CHENNAI: Even as land prices in the city continue to move upwards, most outlying regions of Chennai are struggling to recover from the 2008 slump.
In most parts of Old Mahabalipuram Road, GST Road and the Chennai-Bangalore Highway, realtors say, land transactions are very few and rates are yet to touch the 2007 high. Surprisingly, many new residential projects were launched along these corridors over the past two years and even received good patronage from buyers. But that has not translated into an increase in land prices along these stretches, said Kevin William Albert, associate director of Jones Lang LaSalle, an international realty consultant.
One reason could be the availability of vast stretches of land along the three corridors . Jayant Hemdev, business directoy of city-based realty consultant Hemdev's , said, "Most builders, who have launched new projects along these roads, especially the OMR, had bought the land long ago. They delayed development till the market picked up. Since many are not scouting for land in Chennai's suburbs at present , the land value has not appreciated much. No major land sale has taken place in the suburbs in last two years." Prices had fallen by more than 20% on the OMR in 2008.
"For example, land prices at Navalur on the OMR used to be in the region of Rs 15- 16 crore per acre for properties abutting the highway in 2007. They suffered more than 20% fall in 2008 and are yet to touch the Rs 14-croreper-acre mark. The fall was more than 30% for properties off the main road. Some land owners demanded even Rs 20 crore per acre. But sales did not happen. Bangalore Highway and GST Road suffered more than a 20% fall in land prices. They have not fully recovered till now," said Hemdev.
However, there are exceptions like Oragadam and Padappai, where land prices have risen substantially since 2008. "One of our clients had acquired land near Oragadam at Rs 70 lakh per acre in 2007. Today it is worth close to Rs 2 crore per acre," said Albert. On the spiralling realty prices along the Oragadam-Padappai belt, Albert said, "Development of Oragadam is a recent phenomenon. There is too much hype about it. Subsidiary units of many major industrial houses are looking for space at Oragadam and Padappai to establish their manufacturing units. Many are scouting for space to set up warehouses too. Many builders too have landed there. All these have resulted in prices going up. Still, average occupancy of residential projects at Oragadam is only 20%, compared to the OMR, which is 55%," said Albert.
The overall realty sector could take another hit now. Anuj Puri, chairman & country head of Jones Lang LaSalle India, said, "The US credit rating cut and uncertainties about Europe's debt situation could result in a fall in foreign institutional investment, including those targeted at the real estate. Reduced spending by the US on outsourcing could result in an overall decline in real estate market sentiments."
Courtesy- timesofindia.indiatimes.com