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:
- The rising input costs have impacted the buoyancy of the residential markets in Chennai in first half of 2022. The new supply, which dropped sequentially in Q1 2022, has recorded a slight improvement of 12 per cent in Q2 2022 (as compared to the preceding quarter), with a total of 1,831 new units launched.
- The majority of supply in Chennai is concentrated in the more than the INR 1 crore (35 per cent) price range in Q2 2022, closely followed by the INR 45-75 lakh price bracket, which took a share of 32 per cent in the total new units launched in the quarter.
- Maximum new units in Chennai were launched in the micro-markets of Perungalathur, Navallur and Kovurin in Q2 2022.
- Residential sales in Chennai witnessed a marginal slowdown during Q2 2022 and registered a 2 per cent YoY degrowth as compared to the previous quarter. The residential sales momentum has remained subdued due to factors such as the increase in property prices and moderate growth in new supply.
- Another notable factor affecting the demand for an apartment is the rising interest of Chennai homebuyers in plots, which have recorded a healthy 18 per cent price appreciation between 2018-2021, compared to apartments, which have registered a 2 per cent appreciation during the same period.
- The maximum demand in Q2 2022 was concentrated in the INR 45-75 lakh price bracket, which took a share of 30 per cent in the overall sales tally.
- Homebuyers in Chennai continued to prefer units with a 2 BHK configuration, which took a share of 47 per cent in the overall sales pie, followed by 3 BHK, with a 34 per cent share.
- The localities of Sholinganallur, Perungalathur, Perumbakkam, Manapakkam and Medavakkam witnessed maximum traction in Q2 2022.
- Chennai has the second-lowest unsold inventory in the top-eight cities. The city’s unsold inventory stood at 32,672 units at the end of Q2 2022, registering a 13 per cent decline compared to the year-ago period, and the city’s inventory overhang has reduced to 27 months compared to 42 months in Q2 2021.
- On the price front, the city saw a 9 per cent YoY weighted average price appreciation for the second time straight, mainly due to the rise in construction costs and premium charged over the ready-to-move-in properties.
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