Just when everyone is predicting that property price in Chennai would plateau due to the global economic slowdown, Chennai ignores predictions and shows increase in price.
Apartment prices in almost every part of chennai is going up. Here are some of the comps…
Adyar
June 2012: Rs. 12.5k per Square foot (SF)
Jan 2013: 15k per SF
Sholinganallur
June 2012: 4.8k per SF
Jan 2013: 5.3k per SF
Medavakkam
June 2012: 4.3k per SF
Jan 2013: 4.7k per SF
We do see a slowdown is sales volume for the past year or so, but the price only keeps going up.
With many high rise buildings with at least 10 floors coming up in Chennai, here is what most renters prefer.
Ground floor – Preferred by families with kids. If you are buying a flat which is nearby a schools, go with the ground floor, finding tenants will be easy. If renters have toddlers or babies, they prefer ground floor.
1st and 2nd floor – All round winners. You cannot go wrong with these floors as everybody likes them.
3rd floor and up – Good for young families without kids or families with older kids. Not so good for older people. The biggest question that comes up is ‘what if the elevators don’t work because of power cuts or other reasons?’. Unfortunately, back up generators don’t work some times. In the past month alone we have had to show a house on the 6th floor in a well reputed building where elevators were not working because back up generator failed. The tenant had to climb 6 floors to take a look at the flat. While this is not common, it does happen.
Top most floor – Not preferred by most renters because of heat issues. Builders have started to address this problem by throwing in free false ceiling throughout the house for home buyers.
So, in order of preference, most sought after flats are 1st and 2nd floor, ground floor, 3rd floor and up, top most floor. But there are always exceptions… for example, when you have a sea view, the higher the floor the more premium you pay to live there.
While property prices keep going up in OMR, rental of certain type of homes is not catching up because of huge supply.
6 to 8 months ago, apartment prices in Sholinganallur was around 4000 to 4200 per SF, today it is hovering around 5000 per SF. Similarly, another of our favorite location, Medavakkam, has seen prices go up from 3600 per SF to 4500 per SF in the last one year.
Plenty of builders are creating a huge supply of homes in OMR, which puts pressure on rental rates. 2BHKs are able to hold their rent quite well because of their demand since most renters are usually young and have smaller families, so they prefer a 2BHK. But 3BHKs are having to drop their rent significantly to get renters. In many complex, the rental difference between 2 and 3BHKs is just 1k. This situation will change, but only when the supply/demand situation reverses.
Do not be surprised if your apartment maintenance association increases the maintenance charges a bit. Beginning April 1st, 2012, common areas/facilities within complexes is to come under commerical tariff. This means electricity usage for gym, pool, water treatment plant, motor, etc. is to be categorized as commerical usage. Commerical tariff is based on usage as well. The first 200 units is Rs. 4.25, anything beyond 200 units is Rs.7 per unit.
Gone are the days when large apartment complexes with pools, gym, greenery, club house, etc. can maintain the complex with just Rs.2 per SF. It is not just because of increase in cost of electricity, but also due to artificially keeping the maintenance cost low to easily sell these flats.
