Properties in Chennai suburban areas getting hotter

High rentals and relatively low supply in the city are driving demand for residential space in the suburbs. The budget conscious are investing in properties in the suburban areas such as Ambattur, Kolathur, Thoraipakkam, Pallavaram and East Tambaram.

Both house owners and tenants observe that cost or the rent is not the only determining factor in choosing a locality. N. Sivakumar, who is looking for a tenant for his 3-bedroom-apartment in West Mogappair, says: “I think the question of whether a particular apartment is in the city or in the suburbs is becoming redundant with the rapid expansion of suburbs.”

From merely checking out the rent charged, those seeking accommodation are asking questions like “Is there a school, hospital, petrol bunk, department store in the vicinity,” “How is the bus service to the locality?”…

C. Prasanna, who moved into an apartment on rent in Kolathur a few months ago, says that the complex has facilities such as a play area, gym, swimming pool, medical centre and department store. There are nearly 200 apartments in the complex. “I find Kolathur well connected in terms of bus services. Also, it is not too difficult for me to travel to my workplace,” says the professional employed with a private firm in Gummidipoondi. The monthly rent for a 2-bedroom apartment in Kolathur is in the range of Rs.9,000 – Rs.11,000. In pockets of Tondiarpet, the rent for a 1,000 – 1,200 sq. ft. apartment is around Rs. 8,000.

“For the same rent, the houses I checked out in Anna Nagar were too small, with barely any facility nearby,” Mr. Prasanna adds. Many like him prefer to look for rental options online, avoiding a broker. Many other say it is hard to zero in a house without brokers as even online sites would finally lead to local brokers.

“Rentals in Chennai are mainly driven by the location. Amenities, luxury or the specifications the developer provides come later,” says Sivaramakrishnan A.S., vice-president (Residential Services), Jones Lang LaSalle Property Consultants. The rentals have been stable within the city for last two years and it would continue to be for the next 12-24 months, he says. Rentals have gone up by 15-20 per cent in the high-end luxury apartment and independent bungalows and villas on ECR due to influx of expats. Beach Houses on ECR (3000 sq.ft.) are being leased out at Rs.1.5 lakh a month.

Maduravoyal Residents’ Welfare Federation president B. Varadarajan says a good two bedroom-apartment on one of the main roads would fetch only about Rs.5,000 rent in the locality. “Drainage facilities are poor. Drinking water is a problem and the roads are pathetic,” he says.

Influx of working professionals and new residential projects are not driving rentals in a locality. Social infrastructure is a major drawback why rentals on Rajiv Gandhi Salai, GST Road and in Sriperumbudur have not gone up to the level of expectation, say real estate consultants.

On Rajiv Gandhi Salai, demand for residential space is less compared to supply. A two-bedroom flat ranges from Rs.8,000 to Rs.10,000 in pockets of Perungudi and Thoraipakkam, says a spokesperson of Hanu Reddy Realty. GST seems to be better off than OMR as it is has better infrastructure.

Developers are coming with new ways to assure buyers of a fixed return on the investment. Apartments with smaller units (500 sq. ft. to 700 sq. ft.) are getting sold or leased to cater to transit professionals. “Corporates going for leasing of property and giving it to employees is popular abroad, but they are yet to get pick up in the city,” says N. Nandakumar, Managing Director of Devinarayan Housing & Property Development Pvt. Ltd and secretary of CREDAI Tamil Nadu.

He says one cannot expect a structured return in residential rental, unlike commercial rental. “The normal return in residential rental does not exceed 3 to 4 per cent. A realistic investment is when it offers a long-term appreciation of assets,” Mr. Nanda Kumar adds.

Another aspect gaining more attention in the rental scene is security. Owners now insist on copies of address proof and other important documents from the tenants. “My owner is abroad. But, before I moved in, I scanned copies of my passport and company ID and sent it to him. Many companies ask for receipts from house owner as part of the employee database,” says Shikha Mathew, an IT employee. “Having personal copies of lease and rental documents and other details of the owner, including a few other emergency numbers is equally important,” she adds.


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