The growth of Chennai Residential Landscape
The residential market of Chennai has witnessed a humongous growth in the past 5 years. Main contributors to this growth are economic stability, infrastructure establishments, and emerging interest in commercial and residential ecosystems.
I. Residential Landscape (pre and post covid)
The residential landscape of Chennai is undergoing a major glow-up. The growth in the past 5 years is contributed by robust infrastructure growth and strategic investments by real estate builders. Another highlighting observation would be the growth of local developers bringing their best ability out in front to give pan India developers a good run in the competition. Key movements in the Chennai property markets are –
- Changing characteristics of type of development: consumer preferences are increasingly shifting from basic apartments to integrated townships, i.e., a mix of commercial and residential development along with recreational spaces within a single premise is in demand. Homebuyers are seeking a holistic living experience along with a strong security system, and gated community. They look out for clubhouses, world-class amenities, and set their standards as per the new urban benchmarks.
- Emergence of integrated housing in other micro markets: The growth web of residential hubs is expanding from current hot spots to emerging locations like Perumbakkam, Thoraipakkam, and Pallikaranai with enhanced connectivity. These locations clubbed with infra development are becoming preferred buying locations due to better affordability.
- Investment potential: the return on investment in emerging hot spots is becoming a talk of the town. The additional infrastructure growth and rising attention the locations are garnering makes the location an investors candy destination.
- Shift towards premium and luxury housing: the demand for luxury housing has seen a steady rise, with HNIs and NRIs investing in premium properties. Elite projects with state-of-the-art amenities like rooftop infinity pools, private gardens, and concierge services are redefining Chennai’s luxury housing segment. Gated communities with strong security systems, wellness centres, and clubhouse facilities are setting new standards.
Let us look at the bifurcation of sales basis the price range of apartments in Chennai:
Figure 1.
Key observations form the above figure:
- The segment of properties between the range 75 lakh to 1 crore witnessed the maximum growth from pre to post covid. With more than 5 times of absorption, this mid-segment rise is due to the growing need of corporate goers shifting to Chennai for work purposes. This segment is also an investors safe zone. With exception rental income, this segment garners most attention.
- The rise of luxury properties is evident. With increasing capacity of HNIs and NRIs, robust infrastructure development, and varied type and quality of development, the demand for such properties is on the rise. Both the price segments – 3 to 5 crores and above 5 crores experienced a large spike of more than 300% and 200%, respectively.
- The affordable segment did not see much movement with only 58% growth. This is due to the location of such projects. This segment is catering to the working class who need to be near convenient connectivity and social infrastructure to keep their businesses running. Being away from convenience makes it difficult for them to get jobs. Government needs to intervene with solid framework and subsidized construction for developers to initiate such projects amidst stronger infrastructure.
- The upper mid-mid segment of price range 1 to 3 crore has witnessed a steep rise with better economic stability and the urge to own a home with the working conditions to hybrid and remote. The changing scenario became a major contributor to the growth of sales between 2020 to 2024.
II. Key Drivers of Growth
The transportation enhancements in Chennai are in full swing. INR 63,246 Crore in metro phase II expansion, INR 1660 Crore in road development and modernized bus terminals. Additionally, the proposed Greenfield Airport at Parandur, Chennai-Bangalore expressway NE7 and TIDEL Park in Pattibiram are expected to add value to economic growth and convenient connectivity.
- Transport & Connectivity –
- The metro rail phase 2 is expected to be operational by end of 2030; the line spans approximately 119 KM with 128 stations across three corridors
- Chennai-Bangalore Industrial Corridor is expected to be operational by 2026 enhancing the regional connectivity
- There are two additional connecting roads enhancing the convenience between key industrial, commercial, and residential hubs. Outer Ring Road (ORR) and Peripheral Ring Road (PRR) spanning 63 KM and 133 KM would contribute to this aim.
- Other ancillary movements like upgradations in suburban rail (AC EMUs), digitization of ticketing systems at Metropolitan Transport Corporation (MTC) are in full swing to enhance commuters’ experiences.
- Industrial and Commercial Emergence –
- Clouding of IT/ITes parks like TIDEL, DLF Cyber City, and SIPCOT IT has made Chennai a migrant hot spot for population working in such entities.
- The industrial landscape with Chennai producing 30% of vehicles and 35% of ancillary components earns Chennai the title of “Detroit of Asia”.
- India’s second largest container port, Chennai Port is undergoing significant expansion accompanied by the development of logistics hubs like Rajiv Gandhi dry port near Sriperumbudur, to boost trade and connectivity.
- Urbanization –
- - The Smart-City initiative by Chennai is expanding to areas like T. Nagar, Perungundi, and Guindy. The mission is to introduce smart mobility, flood management, and e-governance solutions.
- - IT/ITes emergence in OMR-ECR link road is aimed at easing congestion and enhancing connectivity
- - GST Road developments are attracting major corporations, while redevelopment projects such as Central Square and Egmore station are invigorating commercial hubs and improving urban infrastructure.
- Convenience Infrastructure
- Chennai is amping up their civic infrastructure with development of top notch educational and health institutions
- Social life is catalyzed with retail stores and shopping malls with diverse options improving the recreational landscape of the city.
- Ample efforts are directed towards enhancing civic hygiene like water supply and drainage system with the inauguration of a water treatment plant supplying 26.58 million liters per day to areas like Ramapuram.
- Additionally, projects like City of 1000 Tanks aim to address flooding and water scarcity issues across Chennai.
The real estate market in Chennai is looking forward to a pivotal expansion in 2025-26 based on infrastructure development and changing consumer behavior. The city accommodates a variety of potential buyers with affordable, mid-level, and luxury housing options. Despite challenges like soaring prices and regulatory changes, the market's flexibility and new opportunities are promising.
If you are a prospective homeowner or a real estate investor, now is the perfect time to examine Chennai’s real estate trends and invest in one of India's future growth hubs.
*The above data points are taken from REIS, JLL Research.
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