Budget Housing In Suburban Chennai, Haven For Investors
Chennai residential market had been driven by end users. The core city is still dominated (almost 85%) by them, but suburbs are no longer so, show investment trends in budget housing projects.
A plethora of factors like increased rental income on investment, lesser interest burden on loans, lower upfront payment of margin money, lower outgo of pre-equated monthly instalment (EMI), better scope for capital appreciation, possibility for spreading risks and scope for part liquidation of assets are attracting investors to affordable housing projects on the outskirts. These buildings are located within a 30 km-40 km radius of the city, especially in blue-collar dominated regions where demand for rental accommodation is high.
A 1,000 sqft apartment in an upmarket area in the city costs Rs 16,000/sqft or Rs 1.6 crore for the apartment. In comparison, with the same money, an investor can buy eight budget apartments in the suburbs at Rs 20 lakh per unit. While the apartment in the city would fetch Rs 35,000 per month in rent, the eight budget apartments could fetch a cumulative Rs 56,000.
More than 50% of buyers in the affordable housing segment are investors, say developers. For a city which has long been considered an investor-unfriendly market, it is quite an achievement.
Even when there is hardly any capital appreciation in city projects owing to a market slowdown, budget housing still lends scope for increase in capital value. The scope of the land value of Rs 600/sqft built-up area, doubling in about six years is still possible in budget housing.
Terming the change an aberration, chairman of Anarock Property Consultants Anuj Puri said, budget housing in other parts of the country is still end-user driven. Almost 90%-95% of buyers in this segment in other cities are end users.
Source Link- https://timesofindia.indiatimes.com/.