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Our site visits in Chennai showcased that the residential market which had been resilient till now
has started to see some softness in inquiries due to the buyers (40-50% IT employees) delaying
purchases (due to noises on global slowdown). We even witnessed that DLF’s pace of execution
was better placed to Unitech
Chennai residential market – resilient till now, could see softness
While the key property markets (Mumbai, Gurgaon and Bangalore) have been witnessing
weakness in sales volumes due to the headwinds (high property prices, increasing mortgage
rates, weak sentiments due to slowdown), Chennai had shown resilience. This is largely
because the culture of owning apartments in multi-storied buildings is picking up compared to
owning independent houses in the past. Additionally, the resilience seen in demand is also
due to the fact that there seems to be a higher percentage of customers making purchases
via own equity rather than mortgage funding as compared to other key markets. Thus, in our
view, the adverse impact on sales volume due to increase in mortgage rates was lower for
Chennai in comparison to other key markets.
Also, as per Propequity (database which collects data via primary and secondary research)
there have been a significant increase in new launch activity post Oct-2010 in Chennai. Out of
~34,000 units launched during the period Oct-2010 to Jun-2011, 14,500 units have been sold
as of June-2011 which contributes to ~ 60% of sales volumes in these months.
However our channel check suggests that inquiries have started seeing some weakness in
the last month (which could impact sales in near future) on fears of the global slowdown
impacting the IT/ITES industry. We believe that this has resulted in a ‘wait and watch’
approach being followed by both the developers and the customers.
DLF scores over Unitech in Chennai real estate market
Our site visit to the residential properties of DLF 's 58 acre project (Garden City - 53 acres
and Commander’s Court- 5.1acres) and Unitech 's 250 acres project (Unihomes, Gardens,
Palm Villas and Birch Court) in Chennai showcased the following key takeaways.
Execution - DLF better placed than Unitech : In our site visit, we witnessed that DLF’s pace of
execution was better placed to Unitech and is close to commencing delivery. DLF targets to
hand over the first 2 towers in Garden City by October 2011 of the 21 blocks launched since
July 2008. Unitech's execution pace seemed relatively slower with Unihomes nearing
completion but other projects were under various stages of construction and would be
delivered only in the medim term
Land bank location - DLF scores over Unitech: While DLF’s Garden City is strategically
placed close to the IT hub (TCS, Infosys, Cognizant, etc) near OMR (Old Mahabalipuram
Road), Unitech’s development which stretches over an area of 250 acres on Kellambakam
Vandalur Road is relatively far from any major economic activity in the vicinity (OMR- 9kms,
GST Road (manufacturing hub) - 7 kms). We note that significant residential projects are
already available in the vicinity of these economic zones.
DLF luxury project has witnessed good traction: We witnessed traction in the luxury segment,
with DLF booking sales of 60% - 65% at Commander’s Court (priced at Rs9,800/ sq ft) at the
time of launch in October 2010. Till date, the project of 350 apartments is 80-85% sold out
with current market price being Rs 12550/sq ft. .
Mahindra World City - sets up the execution standard for the industry
We also even visited the Mahindra World City (owned by Mahindra Lifespace Ltd), a 1,550
acre development covering Domestic Tariff Area (DTA) and three sector specific Special
Economic Zones for IT (Services & Manufacturing), Auto Ancillaries and Apparel and Fashion
Accessories. The world city has even come up with a residential enclave Sylvan County
(spread over 22 acres) and is coming up with Aqualily, a 55 acre development ranging from
premium villas, delux twin homes to spacious apartments.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Our site visits in Chennai showcased that the residential market which had been resilient till now
has started to see some softness in inquiries due to the buyers (40-50% IT employees) delaying
purchases (due to noises on global slowdown). We even witnessed that DLF’s pace of execution
was better placed to Unitech
Chennai residential market – resilient till now, could see softness
While the key property markets (Mumbai, Gurgaon and Bangalore) have been witnessing
weakness in sales volumes due to the headwinds (high property prices, increasing mortgage
rates, weak sentiments due to slowdown), Chennai had shown resilience. This is largely
because the culture of owning apartments in multi-storied buildings is picking up compared to
owning independent houses in the past. Additionally, the resilience seen in demand is also
due to the fact that there seems to be a higher percentage of customers making purchases
via own equity rather than mortgage funding as compared to other key markets. Thus, in our
view, the adverse impact on sales volume due to increase in mortgage rates was lower for
Chennai in comparison to other key markets.
Also, as per Propequity (database which collects data via primary and secondary research)
there have been a significant increase in new launch activity post Oct-2010 in Chennai. Out of
~34,000 units launched during the period Oct-2010 to Jun-2011, 14,500 units have been sold
as of June-2011 which contributes to ~ 60% of sales volumes in these months.
However our channel check suggests that inquiries have started seeing some weakness in
the last month (which could impact sales in near future) on fears of the global slowdown
impacting the IT/ITES industry. We believe that this has resulted in a ‘wait and watch’
approach being followed by both the developers and the customers.
DLF scores over Unitech in Chennai real estate market
Our site visit to the residential properties of DLF 's 58 acre project (Garden City - 53 acres
and Commander’s Court- 5.1acres) and Unitech 's 250 acres project (Unihomes, Gardens,
Palm Villas and Birch Court) in Chennai showcased the following key takeaways.
Execution - DLF better placed than Unitech : In our site visit, we witnessed that DLF’s pace of
execution was better placed to Unitech and is close to commencing delivery. DLF targets to
hand over the first 2 towers in Garden City by October 2011 of the 21 blocks launched since
July 2008. Unitech's execution pace seemed relatively slower with Unihomes nearing
completion but other projects were under various stages of construction and would be
delivered only in the medim term
Land bank location - DLF scores over Unitech: While DLF’s Garden City is strategically
placed close to the IT hub (TCS, Infosys, Cognizant, etc) near OMR (Old Mahabalipuram
Road), Unitech’s development which stretches over an area of 250 acres on Kellambakam
Vandalur Road is relatively far from any major economic activity in the vicinity (OMR- 9kms,
GST Road (manufacturing hub) - 7 kms). We note that significant residential projects are
already available in the vicinity of these economic zones.
DLF luxury project has witnessed good traction: We witnessed traction in the luxury segment,
with DLF booking sales of 60% - 65% at Commander’s Court (priced at Rs9,800/ sq ft) at the
time of launch in October 2010. Till date, the project of 350 apartments is 80-85% sold out
with current market price being Rs 12550/sq ft. .
Mahindra World City - sets up the execution standard for the industry
We also even visited the Mahindra World City (owned by Mahindra Lifespace Ltd), a 1,550
acre development covering Domestic Tariff Area (DTA) and three sector specific Special
Economic Zones for IT (Services & Manufacturing), Auto Ancillaries and Apparel and Fashion
Accessories. The world city has even come up with a residential enclave Sylvan County
(spread over 22 acres) and is coming up with Aqualily, a 55 acre development ranging from
premium villas, delux twin homes to spacious apartments.
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