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For detailed report

CommonFloor Report
Top rental destinations in Chennai
1
Introduction:
Chennai has become an attractive destination for real estate investment with demand for residential units increasing
on a daily basis. Employment opportunities and better standard of living are the key reasons for mass migration of
people from different parts of Tamil Nadu and other states. The past decade has seen over 2 lakh people migrating to
Tamil Nadu from Karnataka and Kerala alone, most of them settling in Chennai (Urban India, 2011: Evidence).
Housing over 8 million people, Chennai residential realty demand has been steadily increasing every year (Census,
2011). There is high rental demand especially in southern Chennai. This is mainly due to the concentration of IT
industries in the area. People seeking jobs in these industries tend to settle in rented residential units mostly for quick
settlement and easy access. With the urban sprawl moving towards the south and more projects coming in every
quarter to satisfy the demand, people consider investing in these projects to rent them for quick returns.
This can also be validated by analyzing CommonFloor Listing data. The most popular rental localities are mostly located
in the south having most number of listings. The following are the most popular localities in the order of most number
of listings whose rental trends will be analyzed in this report.
1. Tambaram
2. Velachery
3. Madipakkam
4. Medavakkam
5. OMR
6. Chromepet
7. Porur
8. Anna Nagar.
All these localities comprise more than 30 per cent of
the market for rental listings with Tambaram,
Medavakkam and Velachery leading the list.
Interestingly, these localities are also located in the
south of the city proving the point that demand is
skewed towards the south of the city.
Figure 1 Map showing the rental destinations
Tambaram
Located in southern Chennai, Tambaram embarked its presence since early 17th century as a small village in the
outskirts of the city. It was a camp for English East India Company. Today with a population of around 174,787 (Census,
2011) the locality is one of the largest real estate micro market. In late 1930s, the Madras Christian College was moved
to this locality. This initiated the development of the modern Tambaram and pace of development increased when
the Beach to Tambaram suburban line became functional.
The GST road that passes through the heart of the locality helps the movement of traffic in and out of the area. The
micromarket has two other arterial roads in the west namely the Chennai Bypass and Gandhi road that assist in traffic
movements. These roads connect the locality with other parts of the city and helps in intercity connectivity as well. The
locality is 12 km away from the Meenambakkam international airport. Tambaram also has its own railway station,
which is part of both suburban railway and a junction in South Indian Railway line.
Various factors are leading to an increased rental demand in this micro market. The rates in Tambaram are affordable
for the working class population. Since it is located close to industries, many people tend to rent a flat here. The micro
market is also well connected by road and trains which offers accessibility to all parts of the city. Additionally,
Tambaram is crowded with several educational institutions. For easy access and daily commutation to these
institutions, both parents and students seek houses in this locality.
2
Figure 2 shows BHK-wise availability for rent during August 2014. It can be seen that 2BHK homes have maximum
availability for rent and these mostly fall under the
affordable category.
In Fig. 3 we can notice that one can fetch a 2BHK
apartment in the price range of Rs 5,000 - 20,000.
Interestingly, there are very few 2 BHK units in the luxury
segment. Maximu availability is in the affordable or midsegments. The 3BHK apartments are available in the price
range of Rs 7,000 - 25,000.
Figure 2: Chart showing BHK availability
Fig. 4 indicates the sizes of different segments. For
instance, 2BHKs are available in the size range of 731 - 1240
sq. ft. and 3BHKs are available in the size 850 - 1440 sq. ft.
Source: CF Listing Data
Figure 4 Chart showing the sizes of different residential units
Figure 3 Chart showing the prices of different residential units
Source: Real insights by CommonFloor.com
Fig. 5 shows the rental yield of different properties in
the locality. Rental yield is the percentage of return
that an individual acquires when he invests in an
asset. The rental yields of different type of properties
are shown in the graph. It shows that the rental yield
for 2BHK with considerable demand is 3.2 per cent
while for 3BHK it is 3.7 per cent. The graph clearly
shows that investing in properties so as to rent them
out is a profitable investment in Tambaram. Hence,
the demand for investing in rental properties are
rising steadily. The most profitable investment in
Tambaram is 1BHK house with nearly 6 per cent
rental yield.
Figure 5 Chart showing the rental yield for different properties
3
Quick Facts
1. Good rental yield.
2. Located close to IT industries in the OMR and better accessibility.
3. Affordable prices and well-developed infrastructure and connectivity.
4. Close to airport and other major localities for easy access.
5. Offers rental options with highest rental yield in the city.
6. Has its own suburban railway stations with appropriate feeder services.
Velachery
7. Stable
with fewer
Velachery
is onemarket
of the coveted
realfluctuations.
estate hotspot where anyone would like to own a property or build his or her
livelihood. This micro market occupies a prominent position in proximity to OMR. Velachery was mostly covered by
farmlands until early 1990s. But the locality started to get its shape after the widening of the Chennai Bypass road
during 2005. The development of this locality is mainly due to the IT industries around it and near the OMR.
Velachery main road connects the locality to other arterial roads and helps in commutation of individuals. The
international airport is 8.5 km away. The locality has a railway station, which is a part of the suburban railway network.
The IT companies along the OMR corridor mainly drive the demand for Velachery. The locality has well developed
infrastructure and good connectivity, which keeps the
demand high. Velachery has higher rental price when
compared to the surrounding localities due to the amenities
that the apartments provide.
Fig. 6 shows the BHK availability for rent. The most preferred
property type here includes 2BHK apartments. This is due to
the presence of huge amount of working class people who
prefer 2BHK apartments which suits their budget and
maintenance cost bearing. There are fair amount of 3BHKs
available for rent. While 2BHK are about 57 per cent a half of
the total listings, 3BHK are near one- third the amount.
Figure 6 Chart showing BHK availability.
The huge peaks and the small columns in Fig. 7 suggest that Velachery has availability of both luxury and
affordable type units for rent. 2BHKs are available in the range of Rs 7,500 - 38,000 ranging between
affordable to upper middle class type apartments. Same is the case for 3BHK apartments and their prices
are in the range of Rs 9,800 - 35,000.
4
Figure 7: Chart showing rental prices and sizes of different residential units.
The rental yield in this micro market is not high
enough to match the demand and the hype the
locality witnesses. This is mainly because many
opt to buy properties here and settle in. As for
rent, they opt for cheaper surrounding localities
where the rental prices are low and affordable.
1 BHK houses give the highest return with 3.66
per cent rental yield, mostly occupied by the
affluent class. Whereas 2BHK and 3BHK yield
2.78 per cent and 2.31 per cent respectively.
Figure 8 Chart showing rental yield.
Quick Facts
1. High rental yield for 1 BHK apartment.
2. Locality consists of many luxurious and high-end projects.
3. Higher number of 3BHK apartments compared to other localities.
4. Rental prices are high compared to other localities in the surrounding area.
Madipakkam
Madipakkam, another important suburb located in South Chennai has been attracting a fair rental demand
in the last few years. Located in the centre of other important localities like Velachery, Medavakkam,
Pallikaranai, Pallavaram and Nanganallur, the demand for rental real estate is on a steep climb.
The Velachery main road is the most important artery for traffic commutation of this micro market. The
OMR and GST road are also very close by, which gives access to the IT industries in the south and connects
the micro market to other localities in the Central and North Chennai. The locality is 6 km away from the
International airport.
5
Madipakkam is one of the most desired locality for
people with limited budget. Most of the residential units
here are rented out at affordable rates. Being close to the
IT industry corridor in OMR the locality attracts huge
demand from those companies who work in lower
hierarchies. Add to this, the locality also has well
developed infrastructure and well established
connectivity.
Fig. 9 shows the BHK availability in the locality. As
expected, there are multiple units available for rent in
2BHK segment since demand is exceedingly high. While
1BHK and 3BHK are found in almost equal proportions.
Figure 9 Chart showing BHK availability.
This is mostly due to cheap 2BHK units available for
investment that can be rented out.
Figure 10 Charts showing rental prices and sizes of BHKs
Fig. 10 shows the rental price for different types of
properties. Most properties listed are under
affordable category for workers in IT industry. One
can fetch a 2BHK in Madipakkam for a mere Rs
5,000 rent per month. 2BHK price ranges are Rs
5,000 - 18,000 while 3BHK price ranges are Rs
7,500 - 25,000 and their sizes are of range 639 1314 sq. ft. and 1000 - 1414 sq. ft. respectively.
2BHK rental yields around 2.74 per cent and 3BHK
yields nearly same amount of about 2.24%. But the
1BHK yields are high up to 3.1%.
Figure 11 Rental yield.
Source: Real insights by CommonFloor.com.
Quick Facts
1. Affordable rental prices.
2. Rental yields are low compared to high yielding localities like Velachery but still good
enough.
3. Strategically located in the middle of popular southern suburbs.
4. Good connectivity and well-developed infrastructure.
6
Medavakkam
Medavakkam is a residential area in South Chennai, located close to the OMR road and other popular
localities like Velachery, Madipakkam, Sholinganallur and Tambaram. This locality has flashed its name in
several reports as the fastest growing suburb in India in terms of real estate investments and returns.
Connected by GST road and OMR road, the locality has access to most of IT industries in the south. The
demand here is driven mainly from the IT professionals who look for affordable housing with easy access to
their work places. The locality is 14 km approximately from the International airport and the Tambaram
station is nearest railway station.
The demand for this suburb has been ascending steadily and prices of houses are expected to rise above
110 per cent by 2017 (Knight Frank housing
report, 2012). The rental prices in Medavakkam
can be grouped as affordable and middle income
group, which are mostly leased by the working
class group of lower hierarchy.
The availability of residential units according to
different types of BHK segmentation is shown in
Fig. 12. The 2BHK units constitute a major part
followed by 3BHK. This is because the apartment
prices are cheap and end-users tend to reside in
3BHKs while investors buy 2BHK so as to rent them
out.
Figure 12 Charts showing BHK availability.
Most apartments available here in Fig. 13 can be classified as affordable due to cheap rental prices.
However, demand is high here owing to its proximity to OMR. One can get a 2BHK for rent at merely Rs
6,000 per month. There are multiple options of 2BHK units available in the locality. Few luxury properties
are also available. Similarly, for 3BHKs the price is in the range of Rs 8,000 - 50,000 per month. The sizes
of 2 and 3 BHK are 550 - 1280 sq. ft. and 1084 - 1700 sq. ft. respectively.
Figure 13 Charts showing rental prices and sizes of BHKs. Source: Real insights by CommonFloor.com
The rental yield in Medavakkam is high compared to the other localities we have seen until now. Most
apartments have more than 3 per cent yield showing that this locality is a profitable micro market for
investment.
7
Fig. 14 shows different types of rental yield for
Medavakkam locality. The highest yield for
apartments is for 2BHK units, which is also the
most in demand for rent. It gives 3.46 per cent
yield. The 3BHK apartments command a fair
yield of 2.55 per cent and 1 BHK a comfortable
3.03 per cent. This micro market is one where
an investor can invest for a steady profitable
income.
Figure 14 Chart showing rental yield.
Quick Facts
1. Affordable rental rates.
2. Stable market.
3. Well established connectivity and infrastructural development.
4. 2BHKs are the dominant type of apartments.
OMR
Old Mahabalipuram road or Old Mamallapuram road extends from Madhya Kailash temple in Adyar in the
north to Mahabalipuram in the south. The stretch is also known as Rajiv Gandhi Salai or the IT corridor of
Chennai. The road dots many IT companies and is on the state highway.
The stretch not only attracts demand for itself but also for the surrounding micro markets. One of the main
reasons why Chennai’s urban sprawl is edging towards the south is the emergence of the IT corridor, the
OMR. The stretch creates huge residential realty
demand in South Chennai.
The locality comprises both affordable and luxury
houses for rent. This is mainly due to luxury, comfort
and accessibility the locality offers. The micro market is
also crowded with hotels, supermarkets and various
types of commercial outlets.
Figure 15 shows the distribution of different BHK
segments available.
Figure 15: Chart showing BHK availability.
.
-----------------------------------------------------------------x-x-x-x-x-----------------------------------------------------------------8
Figure 17 Chart showing different sizes
Figure 16 Chart showing rental prices
. Source: Real insights by CommonFloor.com
There are about 62 per cent 2 BHK properties while 26 per cent are 3 BHKs. There are a few 1BHKs and an
equal number of 4BHK as well.
Figure 16 indicates that one can rent a 2BHK from a starting price of mere Rs 7,500 and the prices go up to
Rs 27,000 per month. 3BHKs are much more costly. 3BHKs prices go up to a lakh rent per month. Figure 16
shows that the sizes of these apartments vary between 780 - 1300 sq. ft. and 970 - 2000 sq. ft. for 2BHK and
3BHK respectively.
Figure 17 Chart showing rental yield
The rental yield in OMR, as seen in Figure 17, is over 3 per
cent in most of the BHK segments. The luxury 4BHK
apartments give the maximum yield of about 5.92 per
cent. The other type of apartments i.e. 1BHK, 2BHK, 3BHK
give 3.87, 3.5, and 3.3 per cent respectively. This clearly
shows that it is a profitable market for rental
investments.
Quick Facts
1. EXcellent rental yield.
2. Preferred mostly for luxurious type unit.
3. Heavy demand due to the concentration of IT industries.
4. Good connectivity and infrastructure.
5. Numerous upcoming projects.
9
Chromepet
Chromepet is one of the important southern suburb of Chennai in proximity to Tambaram. Chromepet’s
history dates back to second century when Thondaimans of Early Chola Kingdom ruled the land. It was then
known as Thondaimandalam. The locality got its modern name after the establishment of Chrome leathers
industry. The development of the locality was initiated in early 1950s when the land around the leather
factory was auctioned.
The GST road passes through the heart of the locality. This artery is the main source of traffic flow in and
out of the locality. The locality has its own railway station, which is a part of the suburban railway network.
The locality is 4 km away from the Chennai international airport.
Lower hierarchy working class group majorly occupies Chromepet. The demand for the locality comes
through the affordable prices and the well-developed infrastructure, which the locality provided. The banks
of the GST road along the locality are clustered with commercial units and the moving internally the locality
is crowded residential units.
The location of Chromepet favours the working
class population an easy access to their
workplaces and hence most of the demand is for
the 2BHK apartments, which is affordable for
them. The chart below shows the BHK
availability in Chromepet.
The listing data shows that the availability of
1BHK and 3BHK are nearly same proportion
while 2BHKs there are 67% 2BHKs are available
Figure 18: Chart showing BHK availability.
One can fetch a 2BHK in the range of Rs 6,500
- 23,000 per month from the various options
available, affordable to upper mid income
group. 3BHKs are bit pricey and are in the
range of Rs 10,000 - 30,000 per month. These
segments have the sizes of 590 - 1160 sq. ft.
and 1050 - 1850 sq. ft. The different types of
properties, their rents and the sizes are shown
in the consecutive charts.
Figure 19 Rental price for different properties.
10
Figure 21 Rental yield.
Figure 20 Sizes of different properties.
The rental yield for the locality is high. 1BHK and 2BHK yield nearly 3% and other yields are average
yields. 1BHK yield is 3.45 per cent while 2BHK is 2.93 per cent. Other types give a fair yield.
Quick Facts
1. High rental yield.
2. Good neighbourhood with every amenities with a km radius.
3. Well-developed locality with good infrastructure.
4. Good connectivity with frequent buses.
Porur
Porur, by name, means land of wars. The land dates back to Pallava period who used it as their
battlegrounds. The modern development to the current state of the city happened during the early 1960s
when the locality got crowded with chemical industries.
Three important roads pass through the locality. The Chennai Bypass road, Poonamalle highroad and Arcot
road, connects the locality to other micro markets in the city. These roads serve as medium for the in and
out of traffic into the locality.
The demand for the locality is from the workers of the
industries around the locality. The property types range
from affordable, mid income to luxury type apartments.
The demand for all these properties are robust. The
following chart shows the BHK availability in the
locality.
The rental costs vary in this micro market from
affordable to high priced luxury. The demand for the
micro market is due to the infrastructural development
and the proximity of the locality to the centre of the
city. Figure 23 suggests that one can fetch a 2BHK in
the price range of Rs 6,500 - 20,000. 3BHK prices are in
Figure 22 BHK availability.
the range of Rs 11,000 - 55,000 while 4BHKs and
Source: Real insights by CommonFloor.com 5BHKs are also available and goes as high up to a lakh
per month. The sizes of 2BHK and 3BHK on average are 916 and 1516 sq. ft. respectively. Figure 23 and 24
shows the sizes and rental prices of different properties.
11
The crests and troughs in Figure 23 shows that there
are a number of properties available at varied price
range.
As per Figure 25, the properties in this locality also
give a fair amount yield in returns. The apartment’s
yields are over 3 per cent while the others are
considerably low. This also suggests that in Porur,
demand is shifted more towards renting apartments
than houses and villas.
The recent Porur tragedy, the collapse of newly
Source: Real insights by CommonFloor.com. constructed apartments that killed many still strives
in the hearts of the people around there. This has
affected the market sentiments of renting and buying flats in Porur. The market is slacking at present but
expected to pick back its pace as time goes by.
Figure 23 Rental price for different type of properties.
Figure 24 Sizes of different types of properties.
Figure 25 Rental yield. Source: Real insights by CommonFloor.com.
Quick Facts
1. Located close to the centre of the city.
2. Classy apartments with luxurious amenities.
3. Good infrastructure and connectivity.
Anna Nagar
Located in the centre of the city, this micro market is one of the most posh micro markets of Chennai. The
locality is well planned and well established. Formerly known as Naduvankarai, this locality’s name was
then renamed Anna Nagar, after the former Chief Minister of Tamil Nadu, Anna Durai.
Poonamalle high road, New Avadi road and Jawaharlal Nehru road are the three arteries that bound the
micro market and are responsible for the traffic movements. The suburban railway station in Villivakkam is
the nearest station for MRTS access. The locality by itself is getting its own monorail station in the upcoming
CMRL project.
12
Similar to other localities we mentioned above, there is ample supply of 2BHKs available for rent in this
micro market. However, the number of 3BHK properties available for rent is proportionately higher than
other localities. Most people renting out houses or apartments here belong to the high-end income groups.
This is the main reason for the change of availability trend. Figure 26 shows the different proportions.
As per Figure 26, the rental prices start from
affordable range and go up to luxury for the
affluent class. One can fetch a 2BHK for a mere Rs
7,500 here. However, the prices go high up to Rs
35,000. 3BHKs are in the range of Rs 10,000 - Rs
50,000. These apartments have an average size of
1000 sq. ft. and 1700 sq. ft. for 2BHK and 3BHK
respectively.
Figure 27 shows the size and rental price variation
for different type of properties.
Figure 26 BHK availability.
Figure 27 Sizes and rental prizes of different properties. Source: Real insights by CommonFloor.com.
The rental yield in the market is low compared to other
localities analysed above. This is mainly due to
exorbitant prices of properties, which cannot be
charged with respective proportional rent practically.
Figure 28 shows the rental yield for different
properties.
Figure 28 Rental yield
13
Quick Facts
1. Located in the centre of the city.
2. Luxurious apartments are the most commonly available property type.
3. Well planned and well organised micro market.
Comparative analysis of the local
Figure 29 Chart showing 2BHK availability in all top
rental destinations
Figure 30 Chart showing 3BHK availability in all top rental
destinations
The availability of 2BHKs for rent is more evenly distributed in all the localities as compared to the 3BHK
localities. Most number of 2BHKs are available in Medavakkam and Velachery. The main key reason for this
is the affordable property values, proximity to the IT corridor and low liveability costs. It can also be noticed
that in OMR the number of 3BHKs are drastically high as compared to 2BHK properties. 2BHKs are the most
preferred type rental residential unit in any city.
The average rental yield for different types of apartments in
various micro markets are shown in the figure 31.
The rental yield in OMR is highest masking other rental
yields in the south. The demand for the micro markets are
high and the owners tend to rent them in lower rates, which
results in lower rental yield in the other micro markets.
Porur and Anna Nagar are comparatively high. Thus, rental
prices are vary in different localities not only based on the
demand for the locality but also the type of people, location
and amenities.
Figure 31 Rental yield of top rental destinations
Conclusion
Rental demand is on an upswing in Chennai, especially in the south. The demand exists in all types of
residential units including houses, apartments, villas and builder floors with different sizes from 1BHK to
4BHK and varying ticket sizes. Even though most of the focus is towards affordable rentals, there is huge
demand for luxury apartments too from the high-end part of the society. With urban sprawl spreading
towards the south and demand increasing robustly, the demand for rental accommodation is expected to
rise manifold in the future.
14
CommonFloor.com
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---------------------------------------------------------------------------------------------------------------------------------Authors
Antone Aravind T
Research Associate
[email protected]
Bangalore
Vishal Nagula
Research Analyst
[email protected]
Bangalore
Meha Singla
Sr Manager -Domain Research
[email protected]
Bangalore
----------------------------------------------------------------------------------------------------------------------------------
Disclaimer: The document above is written by the Domain Research Team at Commonfloor.com, India’s fastest growing
real estate website known for its unbiased prognosis in Real Estate sector.
The information provided in this report is based on CommonFloor data which is collected from various publicly known
sources viz, websites, documents and maps.
It should be considered as a guideline and not in absolute certainty. While care has been taken for groundwork, no
responsibility is accepted for the accuracy of whole or any part. This information is confidential and the sole property
of CommonFloor.com. It should not be reproduced in any form, in part or whole, without prior permission.
15

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