Is Chennai, a traditionally end user driven market, gradually garnering interest of the investors? Let’s find out!
As per the Housing Sentiment Index Report, jointly evolved by Magicbricks and IIM-Bangalore, investor sentiments in Chennai are quite high. Investors in the city, though less in number as compared to the actual buyers, seem to be more optimistic about the property market than those planning to purchase property for end use.
As per the report, the HSI (Housing Sentiment Index) for those planning to buy a property as an investment stood at 124 during the Jan-Mar 2014 quarter. This is was in contrast to the HSI of 111 recorded for end users.
Does this mean investors have finally accepted Chennai as a destination worth parking their money in? Has it finally caught the fancy of the investors? Well, let’s find out.
There are three kinds of investors in the Chennai market today, informs S Ramakrishnan, director, Harmony Homes. “A large number of buyers in the market today who are buying for investment purpose consist of second and third home buyers. These are not hardcore speculators, but those who have money and want to park it safely. It helps that the suburbs of the city are offering ample options to these buyers at reasonable rates,” he says.
The fact that rental yield in the city has been increasing consistently also acts as an additional impetus to those buying a second home. As per PropIndex, during the Jan-Mar 2014 quarter the gross rental yield in different localities in Chennai varied from 2.04 to 4.35 per cent. This was an improvement over the range recorded in the previous quarter at 2.28 to 3.81 per cent. In fact, gross rental returns are the highest in locations that are eyed by these second home buyers, such as OMR and Shollinganallur.
NRIs are also showing a keen interest in the market. “NRIs may not be very keen on earning rental returns from their investments but look for capital appreciation in the long run,” adds Ramakrishnan.
It is probably these investors who have pushed up the sentiment index. Actual speculators in the market are still very few. Nonetheless, as Chennai is considered to be a safer real estate investment than many other cities, investors are slowly showing interest. However, Chennai still cannot be considered a conventional investor destination. But surely the seeds have been sown for the same.
Source: Magicbricks.com Bureau/Timesofindia