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.

7 Reasons for Investment in Chennai Real Estate

The real-estate industry is growing at a rapid rate in our country. The contribution of this industry to the national economy is significant. It chips in about 5% share to our GDP. The expansion of the real-estate sector can be attributed to globalization and the setting up of many MNCs. Within this booming sector, Chennai presents a stable and lucrative market to invest in. Let’s take a look at the factors that add up to make this city a prime real-estate location:

1. Ranked among top 12 cities
In a report by Candy GPS (Global Prime Sector), Chennai is positioned among the top 12 cities in the world to invest in real estate. Factors like market transparency, rational prices, and steady growth make this city ideal for investments.

2. Consistent appreciation of property value
The real-estate market in Chennai witnessed a 150% capital appreciation from 2009 to 2012. There is an overall positive outlook for this trend to continue, with the market value expected to increase by up to 10% year on year. These numbers alone give a strong cue for investing in the sector in Chennai.

3. Better employment prospects and flourishing trend of renting homes
The mushrooming of MNCs in Chennai has resulted in better job opportunities, which have further led to significant migration to the city. This trend has increased housing needs, which has hiked the real-estate value in the city. While some of the migrants move to Chennai permanently, there are those who do not have such long-term plans. They would rather purchase a house in the new city, stay there for a certain period, and then move elsewhere. In such a scenario, they choose to rent out their house and earn an additional income every month. Apartments in Chennai are, thus, a great investment.

4. Better investment returns
Increasing value, absence of depreciation, and no phase of depression have made Chennai an ideal city for real-estate investments. More people are now booking their homes and investing in properties in the city, thus propelling Chennai to the top of the real-estate list. This rise in demand has brought about an expansion in the housing sector. Also, a chunk of these investors are NRIs who were born in Chennai.

5. Developed infrastructure and public transportation
Usually, investors are weary of investing in cities that lack public facilities, especially a well-established transportation system. Chennai boasts of an integrated public-transportation network, including local trains and buses, which makes it an attractive real-estate market.

6. Education and health-care facilities
Be it for good education or advanced health-care facilities in the country, Chennai is a name that easily crops up in one’s mind. India Today has rated the city the best place in India for education, what with the presence of leading educational establishments. The city also has renowned health-care establishments. Recognizing these factors, a lot of people from across the country and abroad visit, and at times move base to, Chennai, which enhances the lucrativeness of the real-estate market in the city.

7. Choices across budgets
Those days are behind us when only IT professionals, NRIs, and foreign nationals sought to invest in Chennai. Today, real-estate investors have many options across budgets. They could opt for a small, affordable home or a luxury apartment in Chennai.

This is a guest post by Dinesh Dawde

An insight on renting homes in Chennai

Chennai’s harbor development in the 18th century made it a hub for trade between Europe and India. This metropolitan city was the first one to have a widespread WI-Fi facility and conditional access system for cable television. Apart from these, there are many concepts and implementations that have first been made in Chennai.

The city has also developed as a center of real estate, all thanks to the programs launched by the Government to improve the city’s infrastructural projects. This article provides insights into the rental market of this crowded city.

In Chennai, the capital of Tamil Nadu state, there is a huge demand for 1 BHK flats. People prefer renting flats in areas like Sholinganallur, Old Mahabalipuram road, Adyar, Porur, Kelambakam, Velachery, and Medavakam. Being an old city, there are a number of options to choose from. The average price for renting a 1 BHK flat in this city is Rs. 7500.

Areas like Porur and Adyar offer high-end properties too. In porur, you can rent a luxury segment property in about Rs. 13500 and in Adyar about Rs. 16000 with median values lying at Rs. 12,000 and Rs. 15,000 respectively. You can also find budget accommodations in areas like Kelambakkam and Medavakkam where the average rates are around Rs. 6,500.

Apart from basic 1 BHK homes, you can also find 2 BHK luxury homes in Chennai. People who are planning to settle in the city can opt for 2 BHK flats. It is advisable to look for a two room home in areas like the Old Mahabalipuram road, Thoraipakkam, Sholinganallur, Velachery, and Perugundi. These areas may offer homes that are priced slightly above the average rate of Rs. 12000. Also, there is a lot of price variation seen in areas like Sholinganallur, Velachery, Perugundi and Chromepet. For affordable properties, you can go for areas like Chromepet, Medavakkam and Pallikarana.

People who are looking for 3 BHK luxury homes in Chennai should check out areas like Old Mahabalipuram road, Pudupakkam, Thoraipakkam, and Velachery. The best part is that most of the high localities have their price trends in line. The average price for a 3 BHK flat is Rs. 18000. Homes can be rented in areas like Pudupakkam, Pallikaranai, and Medavakkam at a slightly lower price. You will also find a number of options in the Thoraipakkam, Velachery, and Sholinganallur areas, but with a price range variation.

The rental market of Chennai has seen a lot of fluctuations in the recent years. If you inquire about the property rates in Chennai from any renter, you will surely get a high quotation. But that is the sad truth that the city offers properties at a high price.

Buying or renting properties in Chennai is surely expensive. And even if you are planning to rent luxury homes in Chennai, then you surely know they don’t come cheap. Renting homes in the neighborhood of the city center too is very expensive. Affordable houses to buy or rent are difficult to find in this city.

This is a guest post by Deepak Yewle

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

3 quick tips for a first time Property Investor in Chennai

Chennai’s realty market has shown positive signs of growth which has attracted a number of home buyers and investors here. And with the market being very profitable, thanks to its high ROI (Return on Investment), the city has become a haven for many first time home buyers. Despite the attractive returns, owning a piece of real estate today seems to be a tedious task. From managing resources to zeroing down on the right location, there are a number of aspects that one needs to take care of. If you are a potential first time investors and wants to invest in properties for sale in Chennai then follow these tips before finalizing your property.

• Buy properties near government approved infrastructure

As a rule of thumb we always tend to invest in an area where infrastructure projects are materializing, thinking that the capital values of homes will escalate. However that is not the case. Investing in areas close to projects like the metro rail, upcoming airport or even any IT Park will result in government taking over your land. Changes in routes and expansions along a tech park and airports are bound to happen which will force the authorities to acquire neighboring land. Once your property falls under the radar, you will not be able to sell your property according to the market prices. The compensation you receive by the state bodies will be based on the government guideline value which is indexed at a relatively lower price. The best thing to do is to wait for the authorities to approve the project and invest in properties for sale in Chennai only after the work has commenced. It will not only save you from hassles but also result in a formidable investment option in the near future.

• Don’t invest in stagnant suburbs

A number of apartments for sale in Chennai especially in the outskirts of the city are finding many takers due to their affordable prices. However, one should remember to invest in a suburb that is in its growing stage. Peripherals along the north of Chennai especially localities like Ennore, Minjur and Ponneri have several approved industrial projects that are going to come up, however, all those advancements will not be able to formulate for the coming 10 years. So you’d rather invest in suburbs that have already shown signs of growth like Navallur, Sholinganallur and Kelambakkam. Apartments for sale in Chennai especially in the southern region of the city have many buyers due to its economical prices and reliable civic facilities.

• Strike the right balance while investing in IT hubs

Many IT corridors attract number of investors due to its high rental yield, however it is very essential to understand the market first. The IT/ITes insurgence has already provided many home buyers varied options and investing in an open market would not yield high returns, so it is very important to identify pockets where there is a demand and invest in only those projects that meet the needs and requirements of the working cosmopolitan crowd.

This is a guest post by Sulabha Kulkarni

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

Which are the happening micro markets in Chennai??

Madipakkam

Madipakkam is a micro market located in the southern part of Chennai. It is surrounded by areas such as Velachery, Pallikaranai, Pallavaram and Medavakkam. It lies in close proximity to the IT corridor of Chennai, the Old Mahabalipuram Road (also known as OMR) and is well connected to it. It is also well connected to the East Coast Road. Since the Madipakkam area is well connected and is affordable, it is attracting end users as well as investors’ attention. If you are looking to purchase an apartment in Chennai, Madipakkam is one of the places to look out for.

The average going rate for apartments in Madipakkam stands at INR 4800 per square feet. In the third quarter of 2013, the prices here were hovering at INR 5300 per square feet on average which was an appreciation of about 27% when compared to the previous quarter. In the last quarter of the year 2013, the prices climbed up by 3% and stood at INR 5400 per square feet on average. The price then came down in the first quarter of 2014 by 11% to be at INR 4800 per square feet. Since then the prices have remained stable.

There is a massive demand for 2 BHK apartments in Madipakkam. This is followed by 3 BHKs. Small to medium sized apartments are in demand in this micro market. The most sought after unit size for apartments here falls between 751 to 1000 square feet category, which is then followed by 1001 to 1250 square feet range and the 501 and 750 square feet range. The most preferred budget range for properties here falls between INR 20 and 30 lakhs, which is followed by INR 30 to 40 lakhs range. Buyers are willing to spend anywhere between INR 4001 to INR 4500 per square feet on apartments here, that is followed by the INR 3501 to 4000 per square feet range.

Perambur

Perambur is a north Chennai locality which is very much in demand. It is located in close proximity to Anna Nagar and is well connected to the central parts of the city. Buyers are willing to spend anywhere between INR 4501 to 5000 per square feet on properties in this locality, which is followed by the INR 4001 to 4500 per square feet range. Buyers are willing to spend anywhere between INR 30 to 40 lakhs on apartments in Chennai at Perambur locality. Thereafter, the preference is for INR 20 to 30 lakhs range. 2 BHKs are the most sought after choice in this locality followed by both 1 and 3 BHKs. The most sought after apartments are smaller units. There is a huge demand for apartments which fall between 501 and 750 square feet range, which is followed by the 751 to 100 square feet range.

The average going rate for properties here stands at INR 5400 per square feet. In the third quarter of 2013 the going rate was INR 6700 per square feet, which was an appreciation of 11% from the previous quarter. The prices dipped by 12% in the next quarter and stood at INR 5900 per square feet only to recover by 2% in the first quarter of 2014.


This is a guest post by Sulabha Kulkarni