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The entry of multinational companies in Chennai is driving the demand for quality and high-end housing space. This is also fanning rentals in pockets of the city due to a limited supply.
Whether in Sriperumbudur or Oragadam to the West of Chennai or the Tada industrial belt in Andhra Pradesh about 70 km to the north of Chennai, there is an influx of foreign companies in manufacturing and services. In tandem with this growth is the demand for housing from expat families looking to Chennai for housing. But there are limited pockets that offer quality housing with adequate amenities. This is also driving up rentals.
To illustrate: the average monthly rent a Japanese family pays in Chennai is over Rs 1.5 lakh says Shinya Fujii, Director-General, Japan External Trade Organisation, which facilitates Japanese investments in India. Chennai, especially, is a key destination for Japanese investments and there are over 350 Japanese companies that have a base here. That means several hundred families from Japan have made Chennai their home for now.
Some of the features that they look for, apart from security, which is not a major concern in Chennai, are: 100 per cent power back-up – the Japanese are fond of seafood and fresh food which calls for refrigeration and freezing. Power supply has to be available throughout the year; piped gas is important, foreigners cannot buy cooking gas cylinders from public sector companies and therefore depend on private supply. Clean water is a major area of concern.
Getting a house with the adequate facilities can be very difficult, he says.
According to property consultants, the ideal options are in some of the posh localities in Chennai.
Primarily to the South of Chennai, on the East Coast Road, if the families are looking for individual houses set in spacious gardens and, possibly, with a swimming pool. Or closer to the city, in the Boat Club area, Poes Garden and its vicinity and parts of Alwarpet. Those working to the North of Chennai and Tada look for houses in Anna Nagar, which gives them easy access to the highway leading North.
According to Sanjay Chugh, Skylines Property Consultants, a large automobile company or any unit in manufacturing sector can bring in over 100-150 expats to oversee the initial years of launch, many executives come with their families.
Senior executives look for individual houses – if the company’s budget allows it – on the ECR. A house of about 5,000 sq.ft set in a 10,000 sq.ft plot with a swimming pool can fetch a rent of up to Rs 2 lakh a month.
Senior managers looking for single accommodation look for two-bedroom apartments, preferably furnished units as they are here for just a couple of years and prefer to manage without the hassle of furnishing a house and disposing the stuff when they leave.
A two- or three-bedroom apartment can range between Rs 50,000 and Rs one lakh a month. It is important that there is adequate power back-up, the building is well-maintained and is close to shopping areas, he says. A long-time resident on East Coast Road says the demand by expats and High Networth individuals is driving residential projects along the coast. Those with surplus funds have invested on ECR unlike the Old Mahabalipuram Road which is a speculators’ market.
A.S. Sivaramakrishnan, Senior Vice-President, Jones Lang LaSalle, says the demand for high-end housing space is driving development on the ECR. Rentals are up 10-15 per cent in just about a year. Over the last year and a half more than a dozen villa-style residential projects have been launched, representing a supply of about 200 individual houses.
According to market sources, these can cost anywhere from a couple of crores to about Rs 10 crore.
Getting an apartment within the city can be quite a daunting task. But the handful of large projects that offer high-end homes will tap the benefit of this growing market segment over the next couple of years, he says.
Typically, a 1,600-1,800 sq.ft apartment can fetch up to Rs 1 lakh rent a month. But the demand is in pockets of Mylapore and Alwarpet, where there are premium residential spaces.
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