Located on India’s eastern coastline in the state of Tamil Nadu, Chennai has been an important industrial and commercial centre due to the presence of a port since the 17th century. The nature of industries has evolved over the years, and the automobile industry has become the primary growth driver for the economy post liberalisation in the 1990s. Prominent automobile companies such as Ford, BMW, Nissan and Hyundai have established their manufacturing base in Chennai. Apart from the automobile industry, Chennai also has a significant presence of IT and ITeS companies. There are 40 operational SEZs in Tamil Nadu, out of which 22 are in and around Chennai.
An international airport and a port have been instrumental in connecting the city to national and international centres and attracting several global companies. Also, the coming up of metro rail and monorail has positively impacted the intracity commute. New infrastructure projects such as phase 2 of the metro rail, expansion of the existing airport, the peripheral ring road, the elevated corridor (Chennai Port-Maduravoyal) have been announced to improve the regional connectivity of Chennai. Also, the proposed Chennai Bengaluru Industrial Corridor (CBIC) is expected to boost the industrial and IT sector in and around the city.
Working professionals from all over the country have flocked to Chennai. Many residential projects have come up to cater to the demand, slowly replacing the low-rise profile of the city with high-rise condominiums. Presence of large base of white-collar employees has translated into demand for residential units in the mid-segment price bracket.
The latest property market trends in the city suggest the following:
- New supply in Chennai registered a de-growth of 24 per cent in 2022 compared to the preceding year, and 9,310 units were launched.
- The majority (45 per cent) of the new supply was concentrated in the INR 45-75 lakh price bracket. Of the total new units launched in 2022, 53 per cent belonged to the 2BHK configuration. Maximum new supply in Chennai was concentrated in the micro markets of Medavakkam, Mangadu and Chengalpattu in 2022.
- While supply has witnessed a decline, residential sales grew 8 per cent YoY in 2022. A quarterly breakdown of residential demand suggests that most of the sales in Chennai took place during the festive season (Q3) in 2022.
- The majority of the demand in 2022 was concentrated in the INR 45-75 lakh price bracket, which took a share of 35 per cent in the overall sales tally. The more than INR 1 crore price bracket continued to take a significant share of 20 per cent in 2022, the same as the preceding year.
- Homebuyers in Chennai continued to prefer units with a 2BHK configuration, which took a share of 48 per cent in the overall sales.
Micro markets such as Medavakkam, Sholinganallur, Mogappair, Perumbakkam and Manapakkam witnessed maximum traction in 2022. - Chennai has the lowest unsold inventory after Kolkata, among the top cities. The city’s unsold inventory stood at 30,942 units at the end of 2022. Moderate new supply and increased sales velocity have reduced the city’s inventory overhang to 26 months compared to 33 months in 2021.
- On the price front, the city has been rather sensitive to input cost hikes witnessed during the beginning of the year. Where the prices appreciated in the marginal range of 1-2 per cent previously, Chennai saw a 5 per cent YoY price appreciation in 2022, its highest since 2016.
Renuka Kulkarni, a seasoned real estate professional, brings over five years of diverse experience in research, consulting, and architectural design within the urban sector. Her expertise spans public and private projects, showcasing proficiency in real estate research, trend interpretation, and policy analysis. With qualifications in architecture and a master’s degree in Data Science (Business Intelligence & Data Analytics) from IIIT Bengaluru, along with an M. Tech in Urban Development and Management from TERI School of Advanced Studies, New Delhi, Renuka seamlessly blends data analytics with market insights, offering a holistic understanding of the industry in her research pieces.
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