Head to South Chennai for bargains

It is that time of the year — summer holidays, schools closed, travel … but not all families will be looking at an outing. It is also the time when people shift houses.

Job transfers can happen at any time of the year, but families mostly move only when the schools are closed. The neighbourhood where a young family with a child decides to live depends on the school's location.

In Chennai, house searches are on. House rents are up by about 10-20 per cent in the last one year.

This year a new feature is the increased activity in the suburbs and peripheral areas of the city; for those in the real estate business the periphery are areas over 10-15 km away from the city. But with the supply of houses far exceeding demand, rental values are subdued on the outskirts.

The heart of the city, the prime residential localities are as usual in peak demand but houses are simply not available. Land prices running into a few crore rupees for a 2,400-sq.-ft plot has made housing unaffordable and new projects are scarce. In prime residential areas, such as Nungambakkam, Alwarpet, RA Puram and Egmore in the central part of Chennai, a 10-year-old, two-bedroom apartment of about 900-1,100 sq. ft can be rented for about Rs 18,000-20,000 a month. A newer house of the same size can set the tenant back by about Rs 25,000 a month, says Mr L. Thayanithi, Vice-President, Chennai Real Estate Agents Association.

This is the fastest moving segment as the size is ideal for a family of three or four.

A three-bedroom apartment in these localities will get the owners a rent of about Rs 35,000 to over Rs 40,000 depending on the location and vintage.

Lease rent

For a single-bedroom unit — there are few new ones within the city — people pay up to Rs 10,000 a month. But these are available in the older sections of the city: Triplicane, Mylapore, Royapettah or Teynampet. These are localities that have a diverse market segment where houses are also rented out for up to Rs 1 lakh a month or more.

In the lower segment, a long-term lease is in practice, says Mr Thayanithi. For a deposit of about Rs 8-10 lakh a tenant can move in for about two to three years. The only monthly payment will be the electricity or other utility bills. The deposit is returned without interest when the tenant vacates.

Typically, this system is preferred by traders or people in small businesses who need the cash. For the tenants, the benefit is that they do not have to fork out the six to 10 months deposit that house owners demand when they let their house out for monthly rent.

In well-established suburbs like Velachery a two-bedroom unit of about 800-1,000 sq. ft can be rented for Rs 10,000 to about Rs 12,000 if the house is on a main road, says Mr Thayanithi. Houses further away from the main road are available for around Rs 8,000.

Chennai has the advantage of a diverse industrial and commercial base and the proportion of people moving in from outside the State is high. Local residents, even those with their own houses, shift to new localities for the sake of easier access to schools and offices. They let out their own house, he says. So this churn happens during the summer holidays, he says.

New supply

A unique feature this year is the spurt in availability of new apartments along the Old Mahabalipuram Road, the OMR, as it is more popularly known. This is the place to go to if you are looking for a modern apartment at affordable prices as compared with the rates in central areas of the city.

This 30-km stretch of road to the south of Chennai starting from Adyar has been the scene of major real estate development in recent years. Large projects of several hundred apartments and township-size projects are in the final stages of completion and houses are being delivered.

Mr Gautam, a real estate broker, familiar with this stretch estimates that over 5,000 two-bedroom apartments are available and ready to be moved into. Typically, in the popular areas such as Thoraipakkam, Sholinganallur, Padur or Kelambakkam, a two-bedroom house is available for rent at about Rs 15,000-20,000. These are most in demand while larger houses see no takers.

Over 1,500 apartment of three bedrooms and total space of about 1,600-1,800 sq. ft are available for about Rs 20,000 to 25,000 a month. But the owners are demanding over Rs 35,000 and prefer to wait.

In the high-end, luxury space, there are over 50 houses in the four-bedroom size but there are few takers. These are usually let out to people operating serviced apartments who furnish the place and sublet the space to companies. These fetch about Rs 22,000 a month.

For now on the OMR, the supply of houses far outstrips the demand, he says.

According to Mr Thayanithi, for a house owner on the OMR the property is a second house and is meant purely as an investment or as a gift for the kids. The owner probably lives in the city or is an NRI. So renting out is the only option for them.

A study by 99acres.com, a real estate portal, says rents in Chennai have jumped in the last one year.

A press release quoting Mr Vineet Singh, Business Head, 99acres.com, said the city has become a centre for outsourcing jobs professionals as Chennai offers good career prospect.

There are various types of homes available on rent to the prospective tenants — apartments, flats, independent homes and condos, and choices suiting every budget. 

Rentals of a three-bedroom house in key localities of Chennai South show that in the residential areas of OMR and Sholinganallur, rents increased by about 27 per cent and 34 per cent.

At T. Nagar, Medavakkam, Thoraipakkam and at Chromepet on the GST Road, rents appreciated by up to 20 per cent. While at Perungudi and Velachery rents dipped by 5-7 per cent.

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