Will the Chennai Realestate Market Crash??
Over the past few years, especially the last two years, real estate prices in the city has almost doubled. MRC nagar, which was quoting at rougly Rs 75 lakhs per ground in 2003 is now quoting at Rs 1 crore per ground. What is even more disturbing (if you have a bearish outlook like I do) is the price of flats. A 2000 square feet flat, a super deluxe flat, on C.P Ramaswamy road sells for anywhere between Rs 80 lakhs to 1 Crore, and all the flats have been sold out. the minimum price for a flat in Alwarpet, Mylapore area today stands at Rs 50 lakh, even in the dingy Alamelumangapuram (the area behind the Sai Baba temple.
The land price appreciation isn’t restricted to just the city, it extends even to the outskirts, areas like Guduvanchery and areas all along the OMR road and beyond Trishulam are also experiencing a boom. North Madras (as usual?) hasn’t experienced such a boom probably because a lot of land in that area is up for grabs, akin to mill lands in Mumbai (?).
The housing boom, is largely debt drive, is what is worrying, largely because it is dependent on the economic growth, if there is a slow down in economic growth, and especially IT boom (IT employees are at the forefront of this boom),it might lead to defaults on EMI’s. Is the Chennai real-estate market over heated? And therefore headed for a crash?
There has never been a real estate crash in Chennai, but then previous realestate booms have been financed through savings and not through debt, like the current boom. Does this mean Chennai will witness its first real estate crash?