Demand remains stable in Chennai’s housing sector

Chennai

Known to be a market driven more by end-user demand than speculative investors, Chennai’s residential market has been expanding over the past few years. This segment witnessed a price appreciation of 2.2% (y-o-y) in 2015 and is expected to see about 2% price hike in 2016.

The demand remained stable in the middle and low- middle residential segments. Meanwhile, demand for the luxury segment dropped in 2015 as a result of which staggered sales were seen. At a sub-market level, in 2015, the central sub-market (Abhiramapuram, Alwarpet, etc.) saw highest price appreciation of 3.7% followed by the off-central sub-market (Kodambakkam,  Thiruvanmiyur, etc.) at 3.1%, western suburbs (Alapakkam, Ambattur, etc.) at 2.6% and northern suburbs (Ayanavaram, Kolathur, etc.) at 2.2%.

The southern suburbs (Navallur, Perungudi, etc.) and the premium sub-market (Boat Club, Gopalapuram, etc.) saw a price appreciation of 1.3% and 0.5% respectively. Supply matched demand in locations like Adyar, which caused a stable increase in capital value. In the off-central sub-market that houses the upper-middle and middle class Chennaites, demand was relatively higher compared to the central and premium sub-markets.

The southern suburbs, with an overall share of more than 53% of Chennai’s housing stock of more than 1.6 lakh units, had a significant impact on the trend of capital value appreciation in the city. However with existing inventory in this segment the capital value growth has been under pressure in these suburbs.

The overall housing demand outlook remains positive and developers are concentrating on boosting sales of existing projects by aggressive marketing and timely completion of on-going projects.

Emerging areas

Thoraipakkam Pallavaram Road and the Pre Toll OMR would gain prominence with the development of a few large IT/SEZ projects  which are under planning stages. Mount Poonamallee Road would also witness renewed interest with a few large IT projects being proposed.