Chennai, Blore vie for realty growth

Bangalore and Chennai have been exponential in the growth of real estate sector in the recent past. This is largely because the two cities are among the most prominent cities in South India in terms of generating new business.

More than Chennai, Bangalore has gradually evolved into a more matured real estate market, since the market growth there preceded that of Chennai. Residential property sales in Chennai and Bangalore have been more or less stable of late, with the Chennai market displaying marginally greater buoyancy than Bangalore.

The absorption of residential property units in Chennai this year has been almost equal to that seen in 2011. In Bangalore, this year’s absorption has been lower.

Capital and rental values in city-centric locations are on the higher side in Chennai when compared to those of Bangalore. This is primarily because of the limited supply of city-based residential properties and lack of social infrastructure in Chennai’s suburbs. This has caused an escalation in demand for purchase and rental apartments in the city-centric locations. In Bangalore, the residential supply is well-distributed – Bellary Road, Hosur Road and Whitefield account for over 68 per cent of the supply for this year. Unlike Chennai, each micro-market within Bangalore competes with others. This has resulted in residential real estate development that is typified by more innovative products and has kept competition intense. Community living as a concept has also seen greater acceptance and adoption in Bangalore than in Chennai. This is owing to the fact that Bangalore has a number of locations which are supported with good social infrastructure – an aspect wherein Chennai falls shorter. This is one of the most important reasons why Bangalore has already seen a number of well-executed township projects with superior amenities. In contrast, Chennai has yet to see a large, fully-executed township project. Apart from IT/ITeS and financial services, Chennai’s economy is driven by the automotive, manufacturing, telecom and semi-conductor sectors. However, the residential property market is primarily driven by IT / ITeS, which is concentrated in certain locations that axiomatically see the highest demand and therefore supply. This has resulted in the city’s Southern and Western suburbs accounting for more than 70 per cent of the residential real estate supply.