FOREWARD

Price is an important real estate variable as it is the end-product of interaction between the underlying demand
and supply elements. It also incorporates all the sector related imperfections like delays in getting project
approvals and clearances. It is an indicator of the health of the market and the overall economic scenario. The
price level and associated trend serves as a guidance tool for important investment decisions from retail home
buyers to private equity funds. Therefore, importance of such a tool cannot be stressed enough.
Real estate in each city is heterogeneous and each locality and project can be mapped to different budget
segments. Each budget segment corresponds to a certain share of supply and consumer preference in the
market. Therefore, can there be one price trend for the city? And how does one ascertain such a price trend which
incorporates contribution from different price segments?
Towards this end, Magicbricks has evolved a holistic price Index for each of the 14 major cities in India. The City
Index reflects the price movement across prominent localities in each city. These localities have been chosen using
the twin criterion of their share in the overall consumer preference in the city as well as share of actively traded
properties. The weight assigned to each locality is its share of consumer preference in the city. This makes for a
comprehensive Index which covers localities with high consumer preference as well as high number of actively
traded properties in the secondary market. It also allows a comparative analysis between cities to evaluate better
investment destinations.
In addition to this macro number, we have also calculated the price variation across budget segments and
localities. This top-down approach helps to identify price trends at the city, budget and/or locality levels. We can
ascertain how each segment is performing relative to others and how it is contributing to price at the city level.
Analysis of City Indices over a 2-year period shows that Navi Mumbai had the highest gain of 15% while New
Delhi was faced with a tough market with 22% decline. The only other city with a double digit Index gain was
Pune with 10% increment. Overall, Western India performed the best with 9.2% average gain followed by South
with 4.6% increment. North and East India saw an average decline of 3.5% and 2.1% in City Indices, respectively.
It is important to note that these gains are eroded when benchmarked against inflation in the study period.
Property in many cities today, costs the same or even lower than prices prevalent two years earlier. Even if
property prices have not seen explicit correction, they have been subjected to time correction in prices.
Another important sign of our times is the 3% premium commanded by the ready-to-move-in (RM) properties
over the under-construction (UC) properties at a pan-India level. This is a reflection of the consumers lack of
confidence on the developers to deliver projects on time. Consumers do not want to undertake development
risk and are opting for safer RM options. The industry needs to introspect and address this aspect of consumer
confidence if it wants the consumer to participate in a big way in the market.
These are changing times and we would love to hear from you. Do write to us at Sudhir.pai@timesgroup.com and
share yours views on this report and how we could make PropIndex even better.
You may also share your opinion with #PropIndex on our Twitter handle @magicbricks or connect with us on
Facebook at www.facebook.com/magicbricksTOI.
Sudhir Pai
CEO, Magicbricks.com

METHODOLOGY
|Realistic price discovery has been the
biggest problem area in the Indian
real estate market. As consumers
and industry struggle to arrive at the
realistic benchmark pricing to assess
the true value of their individual units,
Magicbricks, as the largest repository
of residential property listings, brings
you the trusted Indian Apartment
Price Index in a new and easy to
use format. Mirroring the Indian
Real Estate scenario, this price index
presents an animated representation
of the Real Estate market.
Every quarter, Magicbricks publishes
the quarter-on-quarter inflation and
deflation trends of the residential real
estate prices in India. It collects real
estate demand-supply data on a daily
basis for more than 100 cities in India,
of which, the fourteen top cities are
selected for computing the National
Property Price Index.
The National Property Price Index and
its constituent indices are subjected to
a series of stringent steps.
Each quarter, Magicbricks measures
the individual property level price
changes, which are then aggregated at
the locality level. While comparing the
average pricing figures for the current
quarter and comparing with the
previous one, quarterly price changes
are calculated. These price changes are
further aggregated at the city level
and even further at an all-India level.
As the top receiver and aggregator
of residential demand, Magicbricks
data provides consumers with realistic
benchmarks to assess true property
pricing. Where demand exceeds
supply, consumers have no chance of
negotiating values.
However, where demand is far lower
than supply, buyers can look for more
options and therefore, negotiate

pricing. If, on the other hand, you are

a seller looking for benchmark pricing,
you will effect the fastest sale if your
asking values are close to the buyers
paying power.
There are various co-relations of the
demand and the overall real estate
market as well as its future potential.
Not only is the demand a preceding
indicator to the supply, it is also a fairly
good indicator of actual transaction
activity in the region.
We have aggregated the 14 cities
covered under the report into various
localities and while calculating the
city level property pricing indicator,
we have applied demand as weight
to each locality. This weight is equal
to the localitys share of the demand
being contributed to the citys total
demand. As a consequence, the
locality receiving higher demand for
residential units will be given a higher
weightage. Following that, each
citys price movement is calculated by
aggregating the price movements of
individual localities, according to their
individual weightages.
In terms of checks and balances
towards making the data and
analysis more robust and objective,
we have made sure that superfluous
information does not deviate the
desired results. Hence, we have
applied checks and balances at the
locality level listing data collection and
aggregation.
A statistical technique called InterQuartile range has been used to
ensure that unintentional input
deviations of house size and price
figures, which may distort the actual
value of the house and corrupt the
analysis, are addressed. The technique
aims to remove the outlier datasets,
while securing the correct values.

The interquartile range (IQR)

technique works through measuring
variability of each dataset, while
dividing the data set into quartiles.
The technique measures the value
of data points on the first and third
quartiles of the data and calculates the
difference between the two.
This range, called as the IQR, gives
the effective extent of dataset, while
removing the first 25% and the last
25%. Subsequently, a test is applied
to each of the values in the dataset.
If a particular data lies within an IQR
of the first and third quartile values,
then that data is considered part of
the dataset, otherwise not. The set
of listing values of each locality are
statistically cleaned.
Magicbricks, on an average, covers
more than 500 localities for Tier I cities
of India. Yet for the sake of analysis,
we take only those localities where the
recipient demand is at least 0.05% of
the citys total demand. Only localities
with at least 50 actively traded
properties have been included in the
analysis. Following that process, we
shortlisted various localities which
in some sense, impact the pricing
dynamics of the city.
We then calculate the average prices of
the city for the quarter, while applying
demand weights to the average prices
of each locality. These average prices
at the city level are further aggregated
to the final outcome of the National
Price Index.
The difference in Under Construction
and Ready-to-Move-in property has
been assessed and included in the
report. Rental yield and affordability
too has been addressed for top 10
localities by supply in every city. These
are critical tools which well used can
help with realistic price discovery.

GLOSSARY & DEFINITIONS

There is a wealth of information within these pages. For better readability, we have presented some data as tables and
others as graphs. Between them, you will find how property markets have performed in the Oct-Dec 2015 quarter from
different perspectives from that of capital appreciation, from a rental/yield realisation perspective and from a supply
standpoint. Demand Analysis section also explains what consumers look for.
We recommend that you evaluate the city report in its entirety and that will provide a rounded perspective of the
performance of the property market within each city. Here are the details of what you will find in each of the city reports
enclosed within:
1. City Property Index: The City Property Index is a weighted price index for the city. It reflects price movement in a set
of localities for each city which have been selected basis predefined criteria. This criteria takes into account the share
of a locality in the consumer preference in the city as well as a minimum number of actively traded properties. Price
movement in each of the selected localities is reflected in the Index movement basis the weight assigned to localities.
2. Price Index basic construction status: This Index looks at the movement in prices of under-construction (UC) and
Ready-to-Move (RM) properties across localities in the city. It is a weighted price index where weight is assigned to
each locality basis its share in the consumer preference in the city.
3. Price trend basis budget segments: To better understand the price trend in the city, the localities have been
divided into different budget segments basis their capital value (Rs/sq ft). The number of budget segments vary
to accommodate the price range in the city. We have tracked the weighted average price for each budget segment
for a 2+ year period from quarter ending September 2013 to quarter ending December 2015. This section assists in
understanding performance of different budget segments and evaluates contribution of each to overall price trend.
4. Price trend Top 5 localities by consumer preference: This section presents the price trend of Top 5 localities
in the city by consumer preference. These localities have the highest consumer focus and assessment of price trend in
these localities assists in understanding the prevalent and future price trend in the city.
5. Rental Yield & Affordability: Assessment of rental yield can serve as an indicator of trend in capital value and
prevalent rental values in a locality. Apart from indicating high rental demand, a high rental yield can be an indication
of stagnant capital values and vice versa. In this section, we track the rental yields of top 10 localities by supply in each
city. The rental yield yardstick has also been used to assess the affordability of the locality.
6. Capital Value Tables (given in Annexures) This shows the actual range of prices within which properties were
available in each locality in the quarter. Prices are shown in Rupees per square foot basis, these are the prevailing rates
for properties in each locality.
7. Editorial Speak PropIndex has gone from strength to strength adding more analytics, insights and diverse views
in every edition. To enhance the insights provided by our data, PropIndex now includes city perspectives from our
editor. This helps position the data metrics in the context of policy and other issues that took place in the quarter.

VOL
FY2015-16
2015-16
VOL5,5,ISSUE
ISSUE3;2;OCT-DEC,
JUL-SEP, FY

propindex.magicbricks.com
propindex.magicbricks.com

[National Property Index (NPI)]

175
150
125
100
75
50

100

103

107

113

116

120

123

128

2
2
JFM1 AMJ1 JAS12

OND1

132

134

140

140

141

142

142

144

144

146

146

25
0
1

JFM1

1
1
1
AMJ1 JAS1 OND1

JUL-SEP 2015

n line with the general lack of activity in

the residential real estate market, the
National Property Index has also
remained stagnant over the previous
quarter. This is in continuation of the general
Oct-Dec
trend of 2015
inactivity observed in the market
over the last many quarters (including the
Incurrent
line with
the general lack of activity in the
period between Jul-Aug 2015).
residential real estate market, the National
NPI is the
weighted
average
of supply
and at
Property
Index
(NPI) has
remained
stagnant
capital
in India.
the
samevalues
levelacross
as the11
lastcities
quarter.
This follows
the general trend of inactivity observed in the
Regionally, North India comprising of
market in the last many quarters (including
Delhi, Noida/Greater Noida, Ghaziabad and
the current period between Oct-Dec 2015).
Gurgaon, saw an average drop in the Index
values.
this, while
the Index in
NPI
is theCompared
weightedtoaverage
of consumer
the South Indian
on anand
average
preference
share ofcities
14 cities
their
remained City
at theIndex
samevalues.
level as in the last
individual
quarter, West India saw an average rise of
2% in the Index values. Kolkata in the east
also saw the Index values remaining at the
same
level as the previous quarter.
l In Mumbai, 52% localities saw an average

[National Property Index]

price
increase ofin7%,
pushing
the can
The movement
Index
in theup
quarter
15 Index
2.3%.13%
Balance
48% in
beJul-Sep
attributed
to anby
average
increase
localities
prices
pushing
supply
andsaw
partly
due drop
to sixbyout4%,
of the
eleven
downhaving
the Jul-Sep
15 Index
1.6% leading
cities
more than
50% by
localities
with
to net increment of 0.7% in Oct-Dec 15

4
4
5
3
5
4
3
4
5
3
JFM1 AMJ1 JAS13 OND1 JFM1 AMJ1 JAS1 OND1 JFM1 AMJ1 JAS1

price increment. However, only one city saw

some positive movement in the Price
Monitor while others either stayed at the
same level or witnessed an overall dip in the
price levels.
Bengaluru again emerged as the city with
maximum
Index having
While
thereincrease
was notwith
muchthe
variation
in the
grown by 4%
in the across
evaluation
quarter.
percentage
changes
regions,
northThis
was followed
by Mumbai
3%Greater
increase
India,
comprising
of Delhi,with
Noida,
and
Gurgaon
with
2%
increase.
The
Noida, Ghaziabad and Gurgaon, sawlargest
an
drop in the
Index values.
was again
witnessed
average
dropCity
in index
Industry
in Delhi with
value
5%.
practices
acrossthetheIndex
North
havefalling
beenby
lower
Except
for
Gurgaon,
cities
in
the
North
either
than the South, leading to lower consumer
witnessed aWhile
drop intheIndex
or Indian
sentiments.
Indexvalues
in South
remained
at
the
same
level
as
in
the
cities gained marginally as comparedlast
to the
quarter.
Ahmedabad
grew byrise
1%in
last
quarter,
West IndiaCity
sawIndex
an average
as
compared
to
the
last
quarter.
index values of 0.6%. Kolkata in the east saw
theWhile
Indexthe
value
rise byBank
1%.of India (RBI)
Reserve
lowered the interest rates, leading to banks
passing on the benefit to consumers in terms
of lower home loan rates, the same might
be sufficient
to address
issue
lnot
In Navi
Mumbaienough
prices rose
in 48%the
localities
ofbylow
transaction
and large
1.9%,
pushingvolumes
up the Jul-Sep
15 Index
inventory
Thebalance
festive 52%
season
and the
value by pile-up.
0.8%. The
localities
associated
discounts
and
freebies
given
by
saw prices drop by a steep 4.6%, pushing
developers,
along with
lowerbyinterest
rates
down the Jul-Sep
15 Index
2.0% leading
to a net drop of 1.2% in Oct-Dec 15.

may have some positive impact on the

transaction activity on the ground.
Today, the biggest concern which the
consumer has in respect to the real estate
market is lack of confidence in the developer
community. With many projects having been
delayedand
andThane
lack ofemerged
clarity onastheir
Chennai
the cities with
completionincrease;
timelines,
consumer
vary
maximum
thethe
index
grew byis3%
of
investing
his
money
in
the
market,
each in the evaluation quarter; this is followed
in new
or underbyespecially
Bengaluru
withlaunches
2% increase.
This is in
construction
projects.
line
with consumer
sentiments and market
practices.
Theitlargest
drop in on
thethe
Citypart
Index
Therefore,
is imperative
of
was
in Greater Noida
with the index
the witnessed
developer community
to bring
value
falling byand
4%.take
Except
for Gurgaon,into
cities
transparency
the consumers
inconfidence.
the north witnessed
a
drop
in
index
values;
While payment schemes like
Gurgaon
remained
stagnant.plan
The Ahmedabad
possession
linked payment
have been
City
Index
also
remained
stagnant
at the same
offered by several developers to allay
level
as
the
last
quarter.
consumer fears of non-delivery and credit
getting stuck, more efforts are required to
increase the transaction momentum.
THIS62%
REPORT:
InINThane,
localities saw an average
price rise of 4.6%, pushing up the
National
Property
Jul-Sep
15 Index
valueIndex...............1
by 3.6%. Prices
Mumbai.....................................4
dropped
in 38% localities by 4.1%, pushing
Annexures.................................13
down
the Jul-Sep 15 Index by 0.4% and a
net increment of 3.2% in Oct-Dec 15.

propindex.magicbricks.com

Bengaluru had 56% localities with average

price increase of 9%, pushing the Jul-Sep 15
Index value up by 4.12%. The balance 36%
localities saw prices drop, pushing down the
Jul-Sep 15 Index by 2.36% leading to a net
increment of 1.8% in Oct-Dec 15
Pune had 58% localities with average price
increase of 4.6% pushing the Jul-Sep 15
Index value up by 1.2%. The balance 42%
localities saw average prices decrease,
pushing down the Jul-Sep 15 Index by
0.9% leading to a net increment of 0.3% in
Oct-Dec 15
Noida had 77% localities with an average
price decrease of 4.1% pushing down the
Jul-Sep 15 Index value by 2.9%. The balance
23% localities saw prices increase, pushing
up the Jul-Sep 15 Index by 0.7% leading to a
net decline of 2.2% in Oct-Dec 15

Greater Noida had 76% localities with an

average price decrease of 3.6% pushing the
Jul-Sep 15 Index value down by 3.7%. The
balance 24% localities saw prices increase
by 2.7%, pushing up the Jul-Sep 15 Index

VOL5, ISSUE 3; OCT-DEC, FY 2015-16

by 0.1%, leading to a net decline of 3.6% in

Oct-Dec 15

02

Ghaziabad had 57% localities with an

average price decrease of 3.1% pushing the
Jul-Sep 15 Index value down by 1.9%. The
balance 43% localities saw prices increase
by 2.3%, pushing up the Jul-Sep 15 Index
by 0.7%, leading to a net decline of 1.2% in
Oct-Dec 15

37% localities saw prices drop, pushing

down the Jul-Sep 15 Index by 1.4%, leading
to a net increment of 3% in Oct-Dec 15

Delhi had 16% localities with over 5% price

rise in Jul-Sep 15. Compared to this about
two third localities witnessed an average
price decline of 5%. This led to a decline of
2.3% in the City Index for Oct-Dec 15

Gurgaon had 59% localities with an average

price decrease of 3.4%, pushing down the
Jul-Sep 2015 Index value by 1.2%. The
balance 41% localities saw prices increase,
pushing up the Jul-Sep 15 Index by 1.2%,
leading to a net increment being zero for
Oct-Dec 15

Chennai had 63% localities with an average

price increase of 5.2%, pushing up the JulSep 2015 Index value by 4.3%. The balance

The Kolkata City Index witnessed a 1%

increase in Oct-Dec 15 over the previous
quarter; this was on account of 20%
localities witnessing more than 5% increase
in prices over the previous quarter. In
comparison, only 10% localities witnessed
more than 5% price decline

Hyderabad had 62% localities with an

average price increase of 7%, pushing the
Jul-Sep 15 Index value up by 2.7%. The
balance 38% localities saw average prices
decrease by 8%, pushing the Jul-Sep 15
Index down by 3.6%; this lead to a net
increment of 1% in City Index for Oct-Dec 15

Ahmedabad had 52% localities with an

average price increase of 2.5%, pushing
the Jul-Sep 15 Index value up by 1.7%.
The balance 48% localities saw average
prices decrease of 4.8%, pushing down the
Jul-Sep Index by 1.7%; this lead to net zero
increment in City Index value for Oct-Dec 15

[Lack of consumer confidence]

One of the biggest challenges in the current
realty market is the lack of consumer
confidence in the market and in the players.

example, there has been an inordinate delay

in completion of projects with possession
deadlines getting shifted without any clarity.

Consumers with purchase potential are

hesitant to buy properties. There are a host
of factors which have led to this situation. For

Projects have been stalled for lack of all

approvals with consumers knowing about the
matter only after having made the purchase.

Administrative apathy leading to government

or court orders impacting project delivery or
worse, project sanctity, after the project is
presumed to have received all clearances and
is in advanced stages of construction too, have
led to a drop in consumer sentiments.

VOL5, ISSUE 3; OCT-DEC, FY 2015-16

03

propindex.magicbricks.com

[Lack of consumer confidence]

premium/(discount) of RM properties over

UC properties.
The fluctuation in price of both asset types has
mirrored each other. On an average, the RM
properties have commanded a 3% premium
over UC properties over the last 2+ years. The
gap has widened over the last quarter.
With the exception of three cities (Chennai,
Ahmedabad and Hyderabad), RM properties
are at a premium to UC properties. Even
in cities like Hyderabad and Chennai, RM
properties are at a premium in those localities
with large-scale development and which
provide both options.

Project delay leads to the consumer having

to bear additional financial burden of paying
rent over and above the applicable home
loan instalments for an extended period. All
this has made the consumer wary of putting
money in under-construction projects. This
is reflected in the price differential between
Under-Construction (UC) and Ready-to-Movein (RM) properties. At a pan-India level, RM
properties command an average 5% premium
over UC properties.
It can be surmised that in a developing
market like India, UC properties are likely to
command a premium over RM properties.
This is because UC properties offer certain
advantages of RM properties as well. A
consumer can enter the project at different

stages of construction, which have lower entry

cost and gives flexibility to book profit and exit
an investment.
These advantages are nullified in a slow
market like the present scenario where
investors have exited the market and endusers are wary of putting money in the UC
projects with uncertain delivery timelines. In
the current situation, a consumer is likely to
opt for RM properties as the delivery risk is low
when compared to UC properties.
The given graph shows the Index values of
weighted prices of UC and RM properties on a
pan-India basis covering 14 cities. It compares
the 2+ year trend from Sep 2013 to Dec 2015
where September 2013 has been taken as the
base for the analysis. The graph also shows the

In Hyderabad, RM properties are at a premium

in the larger and more evolved localities
which have substantial UC and RM options
like Gachibowli, Madhapur, Kukatpally
Housing Board and Manikonda. In Chennai,
RM properties are at a premium in the outer
suburbs and peripheral areas. This includes
localities like Pallavaram, Tambaram,
Pallikarnai and Avadi.
In Mumbai, the fact that RM properties may
be more favourably located impacts the
premium more than consumer preference for
RM properties. This holds especially true for
the western suburban localities and those
further north. However, in localities with
relatively large development activity like Virar,
Vasai & Mira-Bhayandar, RM properties are at
a premium to UC properties. In Delhi, the trend
slightly reverses as UC properties have seen a
decline in prices with the exit of investors.

CHENNAI

propindex.magicbricks.com

04

VOL5, ISSUE 3; OCT-DEC, FY 2015-16

[PROPINDEX - CHENNAI]
[Key Takeaways]
The Chennai City Index saw a
marginal 3% increment during the
Oct-Dec 2015 quarter
The Index gain was due to the
quarterly price increase in the
Rs 5,0006,000 per sq ft and the
Rs 7,0009,000 per sq ft budget
segments
In the lower budget segment of
the Rs 3,0005,000 per sq ft range,
which accounts for about 61% of
supply in the secondary market and
42% of consumer preference, the
prices on an average remained at the
same level as in the last quarter
The premier budget segment in
the city had a mixed quarter. While
prices in the >Rs 11,000 per sq ft

segment saw a price increase of

1.5%, the Rs 9,00011,000 per sq ft
had a price decline of 3.5%
Long term trend (2+ years) of City
Index shows that the real estate
market has remained practically
stagnant with only 5.8% increment.
When this Index increment is
adjusted for inflation, it erodes away
any gains and shows that properties
today cost lower than what the price
was two years ago

The price trend analysis across

different budgets for a 2+ year
period shows that average price
increase was 5.8%. The highest price
increase was in the most expensive
segment (>Rs 11,000 per sq ft) with
20% increment. This was followed
by the Rs 7,0009,000 per sq ft price
segment with 17% increment. Entry
to mid-level budget segments in the
Rs 3,0007,000 per sq ft range had
an average price increase of 4%

Consumers in peripheral areas of the

city with large scale development
prefer ready-to-move-in properties
over under-construction projects.
In more established localities of
Chennai this trend reverses itself

Average rental yield across the top

10 localities by supply in Chennai
was 3.57% for the Oct-Dec 2015
quarter. This points towards higher
growth rate of rental values as
compared to property prices

Infra boost might affect Chennai positively

Chennai real estate witnessed highs and lows
this quarter. While the highs included opening
up FDI in the industry; inclusion of 8 cities in
AMRUT scheme; builders voicing the need
to push manufacturing sector to get more
investment; the lows definitely included the
catastrophic effect of floods on infrastructure
and housing.
The FDI is expected to ensure minimum
capitalisation and relaxation of area and exit
norms, with money flowing into the sector.
India will be looked upon as a place where
money can be invested. The strengthening
of the economy, job creation and job security
might result in the revival of the sector.
The old limits of the city corporation, Ambattur,
Tiruvottiyur, Alandur, Madhavaram, Pallavaram,

EDITORIAL

Tambaram, Avadi and Kancheepuram are

identified for the AMRUT scheme. This will
boost the new avatar of the existing JNNURM.

their opinion in this respect. If heard, this will

also pump up consumer confidence. The job
opportunities will positively impact demand.

The infrastructure rejuvenation to include

improvements in water supply, sewerage,
storm water drains, transport and development
of green spaces. An additional 10% grant for
reforms like e-governance has been promised
by the Centre. A boost in infrastructure can
boost demand and better the lives of residents.

While Chennai has big positives, the Nov

2015 floods crumbled the citys infrastructure
and disrupted peoples lives. This compelled
Tamil Nadu Chief Minister, Jayalalitha, to allot
houses to the affected. The situation raised
questions on city planning and its readiness to
tackle natural disasters. The floods also had an
adverse effect on property tax collection. Until
Dec 2015, only Rs 352 crore had been collected
against the target of Rs 600 crore for 2015-16.

The last quarter also saw builders and real

estate consultants raising concerns over the
sluggish market conditions. They sought the
governments help to provide thrust to the
manufacturing sector as Chennai is losing to
neighbouring states in attracting investments.
This is the first time that developers have voiced

With small progressive moves, better planning

and management, lets hope the New Year
brings in many positive strides in the real estate
sector of Chennai.
Magicbricks Bureau

VOL5, ISSUE 3; OCT-DEC, FY 2015-16

05

propindex.magicbricks.com

CHENNAI

[Property Distribution by Capital Value (Rs/Sq.ft)]

Price movement dominated by lower budget segments

The adjacent graphs shows the distribution of actively traded

properties by their capital values. The lower budget segments
account for most of the supply in Chennai. Of the total
properties, 62% are in the two lowest budget segments which
cover Rs 3,0005,000 per sq ft range. The share rises to 82%
if the Rs 3,000-6,000 per sq ft budget range is considered.
Individually, the Rs 4,0005,000 per sq ft range is the
largest segment with 35% supply. This is followed by the Rs
3,0004,000 per sq ft and Rs 5,0006,000 per sq ft segments
with 27% and 20% share each. Other budget segments have
approximately 18% share. The overall price movement in the
city will be determined mostly by lower budget segments.
Given the supply in these segments, large scale transaction
activity is required for meaningful price movement

[CITY INDEX]

Upper budget segments push up the City Index

CITY PRICE INDEX

The long term trend with 2.7% increment

shows that Chennai market has remained
stagnant for quite some time. Looking at
Dec 2014-Dec 2015 period data, it is seen
that this decline has continued over the last
year. The only silver lining the Q-on-Q trend
in City Index (3% gain) has somewhat
arrested the decline in the Index value and
underlying prices
To understand the contribution of various
budget segments and localities in the Index
movement, 41 localities are grouped into
four budget segments on the basis of their
capital values
CITY INDEX MOVEMENT

The City Index for Chennai reflects the

price movement across 41 localities,
chosen using the twin criterion of
share in overall consumer preference
in Chennai and share of actively traded
properties. The weight assigned to each
locality is its share of preference in the
city, making a comprehensive Index
covering localities with high preference
and high number of actively traded
properties in the secondary market

The City Index saw a 3% increment over

the previous quarter. The Oct-Dec 2015
quarter had more localities with price
increment as compared to price decline.
Almost 63% localities saw an average
price increase of 5.2% pushing the
Jul-Sep 2015 Index value up by 4.3%.
The balance 37% localities saw prices
drop pushing down the Index by -1.4%
leading to a net increment of 3% in the
City Index for the Oct-Dec 2015 quarter

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VOL5, ISSUE 3; OCT-DEC, FY 2015-16

BUDGET WISE PRICE CHANGE: OCT-DEC 2015

The biggest average price movement of

12.2% was witnessed in the Rs 7,0009,000 per sq ft segment which was
primarily due to the price gain in the
Velachery locality
Price gain in the key localities like
Pallavaram, Porur, and Madipakkam
contributed to an average price gain of
around 4.5% in the Rs 5,0006,000 per
sq ft segment

The lower budget segments of Rs 3,000

4,000 per sq ft range which accounts for
the bulk of demand and supply shows
negligible to negative price movement.
Most peripheral and suburban localities
in this range saw a decline in prices or a
marginal increase
Prominent localities in this range like
Madambakkam, Tambram, Padur
and Navallur witnessed a drop in

TOP LOCALITIES BY CONSUMER PREFERENCE: OCT-DEC 2015 PRICE CHANGE

prices. Others like Pallikaranai, OMR,

Perumbakkam and Tambram (West) saw
marginal price increment. The core areas
of Chennai which constitute the highest
budget segment (Rs 11,000 per sq ft &
above) like T Nagar and Nungambakkam
also saw a marginal increase in prices
The graph shows the price movement
in the top two localities by consumer
preference in each budget segment

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CHENNAI

Price trend basis construction status

Under construction properties preferred in established localities

The graph shows the trend in the prices

of Ready-to-Move-in properties (RM)
and Under Construction (UC) properties.
Analysis across 41 localities shows that
on an average, UC properties are more
expensive than RM properties.
In 61% localities the RM properties were
more expensive than UC properties.
While the weighted average price of UC
properties is Rs 6,763 per sq ft, the same
number for RM properties is Rs 5,930
per sq ft, representing a difference of
14% prices
The historic trend analysis also shows
that except for the Sep 2013 quarter, UC
properties have been more expensive
than RM properties. The average
difference in prices has been 10%.
However, the difference has increased
over the Dec 2014Dec 2015 period and
stands at an average 15%. The increase
in difference began from Jan-Mar 2015
quarter rising to double digits

Even in terms of price growth, the price

increment of UC properties has been
more than RM properties. Whereas, the
price of UC properties saw an increment
of 25% over Sep 2013-Dec 2015 period,
the price of RM properties grew by a
marginal 3% in the same period
Geographically, the localities where
UC properties are cheaper than RM
properties are in the outer suburbs and
peripheral areas. These include localities
like Pallavaram, Tambaram, Pallikarnai,
Perumbakkam, Padur, Kolathur,
Guduvancherry and Avadi. It can be
concluded that localities which account
for large and new construction activity,
the RM properties command a premium
over UC properties as it allows for ready
occupancy and lower delivery risk
Even in case of these localities, the RM
properties have become more expensive
over the last few quarters. It is plausible
that delay or uncertainty in project
delivery is pushing consumers towards

RM properties or projects nearing

completion
In case of established localities with
limited development activity, new
construction is likely to be expensive as it
offers a new product in a market where
the general age of available options is
quite large
Overall, UC properties are likely to cost
more as they offer lower entry cost and
opportunity to book premium and exit
an investment. However, in a slower
market where consumer lacks confidence
in the developer to deliver the property
on time, a RM property is likely to
command more premium. This is because
a user sees lower risk in opting for RM
property as compared to UC property
As more properties are delivered,
localities become more evolved and
return of consumer confidence is likely
to lead further narrowing of price gap
between UC and RM properties

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VOL5, ISSUE 3; OCT-DEC, FY 2015-16

Price trend basis budget segments

Real estate has seen a net decline in values over the last two years
The localities in the city have been divided into different budget segments. For each group, we evaluate the trend in average
capital values; this is done from Sep 2013-Dec 2015 period. The price trend across the evaluation period is shown in the
below graph.

2 year assessment
Analysis shows that average increment
across all budget segments was 6% over
the 2+ year period. This indicates at a
stagnant market from transaction and price
perspective. Except for the Rs 9,000
11,000 per sq ft budget, higher priced
segments have seen more price increment
as compared to lower ones. The beyond
Rs 11,000 per sq ft segment saw a 20%
price increase followed by 17% increase in
the Rs 7,0009,000 per sq ft range.
Data also shows that higher budget
segments have seen price volatility.
Localities which today constitute
Rs 11,000 per sq ft & above segment has
seen a price increase from the base in
Sep 2013. This includes Nungambakkam,
T Nagar and Thiruvanmayur. On the other
hand, localities in the Rs 9,00011,000
per sq ft segment have seen a fall in values
from more than Rs 11,000 per sq ft to the
present Rs 9,00011,000 per sq ft range.

Localities like Adyar and Anna Nagar in this

range have seen a decline over the twoyear period. Increase in the higher budget
segments are driven by supply.
The lower budget segments of Rs
3,0005,000 per sq ft range had an
average increase of only 3%. Peripheral
localities like Avadi and Guduvancherry
have seen correction in prices. Other
localities have mostly seen less than 10%
price increment. Adjustment of this long
term price movement to inflation erodes
whatever minimal price increase that has
taken place. The properties in most budget
segments either cost the same as two
years ago or have actually fallen in value.
The market has seen time correction in
property values.
Y-on-Y assessment
The last one year period from Dec 2014Dec 2015 has been unfavourable. It
witnessed an average decline of 1% across

all budget segments. The biggest decline

of 19% was seen in the Rs 9,00011,000
per sq ft segment. The Rs 11,000 per sq ft &
higher segment also saw a 3% decline. The
highest gain was in the Rs 7,0009,000 per
sq ft segment with Velachery witnessing
11% price gain. Lower segments saw a
marginal movement between 0% and 3%.
Q-on-Q assessment:
Compared to the Jul-Sep 2015 quarter,
the prices on an average increased by 3%.
The Rs 7,000-9,000 per sq ft price segment
maintained the growth trend with a gain
of 13%. Velachery and Akkarai are the
main localities in this segment. The lower
segments with localities in peripheral
and extended suburban areas have either
marginal increment or remained stagnant.
Trend analysis shows that some higher
segments saw sustained increment while
the market was stagnant. This is most
visible in lower segments.

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CHENNAI

Price trend Top 5 localities by consumer preference

High preference localities have done relatively well

This section presents price trends across

the top five localities in Chennai ranked
by their share of consumer preference.
Together these localities account for
31% share of consumer preference. The
localities are spread across all budget
segments and interestingly, the locality
in topmost budget segment also features
in this list
The trend analysis shows that these
localities with high consumer preference
have seen price increase over short and
long terms. Velachery and Porur are two
localities which have consistently seen a
price growth in the long to short term, in
an otherwise stagnant real estate market
of the city
While Thiruvanmiyur has seen 10% price
increase over the last 2+ years, there
have been many fluctuations. Other
localities have had an average long term
increase of 6%

The last one year (Dec 2014Dec 2015)

and last quarter trends were also
positive with an average of 7% and 8%

price increment, respectively. Porur and

Velachery again had more than 10%
price increase during these period

TOP 10 LOCALITIES BY SUPPLY: PRICE CHANGE OCT-DEC 2015

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VOL5, ISSUE 3; OCT-DEC, FY 2015-16

Rental Yield & Affordability

Stagnant capital values leading to high rental yields

The rental yield numbers are high as

property prices are either stagnant or
have seen only marginal increment.
The rental numbers, on the other hand,
continue to increase between 5%-10%
per annum as the norm in a locality
may be. It also shows that more people
are opting for hire in localities close
to commercial clusters than purchase
options in the areas further out
The yield numbers are used to evaluate
the affordability of each location. Here,
AFFORDABILITY

RENTAL YIELD - TOP 10 LOCALITIES BY SUPPLY

affordability is defined as the ratio of

Equated Monthly Instalment (EMI) to
prevalent monthly rental. The smaller
the ratio, higher the affordability
of the locality. This gives options to
consumers staying in such a locality on
rented accommodation to opt for home
ownership in the very same locality.
The below assumptions have been made:
(a) average apartment size: 1200 sq ft
(b) Interest rate: 9.50% per annum
(c) Tenure: 30 years
(d) Loan-to-value ratio: 80%.
We use the average rental value and

capital value of a locality to compute the

monthly rental and capital values for a
1200 sq ft apartment in that locality
The EMI/rent ratio ranges from the
lowest of 1.3 to the highest 3.0.
Kelambakkam ( at 2.1), and OMR (at 1.3)
are the two most affordable localities as
per this parameter. The ratio in the other
key localities varies from 2.1 to 2.7 with
one locality (Velachery) having a ratio
of 3. This points to rents being lower on
average in the city

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CHENNAI

Capital values and price change key localities

Locality
DEC 2015
Price

Price Change
Q-on-Q

Locality
DEC 2015
Price

Price Change
Q-on-Q

ADAMBAKKAM

6,047

-1%

PADUR

3,784

-2%

10,073

-5%

PALLAVARAM

5,260

9%

AKKARAI

8,682

11%

PALLIKARANAI

4,918

5%

AMBATTUR

4,282

5%

PERUMBAKKAM

4,045

3%

10,309

-2%

PERUNGUDI

5,842

-11%

AVADI

3,443

3%

POONAMALLE

3,435

-3%

CHROMEPET

5,493

4%

PORUR

5,394

16%

GUDUVANCHERI

3,312

1%

RAJAKILPAKKAM

4,155

-12%

IYYAPPANTHANGAL

4,351

5%

SELAIYUR

4,300

-6%

KELAMBAKKAM

3,386

1%

SHOLINGANALLUR

4,469

5%

10,925

-1%

T NAGAR

13,244

1%

KOLATHUR

5,090

4%

TAMBARAM

3,951

-4%

MADAMBAKKAM

3,557

-9%

TAMBARAM EAST

4,459

-5%

MADIPAKKAM

5,023

5%

TAMBARAM WEST

3,938

13%

MEDAVAKKAM

4,689

4%

THIRUVANMIYUR

11,159

1%

MOGAPPAIR

6,299

0%

THORAIPAKKAM

5,824

6%

MOGAPPAIR WEST

5,525

0%

URAPAKKAM

3,710

0%

NANGANALLUR

6,005

-5%

VALASARAVAKKAM

6,447

4%

NAVALUR

4,176

-3%

VANDALUR

3,632

-1%

14,197

2%

VELACHERY

7,683

12%

4,193

3%

ADYAR

ANNA NAGAR

KILPAUK

NUNGAMBAKKAM
OLD MAHABALIPURAM ROAD

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D I S C L A I M E R
Every effort has been made to make this Index as complete and as accurate as possible. MagicBricks accepts no responsibility for inaccuracies in the
information/data contained in this book. It shall have neither liability nor responsibility to any person or entity with respect to any loss or damage
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to change from time to time due to market condition.