Chennai is poised for a significant turnaround in real
estate development in coming months as compared to the other major cities in
India. There’s a lot of scope for growth of property in Chennai due to the increasing demand as there’s still a
long time before this market becomes saturated. The recent announcements in the
budget have been positive for the residential sector. After the Budget, there
has been a tangible improvement in positive sentiment in price-sensitive
Chennai and many southern cities. The Indian real estate market has been
passing through challenging times over the last year, with sales velocity in
flats and apartments slowing down and unsold inventory rising every quarter.
Buyer sentiment had been mostly negative, with several prospective buyers
withholding investment in homes because of the slow economy, job insecurity,
and rising inflation.
Increasing the taxable limit and raising the exemption limit
on interest payments on housing loans will eventually leave more money in the
hands of the taxpayers. While the resultant savings may not be very significant
for extremely expensive cities such as Mumbai, Bengaluru or Gurgaon, they could
make a difference in Chennai. The city’s real estate market continues to be an
end-user driven one, which means that speculator activity is quite small. As a
result, prices of residential property in Chennai
do not fluctuate much, unlike other cities where investors and speculators
influence the pricing. Therefore, even a small increase in additional income
could tilt the balance for purchase decisions.
By relaxing the minimum area prescribed for getting FDI from
50,000 square meters to 20,000 square meters and the lowest capitalization from
$10 million to $5 million, mid-sized developers could get greater access to
funding and FDI participation. All in all, the real estate market across
Chennai is going to flourish gradually in coming years and will provide a
much-needed boost to city’s capital market.
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