There has been a substantial fall in the number of registered residential projects in Chennai, showing a 19.39% drop in the third quarter of calendar year 2023 — from 98 projects in the previous quarter (second quarter) to 79 projects.
The Chennai real estate market is in deep trouble, with a slew of unprecedented challenges ranging from a major drop in residential projects and sales to having to bear the weight of increasing registration fees imposed by the Tamil Nadu government.
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There has been a substantial fall in the number of registered residential projects in Chennai, showing a 19.39% drop in the third quarter of calendar year 2023 — from 98 projects in the previous quarter (second quarter) to 79 projects. Moreover, there was a 30.09% decrease compared to the same quarter last year, which had 113 projects, according to a report by Confederation of Real Estate Developers Associations of India (Credai) Chennai.
Further, the Chennai real estate market witnessed a substantial 40.78% decline in sales when compared to the previous quarter and a 10.45% decrease in sales when measured against the same quarter in 2022. The report says this indicates a major downturn in the real estate sector in Chennai.
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Sivagurunathan, president Credai, Chennai, said: “These numbers witnessed in the quarter ending September 2023 are due to the impact of increased registration fees by the Tamil Nadu registration department. The higher fees have made it more expensive to buy properties, which may have contributed to the decline in sales. While Credai members remain influential within the market, it has shown signs of decline, underscoring the intricate dynamics at play in the Chennai real estate sector.”
The third quarter data shows a drastic divergent trend as compared to the second quarter numbers which had shown high demand for residential projects in Chennai. The data had then indicated that during the second quarter of 2023, the number of residential units registered had touched 6,435 units, which represents a 65.47% increase as compared to 3,889 units in the same quarter of 2022.
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However, the September-ending quarter turned sour for the real estate sector. As of Q3 2023, there were 7,833 completed projects of unsold residential units in Chennai. Of these, 65% were from projects developed by Credai members, totalling 5,118 units. Even the number of layout projects registered with TNRERA has been declining over the last three months, indicating a possible shift in the types of residential projects being developed, according to the report.
The recent amendments by Tamil Nadu registration department for increasing the registration fees have had an impact on the real estate sector. The higher fees have made it more expensive to buy properties, which may have contributed to the decline in sales, it added.
Recently, the Tamil Nadu government passed an order to revise the stamp duty charges for property registration. Instead of a flat fee, it is now 1% of the property’s market value. Additionally, registration charges for construction agreements have increased from 1% to 3% since July 10.
