Real estate had been the hot pie. Rate per square feet had almost doubled in just ten years. Adyar, which is a prime locality in Chennai was quite affordable to several middle class. What was around Rs 2000- Rs 3000 per sq ft has today exponentially increased to Rs 15,000-Rs 17,0000 per sq ft within just a matter of ten years. Today an apartment of 700 sq ft is just a dream for a middle class in this locality.
With the IT boom and unprecedented upward movement of the economy, real estate developers rode the wave. Every part and parcel of land was sold up at marked up prices. Housing which was once a necessity was pushed to become a luxury.
On a survey done in and around KK Nagar, square feet that was just around Rs 1000-Rs 2000 in a gap of 20 years, sky rocketed to about Rs 13,000. A dream of a own house which was then feasible for an EMI of Rs 5000 a month, today has become an unaffordable luxury, ranging at Rs 40,000 per month.
Yet another practice that was followed during the high priced season was ranging all houses at prime areas at more than 1000 sq ft. This eliminated single bedroom houses. I remember housing colonies at Adyar that had homes of varying square feet from 1 BHK to 4 BHK. These helped people from all strata of the society to afford homes within their budgets. With homes designed more than 1000 square feet, rules out single bedroom houses.
A true eye opener to the maddening buzz of the reality bubble, burst when the high rise building at Moulivakkam collapsed at the stroke of a lightning. This came as a stop to a mindless rush of buyers to purchase marked up property even without getting into the details of quality. This came as an eye opener and triggered the down turn of the reality market.
Today several housing projects are left middle in lurch. With no takers, builders who have availed loans from bank are feeling the pinch in their pocket. Builders are taking several marketing steps as well as offering high discounts to sale of these assets. One can find advertisements of offering gold, car and even to the extreme of paying the child’s school fees upto two years! With newspapers enjoying cover jacket ads and sustaining on this main source of revenue, the ball is in their court now. An independent flat in Navalur that was priced at around Rs 75 lakh to Rs 80 lakh is being offered at around Rs 58 lakh. Instead of boring the brunt of bank interest, builders are trying to clear up property at rates that they sell and at marginal profit.
Before VGN, Ceebros developers used the same technique. At a time when most developers were quoting Rs 25,000 upwards per sq ft for apartments in Egmore Ceebros priced these at Rs 13,500 per sqft and also waived floor-rise charges for people preferring to buy in higher floors. On the announcement more than 60 per cent got sold.
With builders realising the burst of the real estate bubble, property price as well as rental price across the city are expected to decrease and get fixed at the appropriate level. This will hopefully put an end to the unmindful urban jungle that is being created.