CHENNAI: A survey on Chennai’s residential real estate analyses the economic and infrastructure drivers that would impact the demographic growth of the city’s metropolitan area. The study gives an outlook on the housing requirement and supply and its impact on prices. “The growth of auto hub and growth of IT/ITeS and BFSI industry has defined the growth of Chennai in the last decade and will continue to drive migration and need for houses. Chennai, which accounts for a major share of US $185 billion investment in the state, will lead to steady growth in jobs and rising need for houses,” said Sunil Rohokale, CEO & Managing Director, ASK Group.
“Based on the demographic growth and the growth in office space and manufacturing sector, requirement of houses is expected to be in the range of 30,000-35,000 houses annually. We expect prices to remain firm due to a balanced demand-supply, while growth corridors are expected to witness upward bias in prices” said Amit Bhagat, CEO and MD, ASK Property Investment Advisors Ltd.
The city has notched up a 20 per cent CAGR growth in software exports in the last seven years due to the presence of leading IT players. Over 300,000 direct job additions have resulted in the last 4.5 years.
The IT/ITeS and BFSI alone will generate the need for 22,000-25,000 housing units annually. Considering the MIG and HIG needs, requirement of houses is expected to be in the region of 35,000-40,000 units annually. Housing sales, based on home loan finance market, leads to annual demand of 30,000-32,000 units. At present, apartments with unit size of 700 sq ft are classified as Middle-Income Group (MIG) housing, whereas, units above 700 sq ft are classified as High-Income Group (HIG) housing. Based on the above approaches, ASK Property Investment Advisors estimate the housing demand in the city in the region of 30,000-35,000 units annually.
Overall absorption has declined by 12 per cent in 2012. However, lower launches due to delay in approvals is expected to lead to balanced demand-supply in 2013. Residential property prices in the city range from Rs15,000-20,000 per sq ft for city centric premium residences, Rs 4,500- 5,500 per sq ft in the emerging growth corridors for middle-income housing and Rs 2,800-3,500 per sq ft in the extended suburbs for affordable housing.