W hile the pandemic has led to economic uncertainties across the real estate sector in the country, Chennai has bucked the trend and witnessed growth. The city’s realty sector has been witnessing steady growth since the third quarter ending September 2020 and the uptick is due to three important factors: a lowered rate of interest, pent-up demand translating to sales velocity and an urge to own a home.
The perceived pent-up demand has transitioned into a trend, resulting in an increase in sales over the last two quarters and this is expected to sustain in the coming quarters as well.
Where culture meets technology
Chennai embodies a perfect amalgamation of rich cultural heritage with modern technology as it is a strong manufacturing base with burgeoning IT/ITeS spaces. Offering a wide spectrum of residential options, the city caters to the high-end IT population that fuels the demand for mid and high-end homes. At the same time, it also addresses the needs of the traditional manufacturing class, with limited affordability, which has given rise to affordable homes.
Mount Poonamallee High Road (MPR) and Pallavaram-Thoraipakkam Road (PTR) have emerged as residential hotspots in the city, driven by the growth of IT / ITeS spaces, good connectivity with other key locations in the city, a robust road network and well-developed social infrastructure. Strong residential demand backed by good commercial supply and improving infrastructure is expected to push the prices further in the coming years. In addition to good physical infrastructure, it also offers robust social infrastructure and a well-rounded lifestyle which is expected to attract end-users.
Despite the dip due to the pandemic, Chennai’s hotspots witnessed almost stable sales in the last three quarters. The reason to be optimistic about the future demand potential in these areas is due to the emergence of business parks in the vicinity with good supply in the offing. New job opportunities coupled with improving connectivity thanks to the Metro Rail is likely to drive the demand for residential units here.
Well-connected with industrial hubs of Ambattur and Avadi, MPR promises to emerge as a destination for both investors and end users. With an office supply of 11 million sq.ft. with good social infrastructure and proximity to the airport, metro rail services and Guindy, the micro market has had the highest appreciation of property prices in the city since the announcement of the metro rail corridor from Lighthouse to Poonamallee.
Peek into Pallavaram
Other areas that are seeing a high demand for offices and homes include the Pallikaranai - Medavakkam stretch and PTR located in proximity to Old Mahabalipuram Road (OMR) and GST Road. Large business parks set up by reputed national and international developers along with many standalone office buildings along OMR are easily accessible from these zones.
Located in South Chennai, PTR in particular is showing positive prospects for both residential and the commercial office spaces with attractive rental rates and capital value. The micro market is gaining prominence as an office market with an upcoming 13 million sq. ft. of Grade-A office supply by reputed national and international developers creating 1,30,000 jobs in the next 3-4 years.
The strong IT development with good connectivity is expected to drive residential demand, pushing it to surpass the supply in the next couple of years which is likely to fuel a strong price appreciation. With educational institutions, hospitals, retail malls and other civic facilities coming up here, it is an attractive option for buyers and investors.
With the ongoing road-widening and flyover project at Keelkattalai along with upcoming three metro stations at GST Road (Pallavaram - Kothandan Nagar), Keelkattalai (Eachankadu) and on OMR (Okkiyam-Thoraipakkam), the PTR stretch is likely to witness significant commercial and residential development, well-developed social infrastructure and excellent connectivity.
Looking ahead
Over the years, Chennai has carved out an identity for itself as a stable market. Despite COVID-19, new launches in 2020 bounced back to 92% of the launches that happened in 2019, while sales reached 50% of the pre-COVID era.
This growth momentum is expected to continue in 2021 backed by historic low interest rates, flexibility of developers in terms of payment schemes and price negotiations, strong growth in commercial realty and the industrial sector and various stimulus packages offered by the government.
The writer is Managing Director — Chennai & Coimbatore & Head —
Residential Service, JLL India
