Trends in Chennai Real Estate: Big and Affordable Flats, Newer Micro-markets

Chennai's real estate market has been growing for the past few years, providing handsome returns to developers and investors. The rapid expansion of the city, coupled with its industrial growth, has led to an increase in home demand, both in luxury and affordable home segments.

 A look at some of the trends in Chennai real estate:

• Currently, almost 60 per cent of new supply and sales is in the under Rs 50 lakh budget segment.
• According to a PropTiger.com report, of the total homes sales in the Tamil Nadu capital, the affordable segment accounted for 44 per cent in 2013, and 43 per cent in 2014.
• Chennai is known for its demand for 3BHK homes, which formed about 40 per cent of the total sales and launches in 2013.
• Among the projects launched in Chennai in 2014, more than 60 per cent of affordable homes had 2BHKs, 26 per cent had 1BHK apartment and 13 per cent had 3BHKs.
• Demand for large homes in Chennai is much higher than other cities owing to a popular joint family system, among other sociological reasons.
• Due to the rapid industrialisation of the city, migrants and other sections of home buyers may shift focus towards smaller units.

Small is in

Unlike most other cities, affordable homes in Chennai mean smaller units. While affordable homes in Bengaluru have an average size of 1,070 sq ft and 1,025 sq ft in Noida, these spread over only 920 sq ft in Chennai. Affordable homes in Pune have an average size of 794 sq ft.

The growth areas

A number of micro-markets in Chennai are fast developing as affordable housing hubs. Avadi, Kelambakkam, Mevalurkuppam are among areas that have seen the launch of around a 1,000 affordable units in recent times.   

Other affordable neighbourhoods include Perumbakkam, Oragadam, Perungalathur, Poonamallee, Pallavaram, Ambattur and Guduvancheri. Areas such as Ambattur and Orgadam are close to the city's auto and garment manufacturing units. While this will increase the demand, it will also ensure that there is steady rental and purchase demand for affordable units in the future.

According to a PropTiger Data Labs report, neighbourhoods such as Vandalur, Perungalathur, Avadi and Poonamalee (which are closer to the Outer Ring Road and Orgadam, Sriperumbudur, Singaperumal Koil, Chengalpattu, and Thiruporur) will see large demand in the affordable segment.

This segment will attract investors, too, as these micro-markets have scope for rental revenue earning and capital value appreciation.

Future growth

Apart from housing a growing IT sector, Chennai is also a popular in automobile and other ancillary part manufacturing hub. The city is expected to profit hugely from the Centre's Make in India campaign.

The government has already announced two industrial corridors here: the -Ranipet strial Corridor and the - strial Corridor. While the Sriperambadur area is also being developed as a warehouses, bus terminals and drainage systems' hub, there are plans for a Finance city. All this is aimed at generating more employment, which in turn would push demand for housing, especially in the affordable category. The demand for this category is going to sustain for the next five to ten years, according to PropTiger.com.

Major affordable-housing projects in Chennai:

• Group's Galleria at Pallavaram
• Amarprakash Developers' Temple Waves at Thandalam
• Akshaya's Today Phase-1 at Kelambakkam
• Unitech's Unihomes at Nallambakkam
• VGN's Hazel at Avadi
• Sare Homes' Dewey Terraces at Thiruporur
• Arun Excello's Temple Green Phase-1 at Orgadam