Chennai: Joining the 'whining' party of Credai and Builders' Association of India, international real estate consultant and researcher firm Knight Frank has attributed the recent plunge (second half of 2017) in real estate industry to enactment of Real Estate (Regulation and Development) Act and Goods and Service tax Act.
According to a report released by Knight Frank, political instability, recurring natural calamities and gloom in market sentiments stagnated signs of recovery noticed in the first half of the 2017 and Chennai residential real estate market recorded new lows in terms of new launches and sales of residential units during the second half of 2017.
The report also suggested that the new launches of residential units had collectively come down by 78 percent at Mumbai, Delhi NCR, Chennai, Pune, Bengaluru, Kolkatta, Hyderabad and Ahmedabad.
During the period July to December 2017, Chennai's residential market had witnessed the minimum launch of 3,200 residential units, which is 33 percent fall comparing to the previous year and lowest in this decade. In 2017, only 9,200 units had been launched, which is also low, the report said.
The report also elucidated that the residential sales during July to December 2017 also fell by 14 percent when compared to second half of previous year. Even though the average price of the residential weakened by 3 percent due to developers offered discounts, many units remain unsold.
The stagnation in the market, according to the report, is owing to ambiguity over Real Estate (Regulation and Development) Act and concerns of job security in IT sector. "As the RERA act is yet to be implemented in full spirit, the industry had suffered. Introduction of GST also affected the industry. Once the RERA get streamlined, the residential market will turn into a consumer-oriented market," the research team said.
Meanwhile, Chennai city's office space market also plummeted as the share of largest office space consumer, IT and ITeS sectors, halved from 43 percent in second half of 2016 to 25 percent in second half of 2017. However, affordability, that is house price to income ratio has grown better in Chennai as the affordability is nearing 4.5 from 5.5, which is a good sign for the industry, Kanchana Krishnan, Chennai Director, Knight Frank, said.
