PropTiger Data Labs City Report: Affordable Housing In Great Demand In Chennai

The real estate industry did not see a revival in 2014. But, as the government is committed to providing ‘Housing for all by 2022’, affordable housing has become a major priority of the authorities in the largest Indian cities. The demand for affordable houses is remarkably high in Chennai, an industrial hub in Tamil Nadu. According to a report from the PropTiger Data Labs released this month, 2012 and 2013 were the best years for Chennai real estate, going by the number of the units launched.

The report titled `Affordable Housing in Chennai’ presents a comprehensive overview of the affordable housing segment in Chennai and identifies key trends for residential real estate

The key findings of the report are:

• In 2012 and 2013, the greatest number of units were launched.
• A total of 1,19,145 units are likely to be delivered from 2015 onward. Much of the new supply is scheduled to be delivered in 2015.
• More than 60% of the new units are priced below Rs. 50 lakh.
• The affordable housing units across Chennai are in smaller sizes. The average super area of the affordable housing units in Chennai is around 900 sq. ft., while in Noida and Bangalore, it is 1,025 and 1,070 sq. ft. respectively.
• Much of the launched units are 1 BHK or 2 BHK apartments.
• Over 40% of the units sold in Chennai are priced in the range of 25 to 50 lakhs.
• Most of the unsold inventory in Chennai is priced in the range of 25-50 Lakhs.
• Approximately 14% of the unsold inventory in Chennai is greater than 3 years old.
• Slow sales drove inventory overhang to 31 months.
• Avadi (1,485 units), Kelambakkam (1,058 units) and Mevalurkuppam (943 units) have the largest number of affordable housing units.

Some of the popular affordable housing projects in Chennai are –

• Mahindra Lifespaces- Iris Court
• Akshaya- Today Phase-1
• VGN- Hazel
• Arun Excello- Temple Green Phase-2
• Unitech- Unihomes

‘Tamil Nadu Vision 2023’ of the state government, which is aligned with the ‘Make in India’ campaign of the central government intends to raise the growth rate of the manufacturing units from 10% to 14%. The central government intends to raise the growth rate of the manufacturing sector to 12-14%. This might create more than 100 million new jobs by 2022.

Chennai, however, faced setbacks in 2014, like the unfavorable political climate, the closing of the Nokia plant, and Ford and Foxconn deciding against investing in Chennai. The setbacks were mostly in the manufacturing sector, which hindered expansion. Slow movement on major transport projects also had an impact. The Chennai Metro Rail Project, expected to get functional by July 2014, is now delayed till March this year, raising project costs. The construction of key road projects and expansion of many industrial units, like the One Hub Chennai on OMR Road (1,450 acres) and Mahindra and Mahindra Cheyyur Facility (400 acres), are in pipeline though.

Outlook for 2015:

The growing manufacturing sector in Chennai will eventually create tens of thousands of jobs. When the manufacturing sector grows, affordable houses in Chennai will be in great demand. Anticipating the demand, developers are designing their project portfolios in a way that they fit the demand for low-priced houses. Parts of Chennai, like Singaperumal Koil, Oragadam, Sriperumbudur, Thiruporur , Vandalur, Chengalpattu,

To know more about the trends in Chennai real estate markets, log on to our website PropTiger.com.