The real estate scenario in the country has always been subject to scrutiny and close examination as it is thought that realty depicts a picture of the health of the economy. So while one can say that as of now the global economic headwinds are not as doomed as they were previously made out to be, the overall sentiment in the country as well as that of the world is that of upbeat optimism combined with a cautious approach to decision making, be it with regards to temporary financial decisions or asset allocations for the long term.

Its smarter to make smart decisions in time

Many common man investors, like you and me, come face to face with perplexing dilemmas of routing hard earned money into traditional fixed assets such as a second home/ plot of land or risk leave it lying around in a bank FD, where it generates minimal to insignificant income, both of which need a lot of forethought and careful analysis. Quite a conundrum, especially if you consider the repercussions of a bad decision.

Thankfully though, there are data reports and technical analysis that reasonably foretell a situation beforehand; especially when it pertains to fixed assets such as real estate investments or the upsides and downsides of other financial instruments like SIP’s or fixed deposits.

In this feature, we are taking a hawk’s eye view of the real estate scenario prevailing in Chennai as of this year and a lowdown on what to expect when you’re investing.

The story so far

Chennai has a slew of infrastructural development plans underway that will augur well for the industries that are already well established in the city as well as for the FDI (foreign direct investment) that’s forthcoming in the near future. High impact growth areas such as the South Corridor, GST road, ECR, OMR, South west areas and the IT corridor have a host of road and rail networks such as the rail-auto hub & Aerospace Park at Oragadam, the six-laning expansion of the OMR highway, MRTS rail project, Chennai Monorail and upcoming metro project, to look forward to.

What’s more, the authorities are keen to fast track other projects such as the Visakhapatnam-Chennai Industrial Corridor, which is a 800-km national highway project aimed at boosting commerce and trade in both cities, besides the upcoming Greenfield airport, 300-crore Oragadam Industrial Corridor Road and the major impetus to make Chennai a Smart city are a couple of major advances that will see the city further its position as one of the leading metro’s of the country.

That said, the ground reality especially with regards to the real estate industry in Chennai is that while builders are maintaining a cautious approach with regard to new project launches on the one hand, they’re also ensuring that genuine customers are given attractive incentives, bonuses and discounts, on the other.

The overall scenario in the country – in a nutshell

It is believed that throughout the country there is a glut of unsold inventories (over 7 lakh) and for this reason two primary trends were observed- One, the builders were keen to give discounts and freebies as opposed to maintaining a ‘what you see is what you get’ approach and two, customers are not overtly impressed by the rate cuts and are sensing better opportunities coming by their way by maintaining a ‘customer is king’ approach while fishing for a better bargain in the process.

Commercial real estate is doing quite well throughout the country and it is widely believed that this trend will continue to remain through the rest of the year, right up till the year next. In fact, data suggests that given the push to ‘Make in India’ and the widespread invitation to set up industries in India will foretell extremely well for Commercial real estate. There will be a shift in the trend of setting up industrial clusters though and most corporates will prefer peripheral outskirts rather than main city-centres. One reason is that land parcels are larger and easier to procure and two, it sets in motion the residential real estate cycle too, as most workforce prefer to work closer to where they live and vice versa.

Here, it is important to note that even though up until now the residential real estate market has got off to a slow start, the market trends have not suggested a heavy drop in psf rates. In simpler words, there will not be a further downfall in the psf rates and they will more or less continue to remain where they currently are. For an investor what this means is that if he/she has zeroed down on a property and finds great value in the deal, it is advisable to take a decision now rather than putting it off to later. Reason being that the constancy that has been the norm so far is not expected to continue until next year and possibly there are expectations that the psf rates will increase, perhaps not phenomenally, but quite enough for an investor to rethink (and regret) his/her decision of waiting it out for too long.