Infra development boosts demand in Chennai, Bengaluru

Infrastructure development has increased the demand for housing in the South India micro markets. In 2020, Bengaluru and Chennai observed increased residential sales due to low interest rates, GST reduction, stamp duty waivers, flexible payment schemes, and enhanced customer perception. As work from home is likely to continue for some time, there is an increase in demand from the IT or ITeS sector for mid-segment housing. Moreover, with the rise in industrial activities in these cities, demand for affordable housing is also expected to increase in the following years. There would be an increase in traction in the mid segment to upper mid segment market because the demand for larger spaces is on the growth. Various prime residential centres are developing in cities like Bengaluru and Chennai. East Bengaluru was a top player and accounted for 45% of the supply and 40% of the reported sales, including micro-markets like Whitefield, KR Puram, and Varthur, providing for the pent-up demand in this market in 2020. North and South Bengaluru also got traction in 2020, with 30% and 25% share in the sales, respectively. Significant micro-markets such as Hennur, Yelahanka, and Hebbal in North, Kanakapura Road, and Sarjapur Road in South also witnessed great demand in these markets. On the other side, South Chennai has emerged as a mid-segment to a prime market. It was the top player and accounted for 58% of the supply and 62% of the reported sales in 2020. Residential catchments with OMR (Old Mahabalipuram Road), PTR (Pallavaram Thoraipakkam Road), and ECR (East Coast Road) like Perungudi, Siruseri, Pallavaram, and Sholinganallur have catered to the pent-up residential demand. West Chennai, a developed market in Old Chennai city, accounted for 31% of the reported sales in 2020. It is witnessed that regions in proximity to the CBD, like Koyambedu, Porur, Mogappair, Perrumbakkam, and the upcoming Manapakkam market, have primarily catered to this demand. While comparing ticket sizes in Bengaluru and Chennai, it is observed that the mid-segment market with Rs 25 to 75 lakh ticket size dominated the residential sales. The bulk of launches focused on this segment, including 78% share and 68% share in the supply. It also observed maximum sales traction with 62% share and 65% share in sales recorded. Chennai observed good traction in the premium residential market, with the ticket size upwards of Rs 75 lakh accounted for 27% of the supply and 25% of the sales recorded in 2020. The South Chennai market reported the majority of the sales. In Bengaluru, proximity to transit corridors such as metro and airport, proximity to office hubs, developed social infrastructure, under-construction metro lines, upcoming commercial hubs, land availability, and good demand from the workforce have been the key reasons driving the demand. Additional infrastructure projects like Peripheral Ring Road (PRR), Satellite Town Ring Road (STRR), Bengaluru – Mysore Industrial Corridor, Bengaluru – Chennai Industrial Corridor, and the new terminal (TS) at Kempegowda International Airport are expected to move real estate growth in Bengaluru. Image Source Also read: Developers line up housing projects for launch in July Also read: Developers to build housing parks in place of IT parks in Chennai