Chennai Insite Report Oct-Dec 2014

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Riding on the wave of road and rail infrastructure development, Chennai’s real estate landscape clocked an average growth of six per cent in Oct-Dec 2014 as compared to the preceding one. Properties in Central Chennai recorded maximum surge in capital values by nine per cent, while the North, South and West regions witnessed a spurt of six per cent each, indicating a revival considering that property prices rose by 12 per cent the whole of last year.

  • City MapKodambakkam was the highest gainer, recording anaverage of 18 per cent surge in property values in Oct-Dec 2014 as compared to the previous quarter. This posh locality had seen a marginal rise of four per cent in Jul-Sep 2014. The Kodambakkam Bridge, which is the commutation lifeline of the area, was being renovated since May, causing severe traffic snarls. The bridge was overhauled and opened for two-way traffic recently, a prime reason for the rise in capital values. In addition, flyovers are being built and 24 overcrowded roads in and around Kodambakkam are being widened, which eased traffic flow to the neighbouring localities of Ashok Nagar, K.K. Nagar and Nungambakkam.
  • K.K. Nagar and Ashok Nagar saw a substantial spike of 16 per cent each in Oct-Dec 2014 as compared to the previous quarter. Annually, the capital value of properties in the micro markets jumped a whopping 65 per cent and 59 per cent, respectively. While the construction of the metro rail has given a huge fillip to property prices in Ashok Nagar, the announcement of the restoration of the 48th Street Park has also improved buyer sentiments. The uptrend can also be attributed to the joint ventures among developers, and rise in material and labour cost. Recently, the labour cost rose from Rs 1,200 per sq ft to Rs 1,800 per sq ft.
  • Considering the kind of infrastructure improvements that Velachery and Adyar witnessed, it is not surprising that these areas are receiving massive footfalls from High Net Worth Individuals (HNIs). Velachery has recorded a growth of 20 per cent annually and 15 per cent in Oct-Dec 2014 owing to the Mass Rapid Transport System (MRTS) development. Establishment of the Phoenix and Grand Malls also boosted sentiments. Adyar’s real estate rose by 40 per cent due to the cleaning of the Adyar River and redevelopment of old properties, which facilitated creation of inventory in an otherwise saturated market.

  • Properties in Kattupakkam surged by 12 per cent last year. Continuing the growth trend, the locality recorded a substantial spike of 15 per cent in Oct-Dec 2014. The area is expected to maintain this uptrend due to its strategic location on Mount Poonamallee Road, proximity to the bus depot and reasonably priced properties. The locality is seeing a spurt of small-time builders.

    Metro rail and road improvements boosted the market, leading to an average surge of 15% among top 
    performing localities

  • Porur’s realty surged by 14 per cent in both Jul-Sep 2014 and Oct-Dec 2014. Presence of numerous IT companies including IBM, Dell, L&T and Barclays and the IT Special Economic Zones (SEZs), which magnetizes workforce countrywide as well as the Chennai monorail which facilitates connectivity with major hubs such as Kodambakkam, Guindy and Poonamalee have propelled prices. According to the latest route alignment, the monorail would connect Poonamallee and Kathipara, with a route branching off from Porur to Vadapalani.

  • Ambattur’s real estate climbed by 13 per cent in Oct-Dec 2014 as compared to the preceding quarter, while witnessing 10 per cent growth last year. Reasonable capital values, ranging between Rs 4,000 per sq ft and Rs 4,600 per sq ft, coupled with good connectivity with adjoining localities of Anna Nagar and Kolathur, have propelled prices. Being an industrial hub, the area sees a high demand for properties on rent, thus making it a locality in which people invest in order to earn rentals.

    Top-performers

    Top-non-performers

  • Mugalivakkam lies at a distance of less than 3 km from Moulivakkam, where property market has been hit by the collapse of an eleven-storey under-construction building in the month of June. The tragedy stemmed growth in the neighbouring localities, including Mugalivakkam, where capital values depreciated by four per cent in Oct-Dec 2014 and six per cent last year.

  • Monsoons entailed congested roads and disrupted connectivity, proving a spoiler for Madhavaram’s realty which saw a four per cent dip in Oct-Dec 2014, albeit an eight per cent rise last year. Usually, the locality is one of the preferred locations for renting warehouses due to its proximity to Chennai Metropolitan Development Authority’s (CMDA) truck terminal and the inner ring road.

  • Key-influencersThe South Chennai localities of Padur, Perumbakkam and Siruseri, which form a part of the Old Mahabalipuram Road (OMR) belt, have grown by 50 per cent in the last decade. However, the Oct-Dec quarter heralded stagnancy for all these areas due to surge in unsold inventory. Furthermore, the OMR localites have seen an rise in demand for apartments on rent, which brought considerable changes in the pricing patterns of the builders, depending on specifications.

  • The four per cent rise in property prices of Mogappair West in Oct-Dec 2014 equals its growth last year. The factors contributing to this surge in a single quarter is the development of IT Parks earlier in the year. The ongoing infrastructural development to improve connectivity to Anna Nagar may lead to significant price rise in the near future.

  • Thiruverkadu in West Chennai has seen new project launches due to the proposed Bangalore Chennai Expressway. While the area remained stagnant last year, the potential for improved connectivity led to property values rallying by 11 per cent in the quarter ending December 2014.

  • Property prices in Arumbakkam rose by 25 per cent last year and this trend continued in Oct-Dec 2014, recording a 15 per cent surge. The shift in trend from individual houses to multi-storeyed buildings and the proposed feeder service for metro along the Koyambedu-St. Thomas Mount stretch caused the sudden spurt in prices from an average of Rs 8,700 per sq ft to Rs 10,000 per sq ft between the third and fourth quarters of 2014.

  • Guindy’s real estate market had witnessed 42 per cent surge last year and seven per cent rise in Oct-Dec 2014. The buoyant market is attributed to the construction of the metro network, recent improvements made on the NH-45 which extends from Guindy to Theni and quick connection to Kathipara Junction, which is the converging point of St. Thomas Mount Road, Mount-Poonamallee Road, Grand Southern Trunk (GST) Road and the Inner Ring Road.

CAPITAL VALUES

Locality

Oct-Dec 2014

Jul-Sep 2014

Change

Adambakkam

5900

5600

5%

Adyar

14000

12500

12%

Ambattur

4350

3850

13%

Anakaputhur

3500

3200

9%

Anna Nagar

10000

9000

11%

Arcot Road

6500

6100

7%

Arumbakkam

10000

8700

15%

Ashok Nagar

9250

8000

16%

Avadi

3500

3300

6%

Besant Nagar

14500

14000

4%

Choolaimedu

8500

8200

4%

East Tambaram

4500

4050

11%

Guduvancheri

3350

3300

2%

Guindy

8000

7500

7%

K.K. Nagar

9250

8000

16%

Kattupakkam

4150

3600

15%

Keelkattalai

5300

5100

4%

Kilpauk

11000

10000

10%

Kodambakkam

9200

7800

18%

Kolapakkam

4500

4450

1%

Kolathur

5400

5350

1%

Korattur

6000

5900

2%

Kovilambakkam

4500

4300

5%

Koyambedu

6400

6000

7%

Kundrathur

3500

3500

0%

Madambakkam

4000

3900

3%

Madanandapuram

4500

4250

6%

Madhavaram

4050

4200

-4%

Madipakkam

5500

5200

6%

Medavakkam

4500

4500

0%

Mogappair West

5200

5000

4%

Mudichur

3500

3500

0%

Mugalivakkam

4800

5000

-4%

Mylapore

14000

13350

5%

Navalur

4200

4200

0%

Nungambakkam

11600

10850

7%

Padur

4250

4250

0%

Pallavaram

4250

4000

6%

Pallikaranai

5000

4600

9%

Pammal

3450

3200

8%

Perambur

5750

5250

10%

Perumbakkam

4200

4200

0%

Perungudi

6500

5950

9%

Poonamallee

3700

3600

3%

Porur

5000

4400

14%

Puzhuthivakkam

5500

4950

11%

RA Puram

16000

14000

14%

Rajakilpakkam

4500

4300

5%

Saidapet

8000

7200

11%

Selaiyur

4600

4450

3%

Sholinganallur  4650  4600  1%
 Siruseri  3950 3950  0% 
 Sithalapakkam  3700 3700   0%
 T.Nagar 12000  11000  9% 
 Tambaram 4500  4050  11% 
 Thirumullaivoyal  4000  3500 14% 
Thiruvanmiyur 11500 10500 10%
Thiruverkadu 4000 3600 11%
Thoraipakkam 5500 5200 6%
Urapakkam 3400 3200 6%
Vadapalani 7800 7350 6%
Velachery 7500 6500 15%

Rental Analysis

  • Rental values in Chennai rose by an average of 17 per cent between Oct-Dec 2013 and Oct-Dec 2014. The rental market in all parts of the city rose in a year, with West Chennai taking the lead with 50 per cent, followed by North (19 per cent), Central (18 per cent) and South (15 per cent).
  • Porur in West Chennai is the frontrunner having clocked an incredible rise of 50 per cent over a year. Medavakkam and Pallikaranai trailed behind, with an average rise of 40 per cent each.
  • Rentals in the top performing localities were driven by the presence of IT majors (in Porur) and proximity to developing suburbs of Ponmar, Ottiyambakkam and Sithalapakkam.
  • A year-on-year analysis revealed that the rental markets of RA Puram, Velachery and Nungambakkam have witnessed stagnancy. These localities cater to the High Net Worth Individuals (HNIs). To this end, they see considerable demand for individual bungalows, plots and re-sale of properties.

RENTAL VALUES

Locality

Oct-Dec 2014

Jul-Sep 2014

Change

Adyar

30

23

30%

Alwarpet

35

31

13%

Anna Nagar

25

21

19%

Kilpauk

25

21

19%

Medavakkam

14

10

40%

Nungambakkam

25

25

0%

Pallikaranai

14

10

40%

Perungudi

16

13

23%

Porur

15

10

50%

RA Puram

35

35

0%

Sholinganallur

15

14

7%

T.Nagar

25

24

4%

Tambaram

12

10

20%

Thiruvanmiyur

23

22

5%

Thoraipakkam

15

14

7%

Velachery

16

16

0%

“Presence of IT firms and SEZs have propelled demand for houses on rent, leading to an average rise of 7% year-on-year”

Supply Analysis

Availability of residential apartments and independent houses/ villas have dropped marginally by a per cent in Oct-Dec 2014 when compared with the preceding quarter, while that of builder floors have risen by the same margin during the period. A year-on-year analysis revealed a decent rise of four per cent in the supply of builder floors, while availability of apartments declined by six per cent.

Availablity of Different Types of Property

  • Property-supplyApartments grabbed the limelight by occupying three-fourth of the total supply of properties in Chennai.
  • Independent houses followed apartments, making up 22 per cent of the market in the Oct-Dec 2014 quarter. Builder floors trailed behind with five per cent.
  • Apartments grabbed the limelight by occupying three-fourth of the total supply of properties in Chennai (72 per cent) in the December ending quarter.
  • Independent houses/ villas followed apartments, making up 22 per cent of the market in the Oct-Dec 2014 quarter. Builder floors trailed behind with five per cent.
  • Across all major cities, Chennai witnessed the second highest supply of independent houses/villas, preceded only by Hyderabad, where in this property type made up 32 per cent of the market.

Property-supply-2Availability of Property in Different Budgets

  • Mid income home buyers have maximum choice since properties within the range of Rs 25-40 lakh made up more than a quarter of the market. Capturing 26 per cent of the market, the high income housing segment (Rs 40-60 lakh) trailed closely behind with a quarter share of the market in the quarter ending December.
  • The Chennai market did not disappoint even those fond of an extravagant lifestyle. The luxury segment (Rs 60 lakh–Rs 1 crore) and the ultra-luxury segment (Rs 1–5 crore) together garnered a total supply of 34 per cent. Availability of homes in these two brackets increased by five per cent between the third and fourth quarter.
  • Surprisingly, number of properties worth Rs 25 lakh and below fell by two per cent from Jul-Sep 2014 to Oct-Dec 2014, taking up the least share in the realty landscape of Chennai (11 per cent).

Ready-to-move-in-and-under-construction

 

Ready to Move vs. Under-construction

  • Of the total number of properties in the ready to move in category, the middle and high income segments bagged nearly the same share of the market. Together, these two brackets captured more than half the city’s real estate in two consecutive quarters. 
  • However, a quarter-on-quarter analysis revealed that the market share of ready to move in mid income houses dipped the most – by five per cent. 
  • Supply of ready to move in properties in the ultra-luxury bracket grew by three per cent – from 16 per cent in the third quarter to 19 per cent in Oct-Dec 2014. The luxury segment, too, witnessed a jump of two per cent during the same span.
  • With the exception of properties within the range of Rs 25 lakh, all budget segments featured more houses in the ready to move in category than in the under construction category. Only the affordable segment had more than 50 per cent properties under construction.
  • Despite having comparatively less properties in the ready to move in category, the affordable price bracket (within Rs 25 lakh) saw a six per cent rise in the availability of properties in that category in the last six months.
  • The number of ready to move in houses in the mid income (Rs 25-40 lakh) and luxury price brackets (Rs 60 lakh–Rs 1 crore) fell slightly by one-two per cent from Jul-Sep to Oct-Dec quarter. During the same term, availability of ready to move in properties increased by the same margin in the high income (Rs 40-60 lakh) and ultra-luxury segments (Rs 1 crore–Rs 5 crore).

“Affordable housing segment captured only one-tenth of the total
Chennai market through successive quarters”

BHK-wise-property-descriptionBHK-wise Distribution of Property

  • Though 2BHK units have always been the most supplied configuration in Chennai claiming more than half the share of the total market, their availability declined by four per cent in the quarter ending December 2014.
  • The second largest market share in the current quarter was taken up by 3BHK units which witnessed an uptrend of four per cent when compared quarter-on-quarter.
  • Homebuyers on the lookout for 1BHK and 4BHK properties had to contend with a limited inventory. Both the categories together made up 15 per cent share of the total market.
  • Nearly two-third of the total number of 2BHK units featured in the ready to move in category, in the last six months.
  • Over two-third of 1BHK units came under the ready to move in category in Oct-Dec 2014, which saw a decent rise of five per cent from the previous quarter.

Copyright 99acres.com


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