Is Chennai real estate cooling off?

D.Murali

Chennai: Is the Chennai real estate market cooling off? “NO,” says Mr Naresh Jain, CEO, Atmosphere Lifestyle Homes. He, however, concedes that there have been mismatches in at least two areas, viz. the OMR (Old Mahabalipuram Road) and Sriperumbudur.

“In OMR, we saw that there was supply of housing, which did not take into account the typical demand profile,” explained Mr Jain, in an interaction with Business Line. “It is not that the entire IT (information technology) employee population in that belt was earning high salaries. Nearly 90 per cent of the IT employees earn around Rs 25,000 to Rs 30,000 per month.”

An offering of flat that is way beyond Rs 40 lakh, which can be taken as the ballpark amount affordable by an average working couple, is definitely unaffordable, he reasons. “Which explains why the recent DLF project on the OMR was a success, priced at a reasonable figure of Rs 2,700 per square foot.”

In Sriperumbudur, it was not a case of demand-supply mismatch, distinguishes Mr Jain. “There were many land transfers. But these did not get converted into development and construction.”

In that belt, which is predominantly industrial, the ideal offering has to be in the region of Rs 20-25 lakh per flat, suggests Mr Jain.

On the ‘cooling off’ thought, his view is that we cannot judge the market by looking at only two areas, OMR and Sriperumbudur, much hyped about. “Prices in other areas may actually double in the next 4 to 5 years,” he foresees.

“We have already witnessed an average increase in real estate prices ranging up to 300 per cent, over the last about 3 years. Yet, the prices are moving upwards, driven by actual demand within the city, and relocation from independent houses.”

Chennai-based Atmosphere Lifestyle Homes has been promoting ‘premium thematic’ dwelling in the city, at a price range between Rs 3 to Rs 7 crore. “Fourteen units are under construction, currently,” informs Mr Jain.

“We are coming up with two more projects, one in OMR on 25 acres, where each villa will be priced at Rs 2 crore, and the other in the ECR (East Coast Road) after Mahabalipuram, with villas are being planned in a 100-acre land, and a golf course will be the USP.”

**

http://InterviewsInsights.blogspot.com