Chennai's Real estate growth and investment pattern

The real sate growth in Chennai till early 2000’s was quite static with property prices maintained a low to nominal appreciation (2-4% per annum). However, post 2004 the trends totally changed with capital appreciation touching double digit on year on year (yoy) basis. The trends impacted both the city and suburban areas of Chennai.

So what was the reason for this sudden spurt in real estate demand and prices ? The rationale to this question is that employment opportunities were being created in multiple segments like IT / ITES, Manufacturing, Healthcare, Educational, Aviation and Logistics sectors. The entire stretch of Rajiv Gandi Salai (OMR) mushroomed as growth due to its employment generating ability from the IT / ITES sector. More jobs were being created on a annualised basis creating demand for IT Parks. Close to 70 % of the Chennai’s office absorption in Chennai was taking place on this corridor, followed by Mount Poonammalle Road, GST Road and Ambattur. This led to a demand for housing in these locations followed by demand for retail spaces to set up convenience stores, eateries. The hospitality sector, not be left behind started developing room inventory to cater to the demand. Mall developers too created retail infrastructure for hypermarkets, departmental stores, vanilla stores, fine dining restaurants, food court and multiple screens multiplex across Chennai.

The growth pattern clearly establishes the synergy between commercial space demand fuelling demand for residential and retail asset classes. Three important pointers for those looking to invest and encash the maximum returns on their real estate investment :

IDENTIFYING GROWTH CORRIDORS : Identifying the right growth corridor to invest is a very significant attribute to real estate appreciation. One should be aware and keep abreast with latest information on the expanding business sectors and areas of expansion for e.g. IT / ITES sectors expanding in Rajiv Gandhi Salai, Mount Poonamallee Road, 200 feet Radial Access Road from Pallavaram to Thoriapakkam. Manufacturing and Logistics industries in Ambattur, Sriperambadur, Oragadam. Trading and Wholesale business in North Chennai etc.,

INFRASTRUCTURE : Chennai’s physical infrastructure is one amongst the best in comparison to other metropolitan cities of India. With the outer Ring Road connecting North to South Chennai, Metro Rail’s ambitious Phase - 2 expansion plans with 3 corridors, revival of the Port - Madurayoval freight corridor and the elevated expressway from Chrompet to Guindy, real estate development is bound to be rampant. Infrastructure development is a catalyst to real estate growth

DEVELOPER PROFILE : A developer’s track record and delivery capability must be factored in while making an investment decision. Projects of developers of repute not only enjoy a healthy capital appreciation but also attract a better real sale value.