Recent trends in Chennai real estate show that it will stand with Bangalore real estate. How far it will take place? Following comparative analysis will tell you how far.
Chennai and Bangalore are two prominent South Indian cities which generate new business. Both the cities have witnessed a higher level of growth in the recent past yet Chennai real estate stands little higher.
Real estate sector in both these cities are growing very fast. Of course Bangalore might stand steps ahead regarding the maturity aspect. Market growth of Bangalore which preceded that of Chennai can be counted as the reason behind this.
But when residential sales are taken as basis, Chennai seems to be more stable than Bangalore. The residential sales in Chennai remained stable in comparison to the residential sales of the previous year.
Meanwhile Bangalore real estate witnessed a fall in residential sales. Capital as well as rental values in city centers and other prime locations are also higher in Chennai in comparison to the other.
Lower supply of Residential properties in city centers and weak social infrastructure of the Chennai suburbs are stated as reasons which cause higher rentals in city centers. Due to this fact the Residential properties in city centers are highly demanded for both purchase and rent.
It is interesting to note that the entire demand in Chennai is pulled by the location features while wholly avoiding the amenities and specifications of the projects. On the other hand Bangalore demands specifications and amenities while avoiding the location of the project.
Unlikely to Chennai real estate market residential property supply is well- distributed in Bangalore where each micro- market like Bellary Road, Whitefield or Hosur Road raise high level competition with others. These areas shared nearly 68% of the residential supply in 2012 so far. This high level competition highly supports innovative ideas to a greater level.
The concept of community living seems stronger in Bangalore than in Chennai. Well-developed social infrastructure existing in various locations of Bangalore can be noted as the reason behind this. Comparatively Chennai has a weaker social infrastructure in many of its areas.
Greater appreciation for community living has so far paved way for so many superior kind township projects in Bangalore. All such township projects are hall marked with high standard amenities and facilities. Chennai is yet to gain such a well- developed township project.
Economy of Chennai is mainly driven by automotive, semi-conductor sectors, manufacturing and telecom. Definitely IT, IT enabled services and other financial services play a key role in its economy. However the residential demand is mainly raised by the IT professionals. Studies prove that nearly 70 % of residential supply is concentrated in the southern and Western parts of the city.
Having no proper social infrastructure these areas are short of good standard schools, shopping malls or multiplexes. There aren’t any notable high standard cuisines or supermarkets in these areas. These factors pull down the demand for residential real estate properties in these areas.
Owing to these facts city -centered real estate residential properties hold higher demands which cause high value appreciation. Increase in rental- rates people to find a suitable option of investment in real estate residential properties.
Chennai city witnesses demand exceeding supply. This situation drags more investors to the real estate which will assure higher returns in terms of capital value as well as rental incomes. So we realize that Chennai real estate is booming slowly.
The higher cost and rentals in the city center causes large level migration to the suburbs where the real estate builders have started new projects already. This will secure a better standard of life in Chennai. Though suburban residential properties will see growth but however, city – oriented residential projects will remain stable for a longer while.