Real Estate in Chennai to Revive Soon
The real estate scenario in Chennai has been going through ups and downs in the past few years, a major reason being the cyclones and the rains that have been tormenting the Chennaites year after year during the monsoon season.
Though the real estate market may be affected by this, the strongly backed IT sector has been a pivotal reason to cushion the blow to the market value and keep it from plunging too low. Being listed among the Top 10 Fastest Growing Cities in the World by Forbes is no easy feat and Chennai has managed to get on it with its constant developments underway and this is also one reason that gives the hope that the real estate market in Chennai has high chances of getting back on its feet.
Even if you are confused about to invest or not in the real estate market in the recent times, you can see that there is still a large scope left for development in Chennai real estate.
Why did the real estate value fall?
Apart from the reasons of natural calamities, another reason attributed to the fall of the real estate value in Chennai is the demonetization which seems to have had a major hand.
The introduction of Goods and Services Tax (GST) also created a lot of confusion in the real estate market which brought a period of null which added to the fall in the market value.
Combined with this, the introduction of the new Real Estate (Regulation and Development) Act of 2016 (RERA) also added to the fall. Through the RERA, the government aimed to bring transparency to the real estate industry by making it mandatory for the developer to share all details with the authority. It also brought into enforcement the regulations for the developers to deposit 70% of the cash inflow to a separate account to prevent cash shortage. This put a damper in the developer community and had to take some time to streamline their process and align them with the regulations of RERA.
This drop in the real estate value is registered not only in Chennai but also in other major cities all over India and according to a Crisil report, absorption of new homes in the major 10 cities in India including Chennai has witnessed a reduction in the Compounded Annual Growth Rate (CAGR) of 8% in the last 6 years.
How can Chennai’s real estate recover?
As a lot of infrastructural developments have been happening around the city, it can play a major role in initiating the most awaited upswing. The projects of Metro Rail, MRTS and many other minor projects that are planned could at least make a dent in the real estate value of a particular property.
For instance, even when the real estate prices were dropping due to the cyclones in Chennai, one of the few areas where the real estate value did not register a huge drop was a few areas in Madipakkam and Medavakkam where there were comparably fewer damages. So even if the overall real estate value drops, the localized market value may still not be bad.
Backed by the developments in the infrastructure and the industries, it is hoped that the situation of the Chennai’s real estate will revive soon to its original uphill track.
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