Is Chennai property market in the midst of a meltdown?

In two years, local Chennai builder VGN Developers claims its 10-acre land bank in Chennai will boast of some of the most inexpensive apartments within city limits.A week ago, it rattled the local real estate market by announcing 1,300 apartments at just Rs 7,000 per square foot, when the prevailing rate in the area is closer to Rs 9,500 a square foot. But, VGN says this discount is not just about the festival season.“As an organization, we needed cash-flows. So, we decided let us bring the prices down, increase the affordability and get cash flows into the company," the company's MD Pratish Devadoss told CNBC-TV18.Less than a month ago, CNBC-TV18 reported how Doshi Housing had launched a residential project priced 25 percent below the prevailing market rates on old Mahabalipuram Road (OMR).More recently, Bangalore-based embassy tied up with HDFC Bank to offer buyers a 200 basis point cut on a home loan for the group's ongoing township project in central OMR. This lower rate will be in effect throughout the tenure of the loan.Most of these developers have begun slashing launch prices with a view to enhance cash flows in a difficult property market. That's why a discount anywhere between 25 and 33 percent on the prevailing market rate is the new normal. Real estate observers say that should this trend continue, the property market here could see a moderate price correction in the next two years."At least 8-10 percentwill correct. Because if they don't, they're just going to be unsold inventory you have just too much unsold inventory at the end of the day,” said Sarita Hunt Managing Director - Chennai, Jones Lang La Salle India.Experts add that the actual duration of this price correction phase will depend on three factors: the pace of approvals, the trajectory of land prices, and the pace at which unsold inventory is absorbed. Watch video for more.