Real estate players looking at Chennai as next big market for future projects

Amidst the robust real estate market of India, Chennai's residential real estate market is bustling with activity, showcasing a substantial 5 per cent surge in home sales, reaching 14,920 units in 2023, signaling a robust return to its pre-pandemic dynamism. This resurgence has caught the eye of numerous investors and heralded the entry of big players, all eager to capitalize on the city's flourishing investment landscape and promising returns. 

The latter half of 2023 alone witnessed a 6 per cent uptick in real estate transactions, with 7,770 units changing hands, reflecting the sector's vigorous recovery. This revival is rooted in growing buyer confidence and economic stability, with industry giants like Knight Frank India and CREDAI Tamil Nadu highlighting the sector's momentum toward regaining its former luster.

Chennai's appeal is further magnified by its rapidly improving infrastructure, making it a magnet for homebuyers and investors alike. Notably, the city now boasts the lowest number of unsold properties among India's leading metropolises, as reported by Anarock Group. The inventory has notably dwindled to approximately 26,390 units, a 13 per cent decrease, significantly shortening the inventory overhang from 56 months in Q3 2020 to just 16 months by Q3 2023. This marked decrease is a testament to the soaring demand for housing, spurred by strategic developments and escalating consumer interest.

The market's robust comeback is attracting premier developers and real estate moguls to Chennai, with real estate major DLF announcing plans to expand its footprint in Chennai with a new high-rise luxury project. These industry heavyweights are drawn to the city's dynamic growth prospects and investment opportunities, reshaping the competitive landscape and diversifying housing offerings.

DLF's upcoming luxury residential project, revealed during their Q3 investors call, will offer residences ranging from 2400 to 2800 square feet. This venture responds to the growing demand for premium living spaces in Chennai, underscoring the city's evolving real estate scenario. Expected to be located in Guindy, a prime locality in Chennai known for its excellent connectivity and infrastructure, this project highlights DLF's significant move back into Southern India's residential real estate market since the fiscal year 2021-2022. 

Ashiana Housing, a senior living-focused real estate developer also announced that it is planning to launch two premium residential projects in Chennai in the coming months.

Talking about Chennai’s residential market Shashank Vashishtha, Executive Director, Exp Realty India said, “The year 2023 witnessed several areas in Chennai experiencing notable real estate growth, particularly North Chennai, Porur, ECR, OMR, Gudavancheri, and Parandur, driven by factors like upcoming metro connectivity and affordable land availability. Despite a significant decline in sales, the market displayed resilience, with developers selling unsold stocks and announcing new projects. The commercial sector showed promise, while the residential sector maintained robust demand for well-located, quality homes at attractive prices. The ongoing Metro expansion and various infrastructural developments position Chennai for substantial growth in the coming years. Looking ahead, 2024 is anticipated to be the year of resurgence for Chennai's real estate. With the government's expansive development plans and ongoing expansions, the downturn is poised to reverse, paving the way for price appreciation and renewed growth in the market.”

Another leading real estate player, Godrej Properties Ltd, announced in 2023 that it has purchased 60 acres of land in the fast-developing micro market of Oragadam Junction, Chennai. Spread across approximately 60 acres, the proposed project is estimated to have a developable potential of approximately 1.6 million square feet of saleable area, primarily comprising residential plotted development. DLF's previous project, Parc Estate, near SIPCOT in OMR, Chennai, was also a plotted development wherein it garnered widespread attention by selling 1500 plots spread across 90 acres for nearly 700 crores.

With property prices steadily climbing and a market brimming with potential, Chennai's real estate sector is clearly on an ascent. The influx of major industry players, coupled with the broad interest from a varied pool of buyers and investors, heralds a promising future for the city's property market.