Poor demand and slow sales have led to minimal project launches in the city during the last 18-24 months. The first half (H1) of this year (January-June 2015), however, saw a significant increase in launches in South Chennai. A recent report by realty consultant Knight Frank India states the increase was from 26 per cent in H1 2014 to 65 per cent in H1 2015.
According to experts, southern localities such as Adyar, Velachery, ECR, Sholinganallur, Perumbakkam and Medavakkam, have always been sought after for residential and commercial realty, and thus the increase is validated. Kanchana Krishnan, Director-Chennai, Knight Frank India, says, “Their proximity to the IT corridor, and the availability of good physical and social infrastructure and civic amenities, is what makes these areas popular.” Certain pockets on OMR and GST are witnessing robust growth. With 60 per cent of the overall new units supplied, South Chennai retained its number one position in the second quarter of H1 as well.
The spurt in these areas could also be attributed to the increase in the employment market and growth of commercial spaces in the area. ECR, Velachery, OMR and Tambaram are registering fast realty growth and attracting many new buyers, including NRIs. “Properties in these areas are comparatively cheap and stand good for long-term investment plans,” says Suresh Jain, managing director, Vijay Shanthi Builders.
Infrastructure development plays a vital role for an area to witness realty growth to such an extent. The State government plans to complete the four-lane stretch of a 33.5-km section on ECR between Akkarai and Mamallapuram by March 2016. Social infrastructure along the IT Corridor on OMR is also expanding rapidly. Jain says, “The ongoing construction of Phase II of the Outer Ring Road, linking the suburbs, and the proposed peripheral ring road project, are expected to improve the demand and capital values of the projects located in far-away suburbs.”
- Perumbakkam/Medavakkam: Many upcoming residential projects
- Sholinganallur: Good connectivity to IT hub, attracts the retail and hospitality segment
- Pallavaram: Excellent road/rail connectivity, proximity to OMR and GST road
- ECR, Velachery, OMR and Tambaram are known to be registering fast realty growth and attracting many new buyers, including NRIs
Although basic amenities such as water, drainage and roads are yet to reach these suburbs, it is surprising to see developers aggressively investing here. Experts say despite the lack in infrastructure, buyers are choosing to invest here because they are looking at the potential of the area after the Corporation limit is extended to Perumbakkam and Pallavaram.
A. Shankar, national director, JLL, says locations such as Kelambakkam and Siruseri have mainly developed due to the presence of the SIPCOT IT Park. Due to poor sales in these micro-markets, developers are attracting buyers by providing various schemes. Krishnan says, “Interestingly, prices in these locations are competitive compared to other pockets, and properties in these areas are expected to appreciate well in the future.”
Approximately 60-65 per cent of the total office space leasing is on OMR, and this directly contributes to the demand in residential segment. Projects launched during the last five years have mainly been integrated residential developments supported by various amenities. However, commercial corridors like OMR are flourishing with residential, retail and hospitality developments.
Dr. R. Kumar, managing director, Navin’s Housing and Properties, says Chennai’s development has always been along the transportation corridors. “This type of development is called ‘ribbon’ development. All the major arteries in the southern parts — ECR, OMR, GST Road, Arcot Road, Mount-Poonamalle Road, Pallavaram-Thoraipakkam Road, and the interlaying areas between these roads, they are all seeing varying degrees of development.”
Developers, both local and national, have launched numerous projects along OMR. Most of these are sold after construction or close to the finishing stage. “This increases confidence among buyers,” says Samir Jasuja, CEO, PropEquity. The continuous increase in demand for IT space in the last few years has sustained demand.
The project types vary depending on location, USP, connectivity and land value. For example, GST Road is well connected with the suburban rail network, thereby attracting senior living, affordable and mid-segment projects. ECR is popular for luxury villas and apartments. OMR has a mix of affordable, mid-segment, and luxury projects suitable for white-collar employees. Shankar says 30-40 per cent of buyers belong to the IT sector, followed by NRIs (25 per cent). Majority of the buyers fall under the middle and upper-middle group, with a monthly income between Rs. 50,000 and Rs. 1,00,000. The Knight Frank India report states that all three housing segments — affordable, mid and luxury — were evenly distributed in the city in the range of 30-40 per cent.
