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The continuous expansion of the IT-ITeS and manufacturing sectors are likely to catalyse the next level of growth in the Chennai realty market, a report by Anarock Property Consultants has said.
The current trend of softening prices is likely to generate demand driven by end-users. The western and southern zones of the city are expected to witness high traction.
‘Stable foundation’
“The growth of Chennai’s residential market rests on a sure foundation of controlled supply dominated by affordable housing, coupled with bottomed-out property prices. Software as a service (SaaS) and automobile sectors now drive the bulk of residential demand in Chennai,” Anuj Puri, Chairman, Anarock Property Consultants said in a statement.
The report indicates that the state government’s recent push to attract investments in SaaS, IT-ITeS, start-ups and MSMEs will activate housing demand in the southern suburbs of Chennai.
More than 20 SaaS companies have already started their operations from Chennai. Further growth of the automobile industry and upcoming investments are likely to spur demand both in commercial and residential segments in the western part of City.
Price correction
Chennai’s residential real estate market was witnessing a continuous fall in prices. But in the last four years, the price correction has been about three per cent from its peak. The average price in the city at present is ₹4,900 per sq ft.
While demand outstripped supply till 2017, the market reversed in 2018, pushing up the unsold inventory to 30,000 units.
In 2018, Chennai witnessed a steep increase in new launches of the affordable segment (units priced less than ₹40 lakh) and this is expected to continue in the coming years as the affordable housing is attracting more traction across the nation due to government’s push with GST incentives.
Affordable housing
The increase in launches in the affordable segment is due to a slight reduction in prices and a general reduction in the configuration of housing unit sizes.
The realty market is expected to be back on the growth trajectory with controlled supply and bottomed-out prices, said the report.
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