Chennai ROI Destinations Introduction The recent softening of the interest rates is expected to renew interest in residential activity in Chennai. More so, because there is limited scope for further reduction in property prices. Moreover, IT/ITeS sectors are expected to be the key driving factors for realty growth here while the infrastructure projects planned within the city will also give a booster shot for future growth. Some of the key ongoing infra projects include Phase 2 of Outer Ring Road, connecting suburbs from south to north zone, and the proposed peripheral ring road project. Predicting high realty demand within the city in the near future, CommonFloor.com has identified the Top 10 investment destinations of Chennai. This will help property seekers to make an informed decision in their quest to buy their dream home. The Top 10 investment hubs are identified by using different parameters such as Price Variation Resale Unit Supply Rental Yield Absorption New Launch Supply Different weightage has been given to each of these parameters as shown in Figure 1. Top markets are identified by considering the following aspects: Capital Returns Rental Returns Indicators and Weightages Change in per sq. ft. Price Resale Units Available Rental Yield Absorption New Units Supply Fig 1: Indicators and weightages of Investment Destinations For the analysis, three different kinds of data types are used, such as Project Data Listings Data Seekers Data The Project data used from 2012 to 2015 with Y-o-Y comparison. While listing and seekers data used for analysis are from H12014 to H12015 with H-o-H comparison. Besides using CommonFloor s Proprietary Data Model, secondary data information has also been collated for more accurate and precise results.
OMR Road Poonamalle Chennai ROI Destinations Guduvancheri Tambaram Kelambakkam Sholinganallur GST Road Fig 2: Map showing top Investment Destinations in Chennai In top 10 investment destinations, OMR Road tops the chart followed by and Poonamalle. Data suggests that markets in south Chennai have emerged as hotspots for major residential activity, followed by localities in the West. IT/ITeS sectors are the key drivers of residential real estate in south Chennai while areas in west such as is essentially seeing demand from the industrial zones. Moreover, areas like Poonamalle and are also being influenced by IT Parks and SEZs in and around the areas. Top Investment Hubs in Chennai
Tambaram T.Nagar Perungudi Kilkattalai Saligramam Korattur Chennai Change in Price per sq.ft. Thiruvanmiyur Kelambakkam Nanmangalam Oragadam Adambakkam Valasaravakkam Saidapet Mylapore Nungambakkam Kodambakkam Kilpauk Anna Nagar Sholinganallur Fig 3: Map showing top markets based on change in price per sq.ft. As per data, prominent micromarkets in central and southern Chennai residential properties have seen good appreciation in prices. Improved infrastructure and good connectivity to all major areas within the city have spiked residential demand in Tambaram. Offering a blend of all propertytypes, T Nagar has also seen decent price appreciation over the last few years. Connectivity and infrastructure have played a vital role in its growth. Top Markets based on %age change in Price per sq.ft. H1 2014 - H2 2014 H2 2014 - H1 2015 H1 2014 - H1 2015
OMR Road Pallikaranai Velachery Chennai Available Resale Units Madipakkam Medavakkam Guduvancheri Poonamallee Avadi Tambaram Padur Maraimalai Nagar Urappakkam Kovur Fig 4: Map showing top markets based on available resale units Data clearly suggests that south Chennai has maximum availability of units in the resale category. Backed by high demand from the migrants essentially working in IT/ITeS sectors, the supply in most of these areas offer properties within their said budget. South Chennai is followed by markets in West Chennai such as and where there is ample supply in the resale market. Besides IT, is also seeing demand from the manufacturing and chemical industries in and around the area. Top Markets based on Available Resale Units H1 2014 H2 2014 H1 2015
Poonamallee Kelambakkam OMR Road Padur Maraimalai Nagar Navallur Chennai Rental Yield Sriperumbudur Siruseri Nanmangalam Oragadam Urappakkam GST Road Tambaram West Thoraipakkam Egattur Selaiyur Pudupakkam East Coast Road - ECR Chengalpattu Fig 5: Map showing top markets based on Rental Yield As per data, Poonamalle has seen consistent growth in gross rental yield from H1 2014 onwards. Good connectivity, proximity to IT hubs and well-developed infrastructure have made Poonamallee score positive from the rental perspective. Also, the area receives spill-over demand from nearby Anna Nagar and, where rents have become unaffordable for many. Interestingly, all micro-markets offering good rental yield are seen to be concentrated mainly towards south Chennai along the OMR Road. Top Markets based on Rental Yield H1 2014 H2 2014 H1 2015
OMR Road Guduvancheri Sholinganallur Poonamallee Avadi Pallavaram GST Road Chennai Absorption Tiruvallur Perungalathur Pallikaranai Thiruporur Tambaram West Medavakkam Thiruninravur Guindy Chromepet Mambakkam Perambur Nallambakkam Kelambakkam Karapakkam Chettipunyam Fig 6: Map showing top markets based on Absorption Interestingly, OMR has emerged as the major showstopper as far as absorption in Chennai is concerned from 2012 onwards. IT/ITeS has been major driver for high demand in this region. Moreover, with large influx of migrants from other cities, the areas along the stretch have seen both - high demand and supply., the second top market based on absorption, is strategically located and is in close proximity to the IT hubs of Velachery and Sholinganallur. Add to this, the locality is easily accessible to OMR. Majority of residential absorption is witnessed along three prime routes, GST Road, OMR Road and Tiruttani Highway. Top Markets based on New Launch Absorption 2012 2013 2014 2015
OMR Road Guduvancheri Pallikaranai Sholinganallur Poonamallee Chennai New Launch Unit Supply Avadi Pallavaram Thiruporur GST Road Tiruvallur Perungalathur Tambaram West Navallur Medavakkam Thiruninravur Guindy Chromepet Mambakkam Perambur Nallambakkam Thalambur Potheri Fig 7: Map showing top markets based on unit supply OMR has topped the list of destinations for residential new Launches from the year 2012 onwards. This is followed by markets located between OMR Road and GST Road such as Guduvancheri Pallikaranai Guduvancheri, located towards the outskirts of the city, has very affordable properties while has good accessibility to IT hubs of Velachery and Sholinganallur. As per data, majority of the residential launches are seen towards Southern Chennai followed by West part of the city. Central and North regions have seen very minimal supply during this time period. The new entrants in 2015 for new launches included Thiruninravur, Guindy, Chromepet and Thalambur. Top Markets based on New Launch Unit Supply 2012 2013 2014 2015
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