Developers from other parts of India such as the Delhi-based DLF, Unitech, Runwal from Pune, RMZ from Bangalore to name a few, have entered the Chennai market.
Chennai, July 28
TO most Chennaiites, the land and real estate prices have gone through the roof. But compared to other metros, Chennai prices are still sustainable and an investment made now is likely to pay off in two years' time, according to Mr Anuj Puri, Managing Director, Chesterton Meghraj, international property consultants.
There is still elasticity in the Chennai real estate market, he said. The average price for the premium end of the residential market is about Rs 3,000 per sq ft and the price is likely to go up further.
Compared to Chennai, the prices in the Delhi and Mumbai markets have reached their peak and are unlikely to go up further, as customers are not willing to pay any more, he said. The top end of the residential market in Delhi and Mumbai would be between Rs 12,000 sq ft and Rs 15,000 per sq ft.
The lease rentals, driven mainly by Information Technology (IT) and IT enabled services (ITES), in Delhi and Mumbai are about Rs 32 to Rs 35 per sq ft, while in Chennai it is about Rs 23 to Rs 25 per sq ft. On retail space, the rental rates in Chennai are about Rs 50 to Rs 55 per sq ft while Mumbai and Delhi the rates are Rs 80 to Rs 85 per sq ft.
Though real estate consultants have been predicting for sometime that Bangalore is getting saturated for the IT and ITES industry, last year Bangalore delivered about 8.5 million sq ft as built up space, while Mumbai had 4 million sq ft and Delhi had 4.5 million sq ft. Chennai trailed behind with 3.1 million sq ft.
Mr Puri said that many of the IT companies, that have a presence in Bangalore, are planning to locate their second or third site in Chennai. One of the main considerations for this move is the proximity to Bangalore, which would make disaster recovery, management of people and resources easier, he said.
A number of large developers from other parts of India such as the Delhi-based DLF, Unitech, Runwal from Pune, RMZ from Bangalore to name a few, have entered the Chennai market. Mr Puri said that the main reason for these developers entering Chennai was the availability of large tracts of land.
He said that the coming of the big developers would usher in better quality norms for commercial, retail and residential buildings. It was also likely to increase the rates in this market.
These developers have won their spurs in other markets and come up with world class townships, Mr Puri said. The Chennai market would benefit from these large-scale developments, he said.