It has been a great year so far for the residential as well as the commercial real estate segment in Chennai as compared to the metros in the North where speculation has caused significant corrections in prices .
The growth in Chennai has been primarily fuelled by a healthy demand and supply equation and opening up of new integrated townships on the outskirts.Increase in job availability as well as job security is a prime factor in making Chennai a preferred destination in the South.
The preference for Chennai as a real estate destination has several interesting factors behind it.
Firstly Chennai has stayed clear of speculation and has seen minimal corrections in recent past which encourages the investors to put in their money on real estate in Chennai.
There has been a slow but significant movement of IT/ITES industry into the city which has scaled the demand upwards. The job opportunities in the city have risen tremendously, though subtly.
The prices of properties have been kept within affordable limits by the developers who are happy to trade in volumes. Chennai has an annual capacity of absorbing 28,000-30,000 residential units a year. This is likely to increase by 10-15 per cent in the next 2 years due to the influx of IT-based industries.
The projects on offer provide a host of new facilities and amenities. This has generated considerable interest among prospective buyers. These include generous landscaping, schools within the campus, serene environment, health club facilities for both indoor and outdoor sports, big club houses, multiplexes in vicinity, restaurants health care, and swimming pools, etc.
The customer in Chennai is clear about the requirements from the real estate developer and thus there are specific sub-segments that are in greater demand as compared to the others. However it is not just the property that creates the demand. There are several other factors which include open spaces, minimal plot cover, living and community related facilities, access to commercial centres and proximity to educational institutions.
A 3BHK flat at an affordable rate of between Rs 35- 45 lakh is the hottest property in Chennai currently. Earlier the standard size of the 3BHK was 1,200-1,300 sq. ft which has now increased to 1,400-1,500 sq. ft after recession. The preferred 2 BHK sizes have also gone up from 850-950 square feet to about 1,100-1,200 sq. ft. Even quite a few 1 BHK or studio apartments have been booked and sold quickly in the last one year indicating a growth in demand of such units too.
There are several upcoming localities that have witnessed a surge in demand for residential units all throughout Chennai and its outskirts. The most preferred location in Chennai this year has been the Madhya Kailash – Sholinganallur stretch and the Velachery area. Madhya Kailash – Sholinganallur: Due to the large number of IT companies that have moved in this locality creating thousands of new jobs there has been a rapid increase in the demand for decent housing in the area. However there is an acute shortage of residential units which has further fuelled the prices of dwelling units. All projects that have been completed in this year have been fully occupied which indicates a healthy trend of growing demand.
Velachery : There has been consistent development of this locality with a number of self sustaining facilities coming up. The arrival of infrastructure for holistic living in good environs encourages most buyers to prefer this locality. In fact growth of Velachery has had positive fallout on adjoining areas such as Medavakkam, Pallavaram, Pallikarnai, the 200 FT. MMRD Road, Thoraipakkam and even Rajakilpakkam.
The Outlook for Chennai
The healthy absorption of residential as well as commercial units with a steady rate of appreciation heralds a positive outlook for the city as a whole. The rates have increased within a range of eight to 20 per cent across the city in the past two years varying as per locality and other conditions. This is a healthy trend as it facilitates continuous growth without speculative sudden spikes in rates of properties.
The overall scenario of real estate in Chennai is quite positive with predictions for a steady growth in the years to come. Due to the conservative nature of investors in this southern metro it has so far been clear of real estate bubble bursts that wrecked across the major cities of the north and the west a few years back. It is a safe and stable place to buy real estate both for the purpose of self occupancy or as an investment only.
(The author is CEO, BankBazaar.com)