People had invested in villas primarily to cater to expats working in multinational companies in and around Chennai. As most expats have either left the country or moved to core areas of the city, billa owners are now struggling to find tenants. Consequently, a good number of villas are empty.
This has also forced real estate developers to halt new projects as finding buyers has also become a tough task. Most buyers were NRIs, realtors said.
The premium villa segment, which reached great heights in 2012, is losing its sheen with no demand from expats and companies cutting down on housing allowances. The expats population along the ECR has come down from 2,500 to 500 in four years, according to estimates from real estate agents handling rentals for foreigners.
At present, around 60% of the 3,000 villas between Neelankarai and Uthandi on ECR are vacant. Rent for the properties, complete with wide lawns and swimming pools, was previously around ₹1.2 lakh to ₹2.5 lakh a month. Though there are a few inquiries from city residents seeking to shift to these posh properties, deals are yet to materialise since people are not ready to take up houses for such high rents. Owners do not want to reduce the rent because the returns do not justify the investment they have made and also prefer to deal with a company as was the case with expats, rather than individuals.
Moreover, several landlords prefer expats since there is no risk involved in vacating tenants and uninterrupted rent.
Mohan Kartha, a real estate agent who has been dealing with expat rentals for a decade, said the villas market has now become a tenant’s market. “There was a time when the landlord used to have three prospective clients from different MNCs and selected the best. Now, they are ready to revise their rent even by 50%, but cannot find expats. Foreigners who moved to the city early this year are being accommodated in apartments at a cheaper rent in core Chennai,” he added.
Srinivas Anikipatti, senior director – Tamil Nadu & Kerala, Knight Frank India said the prevailing situation on ECR had stopped a leading developer from launching a villa project of 400 plots in Kovalam. “While six in every 100 units sold in the city’s real estate market is a villa, its share in value is 12%,” he added.