The past two decades have seen Chennai emerge from a slow moving, laid back city, which went to sleep at 8 pm and woke with the sun to the chanting of Gayatri Mantra, to a city of steel and glass and one that never sleeps. The city’s economy moved from traditional smoke stack manufacturing to the new age of Information Technology (IT) bringing in its wake a breed of younger professionals and technocrats with money and no time.
Today Chennai’s economy is driven by IT and IT enabled Services (ITeS), telecom as well as the traditional manufacturing and allied sectors. It is the growth of these sectors which has triggered the growth of residential real estate in Chennai. Industries such as IT and ITeS are of course the primary drivers in this aspect because the remuneration in this industry is higher than the others, which results in better affordability and leverage with the banks.
The IT and its enabled services companies have taken root on the Old Mahabalipuram Road (OMR). The other corridors of growth in Chennai are the Grand Southern Trunk Road (GST) Road, Sriperumbudur and Oragadam. Residential development along the OMR has proved to be very successful mainly because of its captive target group- the IT professionals.
The OMR starts at the Madhya Kailash temple in the southern suburb of Adyar and goes on until it reaches Mahabalipuram in Kanchipuram district, where it joins the East Coast Road (ECR).
There are two toll plazas on the OMR and three satellite toll plazas on link roads. The first toll plaza is at Perungudi and another at Egattur. There is a satellite toll plaza on the Thoraipakkam-Pallavaram road, another on the Sholinganallur-Medavakkam road and the third at Sholinganallur-ECR road. The toll plazas have gained significance for residential real estate because the price of residential and commercial real estate varies depending on which side of the plaza the property is.
In 2010 it is estimated that 70,000 people were employed in IT and business process outsourcing (BPO) companies on the OMR. The projections at that time were that one lakh more people were likely to be employed on this IT Corridor in the next couple of years. This has resulted in a surge in developing residential real estate. On the OMR, the residential real estate is available right down to Padur, Kelambakkam and Thaiyur.
Thaiyur, located in Kanchipuram district, has now gained the attention of home buyers. The price for plots at Thaiyur is still within the reach of people who want to invest. The price of plots at Thaiyur is about falls between INR 900 to 1100 per sq ft but the price will depend on the actual location and distance from the OMR. Large parcels of land, over 30 acres are also up for sale in Thaiyur.
The average price for apartments in multi-storey apartment blocks on the OMR, between April and June 2014, is between INR 4000 and INR 4300 per sq ft. The prices would be higher nearer Madhya Kailash and will come down as one goes further afield.
Studio apartments in Thaiyur are also likely to be in demand as this kind of housing would be the ideal choice of single IT professionals.
The attraction of home buyers to invest in property on the OMR is reducing because of the sharp increase in prices on this stretch. The price increase of property, between 2010 and 2014, has ranged from 60% to 80%. In addition to this, the social infrastructure is yet to meet expectations on the OMR.
Though OMR started out as the micro market for the affordable segment, today someone wanting to invest would have to look at places after Padur. That is why investing in plots in Thaiyur becomes a wise decision at this point.
Image: By Nileshantony92 (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
Nina Varghese for IndiaProperty.com