Chennai Real Estate Crawls out of Lull; Witnesses Growing Demand and Cut in Inventory

The dampening effects of the demonetization policy on the real estate market in Chennai seem to have started to reverse. The policy, which was announced in November last year, coupled with the real estate bill and the devastating floods that shook the city in 2015, had a back-to-back blow on property rates in Chennai. The result was that the city started accumulating a lot of unsold inventory owing to paucity in demand, although, surprisingly, the rates were not going down.

Now, it seems, the rates of residential properties are coming down notably. And, taking advantage of this emerging trend of price fall, buyers are taking properties on rent instead of purchasing them. According to The Real Estate Management Institute, the average weighted rental value of residential properties in Chennai, as well as some other tier-I cities like Mumbai and Delhi,are on an upswing--somewhere in the range of 8% to 12%. Moreover, media reports suggest that banks and other financial institutions, too, are contributing to this positive development by bringing down lending rates for home loans.

Experts note that there has been about 15% increase in property sales in the first half of 2017 as compared to the same period last year. They attribute this growth to the demonetization policy of last year. A majority of the property rate hikes this year were seen in South Chennai, in relatively affordable places like Mahindra World City, Navalur, Padupakkam, Sholinganallur, and Thalambur.

The spurt in demand has brought about a major reduction in unsold inventory in Chennai, with a supposedly 30% drop in the past two years, according to Knight Frank India. Because there was a bulk of unsold inventory over the past 1.5 years, there were no new flats coming up in Chennai. The real estate consultancy believes that the unsold inventory in the city can easily be exhausted in another six years.

With the real estate market scenario getting better after the demonetization drive, commercial office space demand is slowly increasing. This, according to Knight Frank India, is a sign of employment prospects, which will lead to increasing incomes and housing needs, which means need for more residential properties. The vacancy levels of office space has come down to 10.8% in Jan-Jun 2017 from 22.5% in the same period in 2015. The highest rental growth has been witnessed in the Old Mahabalipuram Road or OMR Business District, in locations such as Guindy and Taramani.

The major contributor to the commercial real estate market in Chennai has almost always been the IT sector. This sector alone accounted for 0.7 million sq ft of office space in the city in this year. However, demand from the banking and financial sector is also increasing. With the limited office space now, and the increasing demands, the weighted average rental values of commercial real estate have increased to about Rs. 55 a month for one square foot.

This is a guest post by Dinesh Dhawde.

What Newly Arrived Expats Need To Know About Rented Housing Options in Chennai

Chennai has attained an enviable stature in very short span of time. Industries, modern infrastructure, a lifestyle to go for and booming state economy are some of the factors that have placed the state in a list of developed cities. Southern part of India is developed and has ample opportunities in terms of career and a better lifestyle for one and all. If analyzed broadly, the state’s name shines bright in automobile and the banking sector and these sectors have also created a lot of career options for professionals or entry level job seekers for quite some time now.

Moreover, major IT companies and manufacturing firms have their branches here and this has surged the migration rate to a good number. Job aspirants and experienced professionals from different parts of India are coming to the amazing south Indian state for job and finally getting settled. On the arrival, an expat may look out for a rented accommodation for himself in an area that is close to his/her work setting and is also well-connected to the essential social as well as commercial infrastructure around the locality or the region.

Here are some of the things that an expat should consider when opting for a rented accommodation in Chennai:

Few Important Pointers to Take Note Of

• North-West & Central Chennai Can Be the Best Deal

Now this is not a hard and fast rule but northern and central part of Chennai can be a best fit for expatriate relocation. There are localities like Beach Road, Egmore and Anna Nagar, to name a few are some of the regions that are a good mix of residential and shopping areas. The localities are also well-connected through roads and also offer close proximity to railway stations and airport. So, the first step could be selecting the right location and any of these localities can be a best fit.

• Serviced Apartments Are Good to Go

The southern part of India is riding high on realty success and one of the yields is the serviced apartments. The apartments are relatively cheaper than luxurious 2 BHK homes and have all the amenities intact within. The person residing within needn’t worry about adjusting as the apartments are spacious and are apt for both temporary and permanent stay. Expats can have a pleasant stay in such flats and this could be a good bridge towards finding a new and better housing option. Places that have already adopted the concept of serviced apartments include Bangalore, Chennai and similar developed areas.

• The Cost of Living

Compared to developed cities like Bangalore, Chennai has quite an affordable cost of living. The daily recommended minimum amount of money for food per person is Rs. 240, which is just within the price range of monthly recommended minimum amount of money for food per person (assuming 31 days), Rs. 7,439.88. The expats who have just arrived and have spent a good number of days will find their pockets not much exploited when expending on groceries, healthcare or simply on leisure.

• Flats For Expats

Areas like Old Mahabalipuram road and Besant Nagar are some of the densely flocked areas; majorly by the expat populace. There are realtors who have constructed a range of residential spaces that are being offered at an affordable price range. Expats are favoring mostly small-sized apartments and 1 BHK house for rent in Chennai. The flats are constructed in areas that are near to the social infrastructures and also have a close proximity to the IT hubs.

Here are some hard facts that reflect price trends in one of the most popular regions of Chennai:

There are other aspects about Chennai’s realty market that an expat needs to understand. The aspects are pretty much related to the rented housing options. Here are the facts:

Few Lesser Known Facts

• Safety

Safety matters and it definitely holds importance for the novices in town. The expats should make sure that the localities they are choosing is surrounded by friendly areas so that chances of thefts and miss happenings rarely exist. The facts say that Chennai is one of the safest Indian cities and the populace is extremely law abiding.  Still, there are certain things one can take note of:

1. Huge amount of cash should not be kept in the flat
2. Dress inconspicuously as Chennai is a little conservative south Indian city
3. Try to be friendly with neighbors but be cautious while revealing your personal and professional data.
4. Other safety measures could be traffic safety as the roads in Chennai are crowded and a little carelessness can be hazardous to life.

• Dig in Company’s Relocation Package

An expat should be aware about all the clauses in the relocation packages and papers. They need to know that there are companies that include finding a home in their relocation clauses. This can be a great helping hand for expats who are relocating for professional purposes and are looking forward to staying there for long.  The best part is that though you will have a rented option in hand, still an expat will be offered information about accessing to maids and drivers as a part of the relocation package.

• Power of Internet& Agents

While on a search for a perfect home, an expat can take advantage of the realty portals and websites. There are sites like 99acres.com, realestatechennai.com, to name a few that can be accessed and considered for searching homes on rent. The person can see through the price range, locality and varieties of housing option for himself.

There is another option that will definitely hit the bull’s eye and that is reaching out to the real estate agents. These agents have been into the business and have met the people in the domain. Moreover, the agents will also help you in stopping onto the right deal and making a feasible agreement documents for the expats and people who have less knowledge about the localities.

• People & Languages

An expat’s stint with the new city can be fruitful as well as challenging both. In an effort to find a rented option in Chennai, an expat should also have some basic know-how of people, culture and language spoken. This makes the scenario, exciting as well as a learning experience. Considering the language here, the people native to Chennai considers Tamil to be their official language, with Telugu at the second rank. If the expat is an English-speaker, then surviving in Chennai will be easier.

Few Final Words

Chennai is a place to be at the moment and an expat can have plenty of options in the rented arena. The apartments are of varied style and are all provided with the necessary facilities. Moreover, the prices tagged on the apartments and housing options are within the reach.

This is a blog post by Pawansingh kumar

Chennai real estate round up

Chennai commercial real estate witnessed a good amount of absorption in 2013. Most of the absorption was in the prime real estate hubs in Chennai, like the IT corridor of OMR. The residential real estate in the city has witnessed a slowdown in the recent past only because of the pricing of housing units in Chennai. Compared to other metros, Chennai housing and residential real estate market has been on the higher end of the spectrum in terms of pricing. Influx of MNCs and IT companies has been the foremost growth factor in the city. Adding to this trend is the fact that Chennai city is a trade hub and a coastal city with a port that acts as one of the major trade link in the country. Having such potential, the city’s real estate sector has also grown in proportion to the economic development. Additionally Chennai attracts investment in various sectors like education, healthcare and infrastructure. Chennai is definitely a preferred investment destination among all cities of south India.

The Chennai real estate market, which used to be traditional and populated with independent houses has opened up to many other real investments options in the past 20 years. The year 2014 saw the revival of the real estate sector in Chennai. Mostly an end user driven market, 2014 saw a new lease of life in the city’s real estate sector. The city is in the fast track of development and has gone beyond the IT sector today. Manufacturing sector has also contributed to immense growth in the commercial real estate sector. However in terms of pricing the real estate sector has not shown much progress as there has been an increase in labor, material and construction cost over the years. This has added pressure to the overly expensive Chennai real estate market. There has been a record 15% increase in the cost of construction over the years and this applies to all the markets across the country.

Chennai lags behind most cities in terms of transport infrastructure. Although the state of Tamil Nadu has one of the best road network in the entire country, the intra city transport has been poor and unable to support the growing population. The delay of metro rail has also added to the pressure. Although the pockets near the metro stations have seen a marginal increase in prices, the constant delay has been a cause of concern for many home buyers. Apartments in Chennai are a preferred investment choice as it is the most affordable piece of real estate one can invest in. Independent house for sale in Chennai or land and plot require deep pockets, which amounts to the least kind of investment in the city. Many apartments in Chennai are near the newer investment hubs like Oragadam and the Outer Ring Road.

“Focus is on the Outer Ring Road (ORR) where the Phase I (Vandalur to Nazarthpet – NH 4) has already been completed. ORR Phase II where land acquisition is in advance stages will boost the real estate activity along this corridor. Chennai and its adjoining cities are among the best for primary and higher education in the country today. Healthcare and medical facilities in the city are also among the best available in the country. Development of new hospitals, schools, malls and multiplexes in the emerging locations are all stimulating growth for the city’s residential real estate industry.” Says Sanjay Chugh, Head- Residential Services JLL India to Money Control.

This is a guest post by Sulabha Kulkarni