Chennai, the capital of Tamil Nadu, is one of the biggest cultural, economic and educational centres in South India. Mercer’s Quality of Living Survey noted Chennai as the safest city in India, and is exemplified by the fact that it has the third-largest expatriate population in the country. Also justifiably called the ‘Detroit of India’, Chennai has over one-third of India’s automobile industry operating there.
Chennai has grown significantly in the last few years. Education prospects and employment opportunities, along with a decent lifestyle, are the key drivers that attract people to the city. With increasing population, the city’s real estate landscape has also grown by leaps & bounds and is now spread across various zones of Chennai.
While real estate development in Chennai paused momentarily due to massive floods of 2015, the fundamental demand drivers remain intact and the city is likely to continue on its growth trajectory in the future periods, reinforced by:
Diversified economic base – Chennai’s diversified economic base is anchored by the automobile, software services, hardware manufacturing, healthcare and financial services industries. This diverse economic base is ably supported by the Chennai port, which is the second largest in India and a key facilitator for import-export of goods. Presence of a vibrant economy creates ample job opportunities and leads to massive real estate development in the city.
Thrust on infrastructure – Chennai’s expansion across various regions, was ably supported by the growth of physical infrastructure with major initiatives such as Outer Ring Road (ORR), Inner Ring Road (IRR), East Coast Road (ECR) and the development of MRTS. The Government’s focus on infrastructure development is evident with major projects such as Chennai-Bengaluru Industrial Corridor, ORR Phase II, metro and monorail corridors being planned to improve connectivity and accessibility to various parts of the city. With improved connectivity, any region’s real estate development obviously picks up pace.
Expanding zones – Chennai is restricted only on one side by the Bay of Bengal whilst the city is free for development on all other sides. This provides a latent advantage for widespread development of new zones and in-turn drives the real estate growth.
A predominantly end-user driven market – Chennai’s real estate market is largely end-user driven and as a result, there is minimal speculation. Whilst this results in a slow and steady growth, the fundamentals remain intact and the future growth potential of the city is undisturbed.
Presence of reputed developers – Chennai’s real estate market has transformed from dominance of local players a few years ago to entry of large reputed developers such as Godrej Properties, Purvankara, Mahindra Lifespaces, Pacifica, PBEL, etc. This truly demonstrates the city’s potential as large developers are expanding their portfolio in Chennai.
All these factors make Chennai an attractive city to invest in – but, as is always the case, not all its regions are created equal when it comes to investment potential. Let us examine some of Chennai’s hottest real estate investment markets.
Top Investment Locations
The IT/ITeS and automobile sectors are the major growth drivers of real estate in Chennai. South Chennai and West Chennai dominate the residential developments in the city. The southern and western suburbs are witnessing massive traction with maximum residential developments launched across the city, as these regions are rapidly converting into employment-generation clusters hosting various IT and financial services companies.
Ambattur and Oragadam in West Chennai, and Old Mahabalipuram Road, Gudavanchery and Pallikaranai in South Chennai are amongst the top destinations for residential property developments and investment.
The industrial growth of Ambattur has led to large-scale residential activity in this region. The micro market is now one of the prominent IT-ITeS and industrial hubs of Chennai. With around 3,000 units launched since 2013, the micro market is witnessing a significant traction in INR 40-80 lakh budget segment. Average property prices range between INR 4,000-4,400/sft.
Located along NH 4, Oragadam is one of the attractive suburbs of Chennai due to the presence of various Fortune 500 companies in the city’s largest Oragadam-Sriperumbudur industrial belt. Around 4,000 units hit the residential market during the past 5 years and the current quoted average capital values are around INR 3,300-3,600/sft. New launches were predominantly in the mid-segment.
Old Mahabalipuram Road
The 45 km Old Mahabalipuram Road (OMR) stretch, termed as the IT corridor, is witnessing heightened real estate activity in the INR 40-80 Lakh price bracket due to the establishment of various IT business parks and dedicated SEZs in this region. OMR Road continues to thrive among home buyer’s attention with around 35,000 units launched over the past 5 years. The average capital values of OMR are between INR 3,500-5,900/sft.
Gudavanchery is one of the promising affordable residential hotspots of Chennai. Presence of IT parks and industrial parks coupled with excellent connectivity and well-established infrastructure drives the residential growth. 4,500 residential units have been launched since 2013 and the current prices are around INR 3,200-3,600/sft.
Pallikaranai lies very close to the IT/ITeS and industrial clusters of the city. The merging of the micro market under the City Corporation of Chennai offers good scope for residential developments and infrastructure facilities. Around 3,300 units were launched since 2013 and the current property prices range between INR 4,500-4,900/sft.
With a burgeoning economy, good quality of living and enormous talent pool, global corporates have been flocking Chennai for setting up their businesses. The city’s infrastructure is also gearing up admirably to cater to the increasing inward migrating population attracted to Chennai for its education and employment opportunities. All in all, the city is poised for significant growth in the future, which will benefit real estate investors focused on vibrant Chennai’s residential property market.