Residential Space in Chennai: The Supply and Price Paradox.
R.Jagannath
R.Vishnu Pillai
Introduction
The growth indicators of a socio-economic group depend upon the progress that its people make, on the consumption front along with savings, which is a potential investment option. To lead a sustainable life, an individual has to fulfill a set of basic needs- food, shelter and clothing, for which monetary considerations are the central to these needs.
Thus it becomes palpable, that a person will settle down in a place where there are ample employment opportunities, social security and job security. With high levels of growth being realized by India along with optimistic projections till the recent past, the three main sectors that have been the lynchpins in realizing such high levels of growth are the manufacturing, service and IT sectors. Besides this, these industries have also been the highest employers.
The growth story hasn’t necessarily been isolated or concentrated, but a few hubs have outperformed the rest. Chennai especially has piggybacked on “Brand India”, with the city housing the most number of manufacturing units and emerging as the second largest IT hub in the country, closely on the heels of Bangalore- the Silicon Valley of India. Chennai has come to be known as Detroit of South Asia, with over 60% of the production in the automobile sector being exported. With a great deal of tax sops being provided to investors, an array of new companies are showing their interest to set shop in India.
Consequently, the city has seen a substantial influx of people from the length and breadth of the country, who are now settling down in the city. This has resulted in a sudden spike in demand for housing properties. With an ever...
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...ces when compared to Central Chennai. But what is astounding is the fact that despite a large number of plots not being sold in the southern market, prices continue to fail to correct itself. Whereas in Central Chennai, not all housing blocks have been absorbed, transcending the rationale that the prices are high because of lower availability of residential spaces.
References
A detailed analysis of the real estate market of Chennai – Arijeet Maji.
Chennai real estate: a closer look –Jones Lang Lasalle.
Residential traction at a glance (March 2013) - Knight Frank. www.thehindu.com www.theeconomictimes.com www.thehindubusinessline.com The seven stars of India- CII and Jones Lang Lasalle.
ICICI real estate report Bangalore.
ICICI real estate report Delhi-NCR.
ICICI real estate report Mumbai.
ICICI real estate report Chennai.
Investment advisory report- Knight Frank.
The lack of available social housing is mainly due to stock levels steadily diminishing each year since 1980, after tenants bought nearly half-a-million council houses under the ‘Right to Buy’ scheme. This coupled with the decline in house building; which is currently at its lowest level since 1946, has brought about a shameful lack of affordable public housing (Turffrey, 2010).
In a social sense, consumers prefer low-density developments. Low density means more space and better standard of living. There are apartments available in every city for those who prefer them. However, many people choose to live in detached homes. Nobody forces people to buy house at outer suburbs (Holcombe 1999). Developers build those houses because that is where people want to live. Why? The answer is simple, those houses offer better space and comfort compare to living in the confine inner city. Many have suggeste...
Supply is the quantity of goods that sellers are prepared to sell at any given price over a period of time” (ibid). The major factors of demand that affect the housing market are: taste and preferences and income. The major factors of supply that affect the housing market include government policies and price inelasticity of supply (ibid).
Gentrification is the keystone for the progression of the basic standards of living in urban environments. A prerequisite for the advancement of urban areas is an improvement of housing, dining, and general social services. One of the most revered and illustrious examples of gentrification in an urban setting is New York City. New York City’s gentrification projects are seen as a model for gentrification for not only America, but also the rest of the world. Gentrification in an urban setting is much more complex and has deeper ramifications than seen at face value. With changes in housing, modifications to the quality of life in the surrounding area must be considered as well. Constant lifestyle changes in a community can push out life-time
Although senior level governments have started to invest in affordable housing in the City, however, their role has been limited and unpredictable (Mah, 2009). It is also well-known that most of the financial burden for housing production have been transferred on to the local governments (Mah, 2009; Evans 2009). Also, local governments are facing many different challenges, from social and cultural issues to environmental and transportation issues (Evans,
Many researchers have theorized why the wealthy desire to move back into the city. Schwirian believes that many wealthy people are drawn to the architectural design of some of these old houses in urban areas (Schwirian 96). Harvey believes in a number of theories, and ...
The earth is made of every single molecule in the air, every breath an animal takes, every wind that blows, every rain drop that falls, every leaf that falls from a tree. In today's world, many people take advantage of Mother Nature, and give no respect to wilderness and earth. Oil mills are constructed and land is torn apart to make more room for the industrial, modern world. Many humans have forgotten about the beauties of nature, and are not concerned by the fact that Mother Nature is slowly dying. Our societies have begun to grow apart from the earth and the non-human world. In Donelle N. Dreese's essay, The Terrestrial Intelligence, he refers to Linda Hogan's collection of essays and believes that "her book, with all its stories, recreates the life of the natural world that has been objectified, and it redefines non-human creatures that have been negatively stereotyped" (12). Reese analyzes Hogan's essays and comes to a conclusion that Linda Hogan is trying to get the message across that humans, animals, and the earth are all connected one way or another, and that no matter how hard we try to detach ourselves from Mother Nature, we will never escape this relationship. Even though at times it seems as if humans have completely broken off from Mother Nature, there is still a connection there that not many people take notice of. Linda Hogan believes that humans are slowly killing the land, animals and even their own people, and by doing so, humans are trying to detach themselves from their roots, the Earth.
The real estate sector in India is one of the sectors recognized worldwide. In the country, it is the second largest employer after agriculture and is expected to grow by 30 percent over the next decade. It consists of four sub-sectors - residential, retail, catering and advertising. The growth of this sector is well complemented by the growth of corporate environment and demand for office space, as well as the urban and semi-urban housing. According to a study by ICRA, construction third ranked among the 14 most important sectors in terms of direct, indirect and induced in all areas of business purposes. It is also expected to emerge from this more non-resident sectors (NRI) Indian investments in the near future, according to a
Across the board most private residents are looking for suburban areas offering open spaces for entertaining friend and families. City dwellers continue to change the dynamics of urban living enriching property values for both single family homes and multiple units. What’s common among both of these personalities, they all start at the same point, each looking for a home that’s comfortable, affordable and offering access to daily living requirements.
Thakur, L. S. and Jain, V. K (2006) “Technology Adoption in India: A future Perspective with Analysis of Important Variables” – J of Advance Manufacturing Systems, vol. 5 No 2, 2006 1-31 –JAMS
The market for IT industry was huge and expanding at a fast pace. However the market leaders were Accenture and IBM which had a negligent market share and rest was captured by small enterprises. Indian companies also ventured in the industry and due to their competition, IT multinational giants had to increase their base in India. Due to high opportunities, attrition rate was also high in this industry. As a result Indian companies like Wipro, Infosys increased their base level salaries. During this phase, Indian economy was transforming towards an era of information and knowledge. This can be seen from the fact that contribution of services towards the economy’s GDP was higher than 18% in 2001 as against in 1980. No other industry had done better standing against global competition. The annual exports had always been over 50% over a decade. U.S.A. share represents highest with 61% and about a third of Fortune 500 companies outsource their software work to India. To foster development, Indian government has taken a number of steps like liberalization of policies and providing necessary capital and infrastructure to foster growth. Thus Indian environment has been conducive for growth. (Ref: Indian Embassy.org) Competitor analysis- The market for IT industry was fairly competitive with IBM and Accenture as global leaders and rest of the market was pretty diffused. IBM and Accenture had strong brand and a global presence with a large customer base. They also offered panoply of services viz. technology implementation, business consulting, offshore services, customer relationship management etc. Both offered breadth and depth of services. IT market in India offered technical and business consulting with Tata Consultancy Services which was the market leader in IT exports and Wipro Technologies and Infosys being other major market players. TCS offered consultancy services, IT services, asset based solution etc. Wipro was third largest IT provider with service offerings in IT consulting, software solutions, BPO etc. Both had a strong global presence. Intensity of Rivalry: Rivalry amongst competitors was pretty intense as can be seen the Indian competition caused IBM to increase their presence in India. However leaders like IBM and Accenture had a wide range of service offerings so competition was only amongst few sectors. Rivalry was to hire the top talent as human capital is the most important thing in the IT sector. This is the reason that attrition rate lead to a rise in pay packages.
Infosys is the third largest Indian Multi National Company that provides Information Technology, Business Consulting, Software engineering and Outsourcing services. Infosys was founded in 1981 by Seven Software engineers with a capital of Rs.10000, turned to be the most reputed company with 160405 employees, earning billions of income, assets and equity in the three decades of glory. Though the success continues, Infosys suffers the lack of Employee Retention and so the high employee turnover ever of 18.7%. Infosys is undoubtedly one of the most respected IT companies in India has been showing remarkable results on revenue and income every year. No Indian IT company has a better “Job security” proven than Infosys.
Guest Author, “A Look At Bottom of the Pyramid (BoP) in India [The Global Research & Innovation Hub]” http://www.nextbigwhat.com/bottom-of-the-pyramid-bop-in-india-the-global-research-innovation-hub-297/
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