With the Candy GPS Report identifying Chennai as one of the 12 cities around the globe with the potential to show strong residential property price growth in the next few years, land developers are bullish about their projects. However, the residential segment is finding the going tough at present due to a combination of factors.
Demand for vacant plots, however, continues to grow across micro markets though liquidity crunch has impacted the tempo of investment. Smaller to medium range investments in the price range of Rs 7 lakh – Rs 12 lakh are now consistently pushing the land developers to continue to undertake development.
Depending on the affordability level and the price segment, demand varies in the city. For instance, areas, such as Wallajabad and Achirapakkam are hot spots for those who are looking to invest in the price range of Rs 7 lakh – Rs 8 lakh. Whereas, those who can afford Rs 12 lakh and above, areas like Oragadam, Sriperumbudur and Sunguvarchathiram are the favourite locations with multiple options.
The demand for plots predominantly driven by salaried classes has been steadily growing due to scarcity of land for development in the city, rigid development control rules throttling the land development and conversion of land for housing purposes taking a prolonged time. Lack of clarity in title deed, legal issues and prohibitive cost are major factors that deterred availability of land for development in the metro.
Over 10 organised developers are catering to this segment across micro markets in Chennai besides several unorganised players operating in the market.
However, with the government creating awareness through their website and displaying approval details for plotted development projects in and around the city, today’s investors are cautious to opt for only DTCP approved plots and those that are offered with the provision to avail of plot loans. This provides a cushion to investors as the lending institutions do the due diligence exercise before offering plot loans to the borrowers.
Moreover, plot loan is available only on the guideline value of the property and not on the market value of the property. This necessitates a higher upfront investment from the investors while opting for plot loans.
Source: Times of India