Chennai is the fourth most populous city in India and is an important metropolitan centre in the country, with automobile and services sector industries being the primary economic drivers. It has emerged as a major hub of commercial and residential activity in India. While the central zone is the oldest part of Chennai and houses several corporate offices and retail areas, the southern zone is evolving into an IT hub. While the west and north zones are mainly characterised by industrial development, the infrastructure development such as metro, monorail, and roads (Outer Ring Road) has boosted the residential activity in these areas.
The city enjoys robust regional and global connectivity via the international airport and port and continues to attract workforce. Chennai is projected to be home to 10.4 million people in 2030. It demonstrates strong basics for growth in employment and infrastructure, which underpin the rise in residential realty demand and prices.
Chennai is characterised by low-to-medium density residential development compared to other metro cities, with low-rise apartments and villas gaining on the high rises. However, the central and southern zones have seen high-density development over the years due to the concentration of corporate and IT sector offices with only pockets of open land available for sales of residential land. Hence, maximum open land is currently available in peripheral areas, which have emerged as hubs for plotted development activity. Land takes up to 30—35 percent share, on an average, in the overall residential demand in Chennai. Unlike other metros, the residential land segment is mainly end-user driven due to the existing medium-density urban fabric. In the last decade, saturation of central areas has encouraged residential development towards the west. The micro markets of the west also witnessed maximum residential land activity with high traction in Avadi, Ambattur and Sriperumbudur.
The contiguity to the central zone and connectivity through the outer ring road have boosted development in this zone which has consistently taken up to 40—50 percent share in the overall residential land demand in the recent past. The upcoming peripheral areas in the western region offer a lower entry point than the southern localities such as GST and OMR, which have also seen noteworthy traction for residential land. The proximity to commercial hubs and excellent road connectivity to central areas have been driving factors for demand in the western areas.
Residential land prices in Chennai appreciated by 18 percent between 2018-2020. While the land prices have seen an upward trend since 2018, it is more pronounced from the beginning of COVID-19 pandemic. In comparison, the apartment prices in Chennai have appreciated by 2 percent during the same period. The prices for residential land in the city have risen on the back of growing demand due to shift in the consumer interest in owning an independent home than an apartment. Also, Chennai records queries for residential land from NRIs for who are looking to invest in the sector. Bearing testament to the rising demand for residential land, the sales in the first half of 2021 are already at par with the pre-COVID levels of the first half of 2019 despite the second wave. Large developers in Chennai are also venturing into the sector to launch residential plots either as standalone projects or as part of the township.
The infrastructure development and connectivity to the central commercial and office areas in Chennai will be crucial for future demand and price growth of residential land concentrated in the peripheral areas. The peripheral ring road (PRR), metro connectivity, and upcoming Chennai Bengaluru Industrial Corridor will aid in connecting these micro markets to the major commercial hubs.
The residential attractiveness of western micro markets will receive a greater boost with the upcoming Chennai Bengaluru Industrial Corridor along with the existing outer ring road (ORR). Having said that however, the connectivity has to be supported by local social and physical infrastructure development to put all cogs in place. Also, while the southern markets have seen robust IT sector growth, this area has been the worst affected due to water scarcity. Hence, the liveability of these areas will be the defining factor for the future trends for residential land segment.
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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