The current real estate landscape in Chennai serves as a testament to the city’s progress and change. It’s standing as a significant IT and industrial centre, creating more employment opportunities, has resulted in an increased demand for housing from both locals and migrant professionals. Additionally, various governmental initiatives aimed at promoting the real estate sector have positively impacted the growth of the residential market. With Chennai’s population becoming more diverse, the residential market in the city has striven to adapt and develop accordingly.
Residential Demand Remains Firm in Q3 2023
In the face of challenges arising from volatile market conditions influenced by both domestic and global economic factors, the residential real estate sector in Chennai exhibited relative resilience. This was evident through a positive sales trend, with 3,870 homes transacted in the third quarter of 2023.
While the year-on-year perspective indicated a 12 percent decline in sales during Q3 2023, an analysis of quarter-on-quarter data recorded a commendable 27 percent growth in residential sales when compared to the previous quarter Q2 2023.
This expansion serves as a clear indication of the market’s capacity to adjust and rebound, highlighting the sector’s potential for sustained growth and its capability to withstand adverse conditions.
Identifying the Prime Budget Ranges in Demand
As per our data, homes valued in the budget category between INR 45 lakh and INR 75 lakh took the lead, constituting 35 percent of the total units sold in Q3 2023. This points to considerable demand from middle-income families and young professionals in search of affordable yet comfortable housing options.
The substantial share of residential units sold in this budget range underscores the importance of affordability in the Chennai real estate market, indicating that a sizeable portion of potential buyers is driven by the consideration of cost-effectiveness.
Significantly, residential properties in the price range of INR 1 crore and above constituted a noteworthy portion, comprising 23 percent of the total residential sales in Q3 2023.
This depicts a substantial aspiration towards owning high-end properties and implies a growing demographic with elevated disposable incomes, potentially including professionals from expanding sectors like IT/ITeS and finance. The diverse distribution of demand, thus, emphasizes the ability of Chennai's real estate market to cater to a wide range of buyers, spanning from first-time homebuyers to those in search of more luxurious accommodations. Developers and industry stakeholders are closely monitoring these trends to tailor their offerings according to the evolving needs and preferences of potential buyers.
2BHK Apartment Sales Continue to Dominate the Market
During the third quarter of 2023, 2BHK units retained their status as the most in-demand configuration, constituting 49 percent of the overall sales.
The appeal of 2BHKs lies in their practicality and affordability, making them a favoured option for first-time homebuyers and small families. Concurrently, 3BHK units secured a noteworthy 36 percent share, highlighting the demand for larger residences suitable for extended families and professionals seeking additional space, possibly for a home office. At present, residential properties in the city are priced in the range of INR 5,700/sqft to INR 5,900/sqft on average, primarily aligning with the mid-segment housing category and is conducive to sustained momentum in the residential market.
Outlook
Thus, despite encountering challenges and uncertainties, the residential market in Chennai has displayed notable resilience and adaptability. The substantial increase in residential sales during Q3 2023 signals both homebuyers’ and investors’ confidence in the city's prospects. Looking ahead, a comprehensive strategy encompassing affordability, mid-range comfort, and high-end living choices would strengthen Chennai's real estate market, enhancing its ability to adapt and endure amid evolving economic conditions and shifting consumer preferences.
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