Just married, Ashwin was looking to rent a place to live in the city. His budget only allowed him an apartment in the suburbs. While he would have been happier if he found a suitable place in the city, he wasn’t complaining too much. His apartment on the Old Mahabalipuram Road had three bedrooms, a slew of amenities, and was close to his office.
Residential housing in Chennai has seen a rental spike by 10 per cent to 15 per cent over the last few years. But rentals in the suburban areas have gone up more slowly, with accommodation available from anything between Rs. 8 per sq ft. to Rs. 25 per sq ft a month.
This entire hike began with the IT boom in 2000 which boosted demand for residential space within the city. The city’s population almost doubled and individual houses began to give way to multi-storied apartments. The demand pushed up prices — of both land for construction, and of apartments for end-users.
The increased demand for housing saw the city expanding towards the suburbs. The primary reason for this was the shortage of land within the city. With land prices in the city shooting up, developers had to look to the suburbs to come up with viable residential projects, according to Sivaramakrishnan A.S., vice-president (Residential Services), Jones Lang LaSalle Property Consultants.
Though Chennai city sees a huge demand for rental housing, the supply is minimal. But it is the reverse in the case of the suburbs. The demand is due to availability of public transport, water and other infrastructural facilities, which are not found in certain suburbs. With consumers balancing their budgets in line with lifestyle expectations, suburbs seem to provide the right solution. Hence, consumers choose to live in an apartment based on affordability, which also meets the basic requirements of the family, says Jayant Hemdev, Business Director, Hemdev’s International Realty Services.
This move to the suburbs is aided by the fact that the work place is not in the city any longer – it is in the IT corridor or industrial corridor.
These factors are over a period of time likely to turn the suburbs into another Mylapore or Adyar.
Today, Chennai is seeing a lot of development on the OMR, Mogappair and Velachery. The Madhya Kailash- Sholinganallur stretch is seeing a supply-demand mismatch, with demand exceeding supply. This area and its peripheries are high growth regions because of the IT corridor. Velachery is also developing fast. In fact areas nearby Velachery, such as Medavakkam, Pallikaranai, Pallavaram–Thoriapakkam, and Rajakilpakkam are experiencing the rub off effect of Velachery, with rapid land appreciation. Other areas in demand include Porur and the stretch up to Urapakkam on the GST Road.
Ganesh Vasudevan, Vice President (Business), India Property, says that most of the areas around GST and OMR have 2 and 3 BHK apartments in the sub-1,500 sq ft. category available at monthly rentals of Rs. 15,000- Rs. 20,000. In West Chennai, areas like Anna Nagar and Kilpauk command Rs. 20,000- Rs.25, 000 monthly rentals for similar size apartments. Emerging areas like Sriperumbudur and Ambattur have options in the Rs. 10,000- Rs.15, 000 rental brackets for 2 and 3 BHK flats. Central Chennai areas like R. A. Puram, Alwarpet, Mylapore and T Nagar command a rental band of Rs 25,000 to Rs 40,000 for a similar size apartments.
The year 2009-10 was mostly flat with less than 8 per cent increase in average rents across the city of Chennai. This was partly driven by fears of slowdown and global recession. However 2010-11 has seen an increase of 13.5 per cent in average rents. The trend is accelerating in the last six months – driven by overall inflation growth across products and services, says Satya Prabhakar, Chief Executive Officer and Founder of Sulekha.com.
V. Subramanian, Executive Director, Ramani Realtors Pvt Ltd, says that with more companies and corporate coming in and fuelling the demand for good quality housing, the rentals in the city are bound to strengthen. This has forced the middle class to look at the suburbs.
The increase in petrol prices and the cost of the transportation will impact the consumer preferences on where to live. At the same time given that the interest rates are high, consumers are also going to defer buying property and depend on rented apartments. This is likely to impact on rental prices.
