Chennai, the capital city of Tamil Nadu, has been a significant hub for both residential and commercial real estate activities in Southern India. The city’s status as an IT and industrial hub has driven employment opportunities, resulting in housing demand from both local and migrant professionals. Various government initiatives and policies to promote the real estate sector have positively impacted the growth of the residential market. In recent years, the city’s expansion into its suburban areas has led to increased real estate activity in those regions.
A steady residential market
The residential real estate market in Chennai has been evolving progressively over the years, navigating through various challenges and opportunities.
In the second quarter of 2023, the market showed remarkable growth in new supply, albeit a slight dip in sales on a year-on-year basis. The period witnessed an impressive surge in new supply, with a staggering 153 percent year-on-year growth.
However, it should be noted that the base in Q2 2022 was relatively low due to the pandemic’s impact on the market. Despite the rapid increase, developers remain cautious and strategic in their offerings to cater to the evolving demands of buyers. Nevertheless, the market continues to display resilience and adaptability.
2 BHK unit configuration popular choice of buyers
2BHK units remained the most sought-after configuration in the second quarter of 2023, comprising 51 percent of the total sales. The practicality and affordability of 2BHKs make them a popular choice among first-time homebuyers and small families. Meanwhile, 3BHK units held a significant 30 percent share, showcasing the demand for more spacious residences catering to larger families and professionals seeking extra space for a home office.
Where are these demand hotspots in Chennai?
Several localities in Chennai emerged as sought-after neighbourhoods during this period.
Manapakkam, Sholinganallur, Pallikaranai, Medavakkam, and Navallur were among the areas that dominated residential sales in Q2 2023, the prices of properties quoted in the range of INR 5,000/sqft and INR 6,500/sqft.
These localities’ attractiveness can be attributed to their proximity to key commercial centres, IT parks, and essential amenities, making them preferred residential destinations by homebuyers. While Manapakkam is located in the south-western part of Chennai, Sholliganallur and Navallur lie along the Old Mahabalipuram Road (newly named as Rajiv Gandhi Salai), with Pallikaranai and Medavakkam being quieter neighbourhoods in the southern part of the city.
IT hubs driving demand
Situated along the Mount-Poonamallee Road, Manapakkam offers easy access to major commercial areas and IT hubs, such as Guindy Industrial Estate, Porur, and DLF IT Park. The locality is equipped with adequate social infrastructure and recreational facilities, making it a self-sufficient neighbourhood. Meanwhile, Navallur and Sholinganallur’s proximity to the IT corridor has led to a large number of working professionals seek housing options here owing to the convenience of short commutes to their workplaces. Being located on the OMR, these neighbourhoods enjoy seamless connectivity to major IT parks, commercial centres, and educational institutions.
On the other hand, the southern locations of Palliakaranai and Medavakkam offer the significant advantage of affordability compared to some of the more established localities in Chennai. The availability of reasonably priced housing options makes these micro-markets attractive destinations for first-time homebuyers and those looking for value for money.
Market to watch out for
The Chennai residential market has shown commendable resilience and adaptability despite facing challenges and uncertainties. The impressive growth in new supply in Q2 2023 reflects developers' confidence in the city's potential. The localities driving the demand indicate the importance of connectivity and amenities in homebuyers' preferences, and the city remains poised for promising prospects in the coming months.
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