PropIndex Jul Sep 2015(Chennai) Online

8/20/2019 PropIndex Jul Sep 2015(Chennai) Online

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The Indian real estate sector is at crossroads today. The real estate markets across all the major cities have beenstagnant with low transaction activity. The market is saddled with large unsold inventory which at current rate

of sales velocity will take more than four years to clear. Amidst this environment, there have been repeated calls

for reduction in the prices of residential assets. Market watchers believe that only rationalization in prices can

break this logjam and lead to more transaction activity.

But what are the current price levels? And how much room does a developer have to reduce prices? In our

current edition of PropIndex (Jul-Sep 2015), we look at the price trends across major cities. As different budget

segments have unique demand-supply scenario, we’ve divided the capital value (Rs/sq ft) range in each city into

eight budget segments. The trend analysis has been done on a Q-on-Q basis for a two year period between

Jul-Sep 2013 and Jul-Sep 2015.Our analysis shows that prices across different budget segments in each city have remained stagnant over the

evaluation period. Comparing the cities basis their weighted average price movement over the two year period

shows that except for Pune and Chennai, none of the cities have even managed to get a double digit growth.

Even in case of these two cities, the price increment has been 11.8% and 10.8%, respectively. Delhi was the

worst performer with a net decline of 14.8%. Big mid-segment real estate markets like Bengaluru and Noida

saw 7.6% and 3.2% price increment. However, when these marginal increments in prices are adjusted for

inflation, we find that the net movement in prices is either zero or even negative.

This stagnation in the market is reflected in the Jul-Sep 2015 National PropIndex which remained at the same

level as the previous quarter. In case of individual cities, Bengaluru again witnessed the maximum appreciation

of 4% while Delhi declined further by 5%. Western cities of Pune, Mumbai and Ahmedabad all witnessed

positive movement in their city indices.

Today, the developers understand the requirement of easing acquisition cost for consumers. Towards this end,

they have come up with various attractive payment plans like subvention schemes where EMI till possession is

paid by the developer or possession linked payment plans. Apart from this, they are also offering freebies and

discounts. When the financial saving from these payment plans or freebies/discounts are factored, it translates

into 5%-15% saving to the consumer. With RBI easing policy rates and attendant reduction in home loan rates,

the developer community expects that the combination of lower interest rates and freebies/discounts will getthe fence sitters to take the leap.

Therefore, in short to medium term, we do not expect developers to take the drastic step of upfront reduction in

capital values. They are more likely to persist with discount and freebies to pass lower cost to consumers. An

upfront reduction in prices may send strong negative signals and have a domino effect. Consumers may start to

hold their purchase decision expecting prices to fall further.

These are changing times and we would love to hear from you. Do write to us at [email protected]

and share yours views on this report and how we could make PropIndex even better.

FOREWORD

Sudhir PaiCEO, Magicbricks.com


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Magicbricks PropIndex

Magicbricks PropIndexis a tool whichempowers propertyseekers and investorswith detailedinformation on themovement of residentialapartment prices andsupply of properties inIndia. No credibleproperty index can be a

function of direct valuesas the changes aregoverned by multiplefactors.

Magicbricks PropIndexhas taken this realityinto account andproduced an index basedon listing of apartmentsand their capital and

rental values on thewebsite.

“Magicbricks has over12,00,000 activeproperties posted bymore than 2.5 Lac activeusers in 600+ cities and17,000+ localities. Ourusers include owners,agents and developers.”

Methodology

Apartment values arebased on listings onMagicbricks. Theseinclude multi-storeyapartments and singleunits on plotteddevelopments, referredto as builder floors on

Magicbricks.com.

The Index is structuredin such a way thatindividual properties

are aggregated into theirrespective cities and

then to the NationalIndex. Weightages forPropIndex are based onthe supply of propertieswithin the locality/city.Based on this structure,PropIndex gives arealistic picture of trends in price/supplyacross different propertymarkets in each city. Wehave used differentweightages for ListedPrice Monitor/RentMonitor. Therefore, readas a whole, PropIndexalong with tablesprovided for Listed PriceMonitor, Rent Monitor,Yield Monitor andCapital Values, gives an

excellent perspective of the property marketperformance in thequarter.

While listing and itsvalues/supply provide alevel of understandingof the market, there aremeticulous data checksto prevent aberrations

creeping in the Index.These are based onstatistical calculations,industry inputs andlogical interpretations.

The National PropertyIndex (NPI) is indicativeof the extent of activityas well as pricemovements across cities

and localities in themajor cities active onMagicbricks.com. Theindex includes the top11 cities (these have

been chosen based ontheir activity levels) and

has an individual cityreport for each of thesecities. While the NPI andits movements are of interest to the expertcommunity of bankers,builders and investors,the PropIndex has alsotaken care to explain thenuances of indexmovements at thelocality level that wouldhelp the huge base of Magicbricks.comconsumers.

Insights into consumerdemand have beengathered throughanalysis of searchinformation on the site.This helps understandthe best localities bydemand, the type andconfiguration of units aswell as the budget-wisepreferences.

The PropIndex is theresult of meticulousresearch at the localitylevel and throughdetailed discussions

with experts atMagicbricks.com’soffline and onlineinitiatives.

The Indian real estatemarket is dynamic andthe PropIndex reflectsthose changes. Since it isderived from a dynamicdatabase, additions and

deletions of localitieshappen as a function of market dynamics.

METHODOLOGY


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There is a wealth of information within these pages. For better readability, we have presented some data as tables and others as

graphs. Between them, you will find how property markets have performed in the Apr-Jun 2015 quarter from different

perspectives – from that of capital appreciation, from a rental/yield realisation perspective and from a supply standpoint. Demand

Analysis section also explains what consumers look for.

We recommend that you evaluate the city report in its entirety and that will provide a rounded perspective of the performance of

the property market within each city. Here are the details of what you will find in each of the city reports enclosed within:

1. City Property Index – This is a composite index which is a function of supply of properties as well as the average capital

appreciation/drop in various localities of the city in the quarter. The City Index is the weighted average of the average rate per

square foot in that locality and the supply of properties from that locality. Premium localities (with higher average rate per

square foot) as well as localities with higher supply of properties will have a bigger impact on the Index. For example, if the

supply of properties from a premium locality drops, that locality will end up having a lower weightage in the Index which inturn will push the Index downwards (and vice-versa). On the other hand, supply of properties remaining unchanged, the

Index will be influenced by capital appreciation within the locality.

2. Listed Price Monitor – This metric shows the capital appreciation/drop within a locality and is calculated on the basis of

movement in the “average rate per square foot” within that locality. By and large, the movement in the “average rate per

square foot” reflects capital appreciation/drop. However, in a few select cases, we have observed that the average rate per

square foot moves due to a change in the mix of apartments within that locality (e.g. if the ratio of premium apartments,

which command a higher per square foot rate, changes over the quarter). In these few circumstances, the Listed Price Monitor

will, in turn, reflect this input. Such changes have been explained in the text of the City Reports.

3. Rent Monitor –This reflects the rental appreciation/drop within a locality. It is calculated on the basis of movement in the

“average rent per square foot” within that locality. By and large, the movement in the “average rent per square foot” reflects

rental appreciation/drop. However, in a few select cases, we have observed that the average rent per square foot moves due to

a change in the mix of apartments within that locality (e.g. if the ratio of premium apartments, which command a higher per

square foot rent, changes over the quarter). In these few circumstances, the Rent Monitor will, in turn, reflect this input. Such

changes have been explained in the text of the City Reports.

4. Yield Meter – Yield is the annual rate of return earned on property. The Yield Meter depicts the gross yield percentages

across various localities. Gross yield is a ratio of average annual rental value to the average capital value of the property.

5. Capital Value Tables (given in Annexures) – This shows the actual range of prices within which properties were available in

each locality in the quarter. Prices are shown in Rupees per square foot basis, these are the prevailing rates for properties in

each locality.

6. Price Trend Analysis – This analysis of looks at distribution of real estate assets on the basis of capital value (Rs/sq ft).

We have grouped the city localities into various budget segments on the basis of their capital values. We then evaluate the

historic price trend for these budget segments over a two year period from Jul-Sep 2013 - Jul-Sep 2015.

7. Editorial Speak – PropIndex has gone from strength to strength – adding more analytics, insights and diverse views in

every edition. To enhance the insights provided by our data, PropIndex now includes city perspectives from editors of the

Times Property.

GLOSSARY & DEFINITIONS


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NOTES


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JUL-SEP 2015

In line with the general lack of activity inthe residential real estate market, theNational Property Index has also

remained stagnant over the previousquarter. This is in continuation of the generaltrend of inactivity observed in the marketover the last many quarters (including thecurrent period between Jul-Aug 2015).

NPI is the weighted average of supply and

capital values across 11 cities in India.

Regionally, North India comprising of Delhi, Noida/Greater Noida, Ghaziabad andGurgaon, saw an average drop in the Indexvalues. Compared to this, while the Index inthe South Indian cities on an averageremained at the same level as in the lastquarter, West India saw an average rise of 2% in the Index values. Kolkata in the eastalso saw the Index values remaining at thesame level as the previous quarter.

The movement in Index in the quarter canbe attributed to an average 13% increase insupply and partly due to six out of the elevencities having more than 50% localities with

price increment. However, only one city sawsome positive movement in the PriceMonitor while others either stayed at thesame level or witnessed an overall dip in theprice levels.

Bengaluru again emerged as the city withmaximum increase with the Index havinggrown by 4% in the evaluation quarter. Thiswas followed by Mumbai with 3% increaseand Gurgaon with 2% increase. The largestdrop in the City Index was again witnessedin Delhi with the Index value falling by 5%.Except for Gurgaon, cities in the North eitherwitnessed a drop in Index values orremained at the same level as in the lastquarter. Ahmedabad City Index grew by 1%as compared to the last quarter.

While the Reserve Bank of India (RBI)lowered the interest rates, leading to bankspassing on the benefit to consumers in termsof lower home loan rates, the same might

not be sufficient enough to address the issueof low transaction volumes and largeinventory pile-up. The festive season and theassociated discounts and freebies given bydevelopers, along with lower interest rates

may have some positive impact on thetransaction activity on the ground.

Today, the biggest concern which theconsumer has in respect to the real estatemarket is lack of confidence in the developercommunity. With many projects having beendelayed and lack of clarity on theircompletion timelines, the consumer is varyof investing his money in the market,especially in new launches or under-construction projects.

Therefore, it is imperative on the part of the developer community to bringtransparency and take the consumers intoconfidence. While payment schemes like‘possession linked payment plan’ have beenoffered by several developers to allayconsumer fears of non-delivery and creditgetting stuck, more efforts are required toincrease the transaction momentum.

IN THIS REPORT:National Property Index...............1

Chennai.....................................4

Annexures.................................13

[National Property Index (NPI)]

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NATIONAL PROPERTY INDEX

The City Index for Ahmedabadexperienced an increment of 1% ascompared to the previous quarter. Anincrease in supply across all localities of thecity was observed. While some localitieswitnessed a double digit growth in supply, it

is important to add, that most of them hadlow base numbers initially. Of the localitiesin the city, a substantial 43% of themwitnessed an increase in prices.

More than 65% localities in theBengaluru real estate market witnessed anincrease in the average capital values andthe overall supply also increased by 10%.Bengaluru City Index again saw maximumappreciation of 4% in the last quarter. TheEastern and South-East parts of Bengaluru

comprising of Whitefield, Sarjapur Road andElectronic City, remainrd the largestcontributors to the supply in the city.

The Chennai City Index saw a marginalincrement of 1% in the Index values in thisquarter. There was an 11% increase in activelistings in the city with 57% of the localitieswitnessing positive movement in capitalvalues. Overall, the Price Monitor for the cityfell by 5% as drop in values was more thanwhat could be compensated by the price

increment.

Delhi again witnessed a decline in theCity Index while the Listed Price Monitorremained at the same level. The Delhi City

Index fell by 5% for the Jul-Sep 2015quarter. As observed in the other cities,Delhi also saw an overall increase in theactive listings but only 30% of the localitiessaw any positive movement in the pricepoints. Except for a few localities remainingat the same price level as the previousquarter, most of the 69% of the balancelocalities saw a decline in capital values.

Ghaziabad saw a 2% decline in the Indexvalues accompanied by 2% decline in theCity Price Monitor as well. This was onaccount of 73% localities witnessing a dropin values. Indirapuram and Raj NagarExtension continued to be the dominantlocalities in terms of supply in theGhaziabad real estate market. Both thesetogether contributed more than 50% of the

total supply in the market.In Gurgaon, the supply of active listings

in the market increased marginally by 3%.A drop in the average capital values arrestedthe growth of the City Index. More than60% of the tracked localities witnessed adrop in the average capital values. SohnaRoad area remained the most preferredlocality in the city.

Unlike the previous quarter whereHyderabad had the second highest

increment in the Index Value, the cityrecorded a drop of 4% in the City IndexValues during this quarter. The western partof Hyderabad centered on Gachibowli and

comprised of other localities such asManikonda and Kondapur which continued

to be the top localities in terms of activelistings. On an average the localitieswitnessed less than 1% increase inproperty values. The city also saw anincrease in the overall number of activeproperty listings.

The City Index for Kolkata remainedstable over the past quarter. More than55% of the localities saw a drop in capitalvalues while the remaining 39% of themsaw some increment. The localities on an

average witnessed a 1% drop in capitalvalues. However, the City Price Indexremained stable over the quarter. Localitessuch as Rajarhat, EM Bypass and Gariacontinued to be the top localities in termsof availability of actively listedproperties.

Mumbai noted the second highestincrement in the City Index after Bengaluru.While the City Index improved by 3%, theListed Price Monitor remained at the same

level as the previous quarter. The localitiessaw an average increase of less than 1% incapital values with 62% localities having apositive movement. Most localities alongthe Western Expressway had an incrementin capital values.

The City Index as well as the Listed PriceMonitor for Noida remained stable in theprevious quarter. While 53% of the localitieswitnessed a positive movement in capitalvalues, the overall increment in the city wasvery low. Noida Extension and sectorssituated along the Noida-Greater NoidaExpressway continued to be a source of themost active listings.

With 63% localities experiencing positivegrowth in capital values and an overallincrease in the number of active listings,Pune saw a 1% increase in the City Index.However, the Listed Price Monitor decreasedby 1%. Kharadi and Vimang Nagar in theNorth of the city together accounted formost of the listed properties. Apart fromthem, Wakad and Wagholi also contributedgreatly to the supply of the actively listedproperties in the Pune real estate market.

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INDIAN REAL ESTATE MARKET

FUTURE SCENARIOThe Indian real estate market has been

stagnant in terms of transaction and capitalvalue of real estate assets. The number of newproject launches has tapered drastically inmost cities compared to the earlier years. Withsmall exceptions, sale of units has fallenfurther from the decline of the previous year.

The fall in unit sales over the last few yearshas translated into a large inventory of unsoldstock. By one estimate, the total number of unsold inventory exceeds 700,000 units andthe market will require more than four years toclear this. One of the main reasons for the fall

in new project launches is the level of unsoldinventory in the market.

Consequent to this logjam , the prices havealso remained stagnant over the last couple of years. To understand the price trends,Magicbricks analyzed the weighted average

price for 11 cities in the PropIndex.

The weighted average price for a city takesinto account the average price of its localitiesand the weights assigned to each is the supply

in that locality. The analysis has been done for

a two year period from Jul-Sep 2013 to Jul-Sep2015. For ease of comparison, cities have beendivided into segments having weightedaverage price greater than Rs 6,000 per sq ftand with prices lower than Rs 6,000 per sq ft.

As the graphs shows, the prices in the citieshave either seen very low rise or outright drop.In case of the four cities with weightedaverage price greater than Rs 6,000 per sq ft,Pune with 11.8% increase is the only city withany visible price movement.

Mumbai and Delhi have seen a drop invalues. In fact, Delhi witnessed the largestdrop amongst all cities. Gurgaon also remained

stagnant with negligent growth. Even in caseof Pune, when inflation is taken into account,the price increase is nullified.

In case of the other seven cities with aweighted average of less than Rs 6,000 per sqft, the story repeats itself. With 10.8% increase

during the evaluation period, Chennai saw thehighest increment. With the exception of Ghaziabad, other cities also saw a marginalprice increase. The prices in Ghaziabad cityactually dropped by 6.6%.

Given the high inventory level and low sales

volume, the market needs to correct the prices.Our analysis shows the prices have beenstagnant for over two years now. When this isindexed to inflation, the values have dropped.

Short of announcing a cut in prices,developers have used innovative schemes tolower the acquisition cost. These vary fromattractive payment schemes to giving freebieslike modular kitchen and other white goods tooffering discounts or waiver on charges like carparking, club house etc. The developers are

also ready to offer up to 25% discount on thetotal cost in case it is a one time payment.

The impact of the schemes is such that priceshave already come down by 10%-20%. This isdemonstrated with an example. Let’s assume a1400 sq ft property costs Rs 60 lakh, Rs 4,286per sq ft in capital values. This comes with asubvention scheme where the developer paysthe EMI on the loan amount during theconstruction period. The EMI is transferred tothe consumer on possession. Assuming a loan

amount of Rs 48 lakh (80% of the unit value),interest rate of 9.5% and a loan tenure of 25years, the EMI is Rs 41,937 per month.

The developer pays this EMI for theconstruction period of 24 months. The totalamount paid is slightly more than Rs 10 lakh.Simply put, the actual cost to the buyer isRs 50 lakh, translating into a rate of Rs 3,567per sq ft, a discount of almost 17%.

Developers are expecting that freebies and

attractive payment plans combined with therecent drop in home loan rates will help inreviving sales. Therefore, in short to mediumterms, developers are unlikely to have anyincentive in dropping the prices upfront.

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A gazette notication issued by state govt legalising

purchase of lands near protected areas or tiger

reserves shocks environmentalists

Corporation failed to take any major initiative toimprove basic infrastructure on the outskirts of

Chennai in recent years, reports say

Chennai saw biggest land deal of $220 million or nearly

1,460 crore in September as Shapoorji Pallonji Group

and Canada Pension Plan Investment Board’s joint

venture company acquired SP Infocity IT Park

State govt signs a 900-crore deal with Embassy Group

for a 198-acre industrial park in Sriperumbudur

CM inaugurates city’s rst fully-

automated multi-level car parking

Corporation seeks residents’ ideas

on making Chennai a smart citiy

Illegal buildings should face only

demolition, Madras HC rules

12 cities of Tamil Nadu get selected

for the Smart City project

State housing board to construct

2,300 LIG ats at a cost of Rs 380 cr

Bus terminus to come up near

Vandalur to improve city connectivity

The City Index increased by 1% while the Listed Price Monitor declined by 5%

[CITY INDEX]The City Index retains the trend of marginal increase in July-September 2015 quarter

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CHENNAI04

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CHENNAI REAL ESTATE IN PERSPECTIVE Q2 2015

As it happenedCHENNAI

HOT NOT

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CHENNAI05

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[PROPINDEX - CHENNAI]The city witnessed the second highest gain amongst south Indian cities for Jul-Sep 2015 quarter. There isan overall increase in the average capital values for 57% of localities across the city. But decline in balance43% led to 5% decrease in the Listed Price Monitor of the city.

The Chennai real estate market catersprimarily to the mid and affordable

segments which together account foralmost 60.3% of the active listings in themarket. These segments consist of fourprice brackets between Rs 3,000 per sq ftto Rs 4,999 per sq ft

The consumer base in these pricesegments is very sensitive to economicscenario and price movements.Consequently, the transaction volumeover the last two years has declinedleading to a large pile up of unsold stock

The premium and luxury segmentstogether constitute approximately 40%

share of the market. The premiumsegment (Rs 5,000–9,999 per sq ft) has

about 27.5% of the overall share.

The luxury segment has a relatively small12.2% share of the Chennai market. This isspread across prime localities in the heartof Chennai and the suburban areassituated adjacent to them

Overall, the weighted average price forChennai has seen only 9.7% incrementover the last two year period betweenJul-Sep 2015 to Jul-Sep 2013. Though the

market did recover somewhat during theJul-Sep 2015 after a 4% decline seen inthe Jan-Mar 2015 period

Amongst the different price brackets inthe real estate market, the luxury

segment in Rs 12,000 per sq ft and abovebracket witnessed the maximum priceincrement of 14.6% over the last twoyears in the city

The Rs 8,000–9,999 per sq ft segmentwas the worst performing price range. Itsaw a decline of 0.3% in prices during thesame time period

The largest price segment by supply,Rs 4,500–4,999 per sq ft, registered only

6.2% price increment in this quarter. Thisis indicative of a sluggish real estatemarket and low demand

[Key Takeaways]

After being plagued by reports of asluggish market and unsoldinventories, the real estate in

Chennai is slowly showing signs of

improvement on the back of a recovery in theIT and manufacturing sectors. UnlikeBengaluru, the Chennai market is dependenton these two sectors and uncertainty here hitsthe market. Despite all the problems, overall,the Chennai realty market was the most stablein the southern part of the country.

The announcement of Chennai in theSmart Cities project list has helped improvemarket sentiments. The increased investmentsas part of this project are expected to improvethe social infrastructure resulting in a likely

spurt in buying activity in the residential andoffice space. The success of the recentlyorganised Global Investors Meet (GIM) which

opened up windows for foreign investment inthe realty sector has also acted as a llip. Therate cut announced by the Reserve Bank of India recently is another factor that has worked

in favour of the real estate sector.

While the cost of construction has gone up,real estate consultants say there has been acorrection as prices have bottomed out.Lowering of prices and benets to thecustomers in the form of discounts and offershas ensured a positive response from buyers.

The luxury market has done well with thedemand for high-end homes going up.Facilities that were once meant only for theelite class are now being provided even in the

mid-segment homes and have encouragedconsumers to buy. The ip side is of increasingcases where people felt they ended up payingfor facilities that they didn’t really need.

One positive aspect of the last quarter wasthe heightened activity in the affordablehousing sector. Perumbakkam, Medavakkamand Naganallur were among the residential

markets that saw a lot of development activity.The office space segment also showed amarked improvement with reports stating thatthe market witnessed an absorption of approximately 3.6 million sq ft this year. Areaswith maximum traction were OMR, MtPoonamalle Road, Guindy and Ambattur. Themood continues to remain upbeat as demand isexpected to go up further.

While the next quarter is expected to bemuch better, it remains to be seen how muchof the promises made at the GIM will translate

into investments and how will the rate cutimpact buyers. Till then most buyers are likelyto follow a ‘wait and watch’ policy.

A resurgent Chennai

[email protected]

EDITORIAL


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CHENNAI06


[Residential distribution by capital value ]

PRICE TREND ANALYSIS

[Major price segments: Q-on-Q trend]

The graph shows the distribution of residential assets by capital values. Over60.3% assets are in the Rs 3,000–4,999per sq ft category.

Within this budget range, the categoriesdiffer by Rs 500 per sq ft. This indicatesprice sensitive nature of the market as

minor difference in prices impacts thesaleability of the project

In addition to dominance of relativelylower capital value, 2BHK is the dominantformat from both consumer preference(53% share) and supply (49% share). It ’srelatively smaller saleable area helps tokeep the overall acquisition cost low

Given the income profile of consumers inthis segment, it is sensitive to anymovement in capital values

The premium segment of Rs 5,000-9,999per sq ft range has a share of 27.5%, withmost options being 3BHK formats withlarge saleable area. This further increases

the overall acquisition cost The Rs 10,000 per sq ft and beyond luxury

segment has a small share of the market.It constitutes 12.2% of active listings

Analysis of two year trends showspercentage distribution is more or less thesame as for the Jul-Sep 2015 quarter

Localities have been clubbed together intoprice segments basis capital value(Rs/sq ft) at the end of Jul-Sep 2015quarter. We then track price changes inthem over a 2-year period

Capital values for each price segment is aweighted average value of pricesprevalent in different localities in thissegment

The luxury segment has seen maximum

volatility and also the most appreciationover the study period

The budget and mid segment hasremained stable and have seen minimummovement in capital values

Mid-budget segment is the largest category

Premium and luxury segments have seen the most price volatility


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CHENNAI07


The adjacent heat map shows the localities in differentcolour shades depending upon the prevalent capitalvalues (Rs/sq ft) in the locality. A bright coloured localityindicates higher capital value while one with lesser shadeindicates relatively lower capital value

Flanked by the sea on its east, the city has evolved in an180-degree arc along the west, north and south. Theexpensive localities are in the center and suburban areasaround it. Peripheral areas have options in the budget tomid-segments. Suburban and peripheral localities like

Velachery, Porur, Adyar, Medavakkam, Madipakkam andChromepet are some of the preferred localities

Localities in premium and luxury budgets are situated inthe center of the cities and expensive suburban localitiesadjacent to them. These are already developed and havelimited land supply. Lack of fresh development in theselocalities tend to make them expensive and still manageto generate demand. Riding on aspirational value, priceshave a tendency to go beyond the median, whichnegatively impacts the project and price appreciation

Most of the new supply is in the budget to mid-segmentsacross multiple localities in both suburban and peripheralareas. A drastic drop in transaction has meant that thereis large stock of unsold inventory. Consequently, theprices in this segment have remained flat

transaction activity in the market becauseof which prices have remained flat overthe last two years.

When this price appreciation is adjustedfor inflation in the study period, the priceappreciation turns out to be negative

The premium bracket of Rs 5,000-9,999per sq ft range is the worst performingsegment in the market. On an average,this price range saw an increment of only

2% during the study period withconstituent Rs 8,000–9,999 segmentactually witnessing a decline of 0.3% incapital values

While the luxury segment has seen a priceappreciation within 10% to 15% range, inreal terms, this price movement isnegative to barely positive

The graph shows the increment inweighted average capital value in eachprice segment over a two year period fromJul-Sep 2013 to Jul-Sep 2015

As can be seen, the luxury segment hasseen maximum price appreciation over

the last two year period. In comparison,the dominant affordable to mid-segment(Rs 3,000–4,999 per sq ft) saw an averageappreciation of only 4.7% in capital values

The minimal movement in the lowerbudget segments is indicative of very less

Budget and mid-segments have remained flat

[Major price segments - price increment]


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CHENNAI08


[City - weighted average price trend]

The graphs show the movement inweighted average price which considersthe price points across all segments. Whilethe first graph shows Y-on-Y movement inweighted average price, the second onegives Q-o-Q movement of the same

The weighted average price increased by

9.7% over the last two year period.

However, the price increment over the lastone year was negligible at 0.1%,indicating stagnant prices

After growing by 11.3% over Oct-Dec2014 to Jul-Sep 2013 period, the pricedeclined by 4% to Rs 5,795 per sq ft nextquarter. From there, the price recovered

by 3% to reach the present level

Considering average annual inflation rateof over 8% in the last three years, aminiscule increase was seen over 2013-2015 period. Maximum contribution toprice increase was in the luxury segment

Flat capital values and incentives bydevelopers are leading to some traction in

the realty market

City has witnessed marginal price movement

The localities in this segment have witnessed a weighted averageprice of 14.6% over the last two year period. This is the highestincrement amongst all segments. These are old and establishedprime areas of Chennai and continue to remain in demand by thelocal population

Apart from secondary sales of independent houses, another mainreason for the price increase in these localities, even in this market,is the limited new supply

The density of development in these areas is high and land for newprojects is very limited. Even when such projects do come up, thescale of project and the number of units is much smaller comparedto the suburban and peripheral areas

[Segment 1: Rs 12,000 per sq ft & above]Most expensive segment sees highest price increment

PRICE MOVEMENT KEY LOCALITIES


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CHENNAI09


This segment witnessed 9.2% increment in weighted average priceover the last two years. This was the second highest price incrementamongst the eight budget segments in the Chennai market

Some of these localities are extension of localities in the center of the city while others are prime suburban areas adjacent to the coreareas. Either ways, these localities have benefited from theirlocation as they were able to capture fresh demand which could notbe accommodated in the core localities

On an average, individual localities witnessed a 5% increment invalues. While some like Thiruvanmiyur and Kilpauk saw 12%

increase, others like T Nagar saw a decline of 10% in capital valuesduring this quarter

[Segment 2: Rs 10,000 – Rs 12,000 per sq ft]Premium segment witnesses second highest price appreciation

This is the second largest individual price segment in Chennai with19% of total active listings in the Chennai real estate market. A totalof 30 major localities fall in this budget segment and are spreadacross a 180 degree arc from north to south

These localities represent the phase of growth when large scaleresidential development started taking place in the city. Today, thesehave evolved into established suburban areas commandingpremium prices. Velachery in this segment is the most preferred

locality by consumers in Chennai

In terms of price movement, the segment saw a miniscule increaseof 4% over the last two years. Only Perungudi witnessed a doubledigit growth while others saw negative to marginal price increase

[Segment 4: Rs 5,000 – Rs 7,999 per sq ft ]Second largest price segment sees miniscule price increase

Localities in this range in the city are again some of the old andestablished residential areas of Chennai. These localities areenmeshed with premier residential areas in the Rs 10,000–12,000per sq ft range

This is the only segment in Chennai to witness a net decrease in theweighted price of 0.3% over the last two year period. Analysis of thistwo year trend shows that this segment has also seen considerablevolatility with a series of price increases and decreases

The price has fallen by an average 6.4% over the last two quarters.At individual locality level, while some like West Mambalam andAdyar witnessed 18%-29% price decrease, others like Saligramanand Vadapalani saw increase in the 15%-20% range

[Segment 3: Rs 8,000 – Rs 9,999 per sq ft]Only segment with decrease in price level


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CHENNAI10


This is the largest price segment in Chennai and accounts for morethan 23% active listings in the market. There are 19 major localitiesin this segment and these form the next ring of suburban areas afterthe localities covered in the previous budget bracket

Localities in this segment like Porur, Madipakkam and Chromepetare amongst the top 10 most preferred localities by consumers inChennai. Overall, the segment saw a marginal weighted averageprice increase of only 6.2% over the evaluation period; individuallocality average increment was 7.4%

Most localities witnessed a single digit growth with only few

managing a growth beyond 10%. Being the biggest supply base,this segment suffered from over-supply and low transaction volume

[Segment 5: Rs 4,500 – Rs 4,999 per sq ft]Largest price segment see single digit growth

This is also one of the biggest price segments in Chennai andaccounts for 12.5% of the market share. More than 21 localities,primarily in the peripheral areas of the city, fall under this segment

The growth has channelled into these localities along the majorroads radiating out of Chennai, primarily in the South and theSouth-West direction. Major localities in this segment are Padur,Urapakkam, Vandalur and Tambram (West)

In line with the trend in the affordable housing segment, thiscategory also saw a price increase of only 6.3% over a two yearperiod. Only a few localities witnessed growth beyond 10%, rest allhave a single digit growth which averages around 7% over theevaluation period

[Segment 7: Rs 3,500 – Rs 3,999 per sq ft]Limited price increment

There are 17 major localities in Chennai with prices in this budgetrange. Perumbakkam in South Chennai is the biggest market in thisprice bracket accounting for 14% of the supply, followed byAmbattur in West Chennai with an 11% share

Overall, the weighted average price of the localities in this rangeexhibited only 4.2% increase over the last two years with an averageincrease per locality being 7.3%. These localities constitute the startof peripheral area of development in Chennai and come after themore established suburban areas covered in the previous category

These localities have also witnessed tremendous growth as the cityevolved and developed radially along a 180 arc from the nor th tothe south of Chennai

[Segment 6: Rs 4,000 – Rs 4,499 per sq ft]Prices in major peripheral localities remain stagnant


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CHENNAI11


[Price increment: top & bottom five localitiesPremium localities with limited supply see increase in price

The graph shows localities with maximum price increase over thelast two year period

Localities like Nungambakkam and Egmore which are close to thecity center witnessed the maximum price increment. Whereas, theformer saw a 26% increase in prices, the latter was 23%

Other three localities in the list are situated in the prime suburbanareas within a price range of Rs 5,000-9,999 per sq ft. Dominance of this list by the premium and luxury segments highlights the lowtransaction volume in the much large budget to mid-segment,which led to stagnant prices in most of the localities in that range

The graph shows localities with minimum increment/maximumdrop in prices over the previous two year period

All localities featured on this list are in the suburban and extendedsuburban areas. The prices vary from low Rs 3,915 per sq ft (Padur)to high Rs 6,350 per sq ft (Valasaravakkam). These areas are affectedby the slowdown leading to rising inventory and stagnant prices

While localities like Thoraipakkam and Porur saw a decline in prices,others like Padur and Valasaravakkam saw about 1% rise. Prices areexpected to be at this level until the market sees positive movementin terms of transaction volume

These are the farthest lying localities where new development hasreached over the last few years. Most of them are located furtheralong the main road(s) from major peripheral localities

Amongst the seven segments with positive price increment, thisrange saw the minimum price increment of only 2.3% over the lasttwo years. While Oragadam in North-East Chennai saw maximumprice increase of 11%, Avadi in East Chennai witnessed a 10% dropin prices. Other localities have a mix of price increase and decrease

This segment has seen minor price variations, positive and negative,over the last two years. But overall, it has remained stagnant. It will

take quite some time for the transactions to reach a level wherethere can be marked difference in price, even with low starting base

[Segment 8: Rs 3,000 – Rs 3,499 per sq ft]Lowest budget segment sees lowest price increment


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CHENNAI12


Saligramam and OMR saw the highest appreciation with 8% and4%, respectively. Increase in residential property in and around OMRhas led to the increase in demand and hence property values too

Saligramam, in West Chennai, is a well developed locality,surrounded by established localities like Vadapalani in the East,Virugambakkam in the West, KK Nagar in the South and Koyambeduin the North. The locality is poised to offer new stock, which along

with connectivity and location advantage ensures a rise in values

Pallavaram saw a rise of 2% in capital values whereas majority of thelocalities did not perform. Pallavaram has good connectivity to the ITcorridors of Thoraipakkam and Shollinganallur, which has pusheddemand for residential properties resulting in escalating land prices

LISTED PRICE MONITOR

Locality Average Rental Average Capital Gross

Value (Rs/sqft/mth) Value (Rs/sqft) Yield

Velachery 17.00 6,725 3.03%

OMR 11.25 4,080 3.31%

Porur 12.75 4,835 3.16%

Pallikaranai 12.75 4,815 3.18%

Madipakkam 11.25 4,835 2.79%

Medavakkam 11.25 4,585 2.94%

Anna Nagar 21.25 10,945 2.33%

Urapakkam 10.00 3,665 3.27%

Perumbakkam 11.00 4,065 3.25%

Ambattur 10.25 4,110 2.99%

Y I E L M E T E R

RENT MONITOR

Nungambakkam and Adyar are localities leading the rentalappreciation chart in the city

Nungambakkam houses various government offices, commercialhubs, premium hotels, educational institutions and spor ts centres.Being an important part of the Central Business District (CBD) manyprofessionals flock here, increasing rental demand and values

Adyar, on the other hand, witnesses continuous demand for rentalaccommodation from the locals and IT professionals due to it ’sproximity to the IT corridors along the OMR

Localities such as T-Nagar (-3%), Thoraipakkam (-3%),Thiruvanmiyur (-2%), Kilpauk (-1%) and Perungudi (-2%) witnessedleast rental appreciation

-5%

OMR recorded the highest gross yield at 3.31%, followed byUrapakkam at 3.27%. The OMR is witness to residential

development, attracting home buyers and also companies

Perumbakkam is benefitted the most from the fast-developing ITcorridor in OMR owing to its proximity with the same and other IThubs such as Medavakkam, Velachery and Sembakkam

Perumbakkam, Pallikaranai and Porur clocked gross yield of 3.25%, 3.18% and 3.16%, respectively

Pallikaranai, a suburb of South Chennai, offers job opportunities,physical infrastructure, proximity to premium office spaces, easyconnectivity and planned development making it idealdestination for investment


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Adambakkam 6060 to 7300

Adyar 8260 to 11450

Alwarpet 15430 to 20820

Ambattur 3820 to 4630

Anna Nagar 9880 to 12870

Anna Nagar West 7690 to 9950

Arumbakkam 7910 to 9970

Avadi 3120 to 3720

Ayanambakkam 4330 to 5320

Besant Nagar 12950 to 16700

Chromepet 4450 to 5470

Egmore 13820 to 17520

GST Road 3630 to 4420

Guduvancheri 3090 to 3680

Iyyappanthangal 3960 to 4650

Kattupakkam 4090 to 4840

Keelkattalai 4810 to 5570

Kelambakkam 3300 to 3850

Kilpauk 10240 to 13530

Kodambakkam 7610 to 10500

Kolapakkam 4200 to 4760

Kolathur 4510 to 5780

Korattur 5100 to 6820

Kotturpuram 12420 to 15040

Kovilambakkam 4220 to 4940Kovur 3880 to 4740

Kundrathur 3240 to 3900

Madambakkam 3800 to 4560

Madipakkam 4520 to 5400

Mambalam West 7660 to 9680

Manapakkam 4860 to 5980

Medavakkam 4270 to 5150

Mogappair 5530 to 6960

Mogappair West 5360 to 6620

Mylapore 11270 to 15540

Nanganallur 5550 to 7020

Nanmangalam 3970 to 4760

Navalur 3900 to 4960

Nolambur 5490 to 6360

Nungambakkam 12720 to 17000

Okkiyam Thuraipakkam 5350 to 6280

OMR 3720 to 4730

Padur 3690 to 4320

Pallavaram 4560 to 5740

Pallikaranai 4540 to 5310

Pammal 3800 to 4640

Perambur 5510 to 6660

Perumbakkam 3810 to 4530

Perungalathur 3740 to 4630

Perungudi 6010 to 7180

Poonamalle 3500 to 4140

Porur 4340 to 5730

Raja Annamalai Puram 15580 to 21710

Rajakilpakkam 4300 to 5060

S Kolathur 4260 to 5000

Saligramam 7420 to 9460

Selaiyur 4240 to 5100

Sholinganallur 4480 to 5550

Siruseri 3550 to 4240

T Nagar 10150 to 13450

Tambaram 3920 to 4610

Tambaram East 4290 to 5160Tambaram West 3660 to 4350

Thiruporur 3080 to 3760

Thiruvanmiyur 9470 to 12700

Thoraipakkam 5170 to 6160

Urapakkam 3390 to 4160

Valasaravakkam 5840 to 7260

Vandalur 3390 to 3930

Velachery 6100 to 7850

Villivakkam 4850 to 6190

Virugambakkam 6200 to 7880

Zamin Pallavaram 4580 to 5230

CHENNAI13


Capital Values – Locality WiseAverage Listed Residential Apartment Prices

Locality apital Values

(Rs/Sq feet)

Locality apital Values

(Rs/Sq feet)

CHENNAI


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NOTES


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D I S C L A I M E R

Every effort has been made to make this Index as complete and as accurate as possible. MagicBricks accepts no responsibility for inaccuracies inthe information/data contained in this book. It shall have neither liability nor responsibility to any person or entity with respect to any loss ordamage caused, or alleged to have been caused, directly or indirectly, by the information contained in this book. The information/data in this

book is subject to change from time to time due to market condition.

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PropIndex Jul Sep 2015(Chennai) Online