Industry experts are amazed at the growth curve of the real estate market in 2023, beating the market expectations the industry experienced an 8.41% year-on-year increase in Q3-2024 with Chennai recording the highest growth in the housing price index amongst the top 10 other major metropolitan cities. This growth has generated more expectations  for 2024, and experts predict that the growth trajectory will take off further in the ensuing period owing to a number of factors. 

Here we would explore few of the reasons for this phenomenal growth in the industry – 

Infrastructural growth 

Colliers India, an expert in real estate and investment consultation operating across the globe, specifies that the infrastructure growth and upgrades in the city including the metro expansion and the construction of new flyovers has greatly fueled both the commercial and residential estate across the city especially in areas around CBD, the OMR stretch of Madhya Kailash–Perungudi and MPR. The proposed increase in FSI(Floor space Index) along this stretch has unlocked great potential for real estate development. 

The state has attracted about USD 2,000-3,000 million FDI (Foreign Direct Investment) in the last two fiscal years and the inflow is expected to continue in the next few years propelling the infrastructure growth further. This development has a directly proportional relation with real estate market growth and realty experts are of the opinion that the opportune time for real estate investment to reap good returns is ripe as the city  has numerous futuristic residential projects in pipeline especially along the IT-corridor in the buzzing neighbourhoods of Padur, and Siruseri, offering investors a wide range of opportunities for real estate investment.  .

Commercial realty boosting residential real estate 

During 2023 Chennai recorded the highest-ever office leasing(10.5 mn sq ft of leasing space in the city) and the momentum is expected to continue into 2024 as well. Furthermore,  new office spaces to the extent of 4-5 mn sq ft are in different stages of construction. The strong growth in commercial realty is translating into buzzing activity in the residential segment as well. The favorable demand-supply dynamics has resulted in an increase in the average housing prices in Chennai in 2023 and the trajectory promises a steep hike in the period to come. 

Pause in repo rate hike has boosted homebuyers’ sentiment

The last hike in repo rate (interest rate at which the central bank(RBI) lends money to commercial banks) affected by RBI’s Monetary Policy Committee (MPC) was in February 2023, after which it has not been increased and continues to be steady. Due to this move commercial banks continue to offer home buyers loans at a buyer-friendly rate without hiking the home loan interest rates. The real estate sector has welcomed this move of the apex bank since this has come as a huge relief to the home buyers who were waiting for the interest rate to stabilise. It helps the home buyers avail home loans at low rates and makes home buying affordable, encouraging home ownership. Market experts suggest that the stable repo rate has encouraged aspiring home buyers and the real estate market growth has been influenced by this important factor.

Industrial growth & employment opportunities  

Chennai’s industrial and warehousing leasing activity picked pace during 2023. During this period the city saw a steep increase in industrial and warehousing leasing demand, an 85% YoY rise. Oragadam locality, the major national highways route of NH-48 and NH-16  have emerged as the key micro markets in the city with notable growth in industries and warehouses in the area. 

Apart from this Chennai has grown to be the choicest city for establishing data centers and recorded a 3X growth rate. The city boasts over 110 MW accounting for about 14% of the data centre capacity in the country, this being attributed to the excellent supporting infrastructural growth, and this sector has been predicted to soar higher in the upcoming years.  Digital Realty, the largest global provider of cloud- and carrier-neutral data recently announced the launch of its first data center in the country in Chennai. The growth in industries,  the resultant employment market expansion and new job opportunities creates a steady demand for quality residential spaces in the city, thereby propelling the growth of the residential real estate sector.

Riding on the wave of a holistic growth consisting of industrial development, infrastructure upscaling, and growing job market, Chennai’s realty market promises a positive trend in the years to come. With easy and affordable loans the time is right for aspiring investors to choose the desired property based on their investment bracket. The city offers a wide range of properties right from futuristic gated community apartments in the IT corridor OMR to contemporary flats for sale in Thirumazisai. With safety of investment and excellent scope for property appreciation, real estate investments have risen to be the most dependable and rewarding form of investment, and the market trend is a clear indication of the fact that the time is right to capitalize on the stupendous growth of this sector.