New real estate projects in Chennai hit by 34 percent, sales 53 percent: CREDAI data
‘Realty projects hit by 34%, sales 53%’
CREDAI’s data exposes difficulties in reducing existing inventory of developers
CHENNAI: An analysis conducted by the Research and Analysis Wing (RAW) of CREDAI (Confederation of Real Estate Developers’ Associations of India) has revealed that the real estate industry in Chennai is on the declining trend as number of new projects as well as the sales have come down during second quarter (Q2) of 2024 (April to June).
According to the RAW report, Chennai saw the registration of 65 new projects during Q2-2024. Of these, CREDAI members represented 65 per cent, demonstrating their strong presence in the market. However, this figure represents a 34 per cent decline from the 98 projects registered in the same period last year (April – June 2023), showing a slowdown in new project launches.
Across the state (including Chennai), as many as 91 new projects were registered this year as against 123 projects in Q2-2023.
“Sales figures in Q2 of 2024 were less encouraging. Only 2,597 units were sold, a significant 53 per cent decline from the 5,498 units sold in Q22023. This decline in sales reflects the difficulties in reducing existing inventory, posing a challenge for developers contemplating new project launches,” a CREDAI release said.
In contrast, the number of residential units registered in the city showed a significant increase. Q2-2024 witnessed the registration of 8,793 residential units, marking a 37 per cent rise compared to the 6,435 units registered in Q2-2023. CREDAI members continued to dominate this segment, accounting for 90 per cent of the registered units, underscoring their significant influence in Chennai’s real estate sector.
CREDAI Chennai’s Research and Analysis Wing (RAW) has released its Q2-2024 report, highlighting a combination of positive trends and challenges in the city’s real estate market. The report, covering the period from April to June 2024, reveals significant fluctuations in project registrations, residential unit sales, and inventory.
Key Insights from the Q2-2024 Report:
- New Project Registrations: Chennai saw the registration of 65 new projects in Q2-2024, 65% of which were by CREDAI members. However, this marks a 34% drop compared to the 98 projects registered during the same period last year, reflecting a slowdown in new project launches.
- Residential Unit Registrations: On a more positive note, the number of residential units registered surged to 8,793, representing a 37% increase from Q2-2023. CREDAI members accounted for 90% of these registrations, further solidifying their dominance in Chennai’s real estate landscape.
Geographical Breakdown:
- Central Chennai led in project registrations, accounting for 29% of the total projects.
- The South Suburbs captured 28% of the project registrations and dominated unit registrations, contributing 45% of the total units. This underlines the growing appeal of the South Suburbs for both developers and homebuyers.
- The West Suburbs accounted for 19% of unit registrations, indicating steady interest in this region.
Challenges Facing the Sector:
Despite the growth in residential registrations, the report also points to significant challenges. As of June 2024, the inventory of unsold residential units in completed projects stood at 7,989 units, signaling a slower absorption rate. Sales have also taken a hit, with only 2,597 units sold in Q2-2024—a 53% decline compared to the 5,498 units sold in Q2-2023. This drop in sales suggests developers are struggling to clear unsold inventory, which could hinder the launch of new projects.
Industry Reactions:
Mohamed Ali, President of CREDAI Chennai, voiced concern over the decline in new project launches and sales. “The Q2-2024 analysis is a crucial moment for Chennai’s real estate sector. While we’re pleased with the rise in residential unit registrations, the drop in project launches and sales emphasizes the need to tackle existing challenges. By addressing regulatory hurdles and fostering government-industry collaborations, we can unlock Chennai’s full potential as a top real estate destination,” said Ali.
Aslam Mohamed, Secretary of CREDAI Chennai, highlighted the issue of unsold inventory, stating, “Developers are focusing on larger projects, but the growing stock of unsold units shows a mismatch with market demand. It’s vital that future projects align more closely with buyer needs.”
Central Chennai leads
The geographical distribution of project registrations highlighted Central Chennai as the leader of the market with 29 per cent of the total projects registered. The south suburbs followed closely with 28 per cent, while also leading in unit registrations, capturing 45 per cent of the total units registered during the quarter.
“This trend points to the growing appeal of south suburbs among both developers and homebuyers. The West Suburbs accounted for 19 per cent of the unit registrations. As of June 2024, the inventory of unsold residential units in completed projects stood at 7,989 units, indicating a slower absorption rate,” the release added.
Mohamed Ali, President of CREDAI Chennai, expressed concerns over the steady decrease in the total number of building and layout projects registered over the last three months. “The Q2-2024 analysis reflects a pivotal moment for Chennai’s real estate market. While we are encouraged by the rise in residential unit registrations, the decline in project launches and sales highlights the need for focused efforts to overcome existing challenges”, he said.
“By addressing regulatory bottlenecks and fostering strategic collaborations between the government and industry, we can unlock Chennai’s true potential as a leading real estate destination,” he said.
During Q1-2024 (January to March), 2,983 units were sold in Chennai, which is higher sales when compared to Q2-2024. A total of 78 projects in Chennai were registered with TNRERA (Tamil Nadu Real Estate Regulatory Authority). Around 29 per cent of the projects registered in Chennai were in the south suburbs, followed by 26 per cent in central Chennai. The south suburbs had the maximum units registered with 53 per cent, followed by north central Chennai with 27 per cent.
