what will see the most real estate activity in the next few years. Builders have already started looking for large parcels of land in the outskirts to build affordable housing projects in the city’s suburbs. There has been an increasing demand for smaller housing units of under INR 20 lakh. However builders over the years have failed to cater to the needs to this demand generated. High cost of construction and even higher land prices in the city has compelled the builders to charge much higher for apartments in Chennai suburbs in comparison to its counterpart like Bangalore or Hyderabad.
The concept of affordable housing across the country is flawed in many ways. For example, affordable price band in different cities mean different things. This is because housing is affected my several factors like land prices, cost of construction etc. Land prices in different cities vary to a large extend. Affordable or low cost homes in Mumbai and its suburbs will be nothing less than INR 40 lakhs. Similarly, you can buy low cost homes in cities like Hyderabad for as less as INR 25 to 35 lakhs. This creates a lot of disparity and takers of these projects suffer on the financial end of it. In Chennai the concept is catching up and we are yet to see where it goes. This segment has been much ignored by builders is now all set to see a revival. “Identifying developable land at the right price in the right place is the key to success of a budget housing project,” said a builder from Chennai. “All developers doing big projects in the suburbs are stuck owing to poor sales and they are looking at alternatives to sustain the business”, said Rajesh Babu, of Recs Group, a Chennai-based realty firm.
“Going by the experience of developers who promote budget housing projects, they are by and large cash-surplus projects as long as the promoter sticks to medium sized developments in the range of 2-3 acres.You can raise funds from the market (customers) and do projects. As long as the budget housing segment is treated as a separate entity and the money collected for it is used for the same project, it will work. But if the money is diverted to service bad loans or to complete other stuck projects, then things will miserably go wrong,” said Sarita Hunt, MD- Jones Lang LaSalle.
