Even as number of residential projects in Chennai fall, property prices rise: report

Chennai property rates may rise due to increased construction costs, govt. fees, and suppliers demanding payment in advance. CREDAI's report for Q3 2023 showed a 19.39% drop in projects and a 40.78% decline in sales compared to the previous quarter. New micro-markets have emerged, such as Surapet, Kodungaiyur, Muttukadu, Kanathur, Madanandapuram, and Mel Ayanambakkam.

Buying property in Chennai could soon cost more, as developers are slowly increasing rates by ₹300 -500 per sq. ft., depending on the location.

“Construction costs have gone up and recently, the government has increased the building licence fee (to issue building permits) and the registration fee was also hiked few months ago,” S. Sivagurunathan, president of CREDAI (Confederation of Real Estate Developers’ Associations of India) Chennai, told The Hindu.

Mr. Sivagurunathan further said procuring raw materials is also becoming a tedious task for builders. “Prior to the Covid-19 pandemic, we used to get credit for the raw materials we buy, but now suppliers want us to pay in advance. Our working capital is high now. And whether projects are selling or not, we need to complete them as per schedule according to the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA),” he pointed out.

On Thursday, November 2, 2023 CREDAI Chennai brought out with a RAW report for the period ending September 2023, in which it said that the number of residential projects registered in the city saw a significant decline compared to the previous quarter, with a 19.39% drop from 98 projects to 79 projects. Furthermore, there was a substantial 30.09% decrease compared to the same quarter in 2022 when there were 113 projects. Despite the decline in projects, the number of residential units registered remained relatively stable, increasing by 22.95% compared to the same quarter in 2022, from 5,232 units to 6,435 units.

In the third quarter of 2023, southern suburbs had the highest share of registered projects at 30%, followed by central Chennai at 25%, and the western suburbs at 14%. Of the registered units, 47% were in the southern suburbs, 22% in the western suburbs, and 20% in the west central areas of the city.

The number of layout projects registered with the T.N. Real Estate Regulatory Authority (TNRERA) has been declining over the past three months, indicating a possible shift in the types of residential projects being developed.