Apartments are the new bungalows of Chennai. As the city’s diverse industrial base and economy add to the surplus income, there is an increasing demand for high-end and luxury housing within the city.
But with space at a premium, the rich and affluent are settling for spacious apartments, say developers. Most leading developers have a pipeline of projects offering houses in the Rs 2-crore to over Rs 6-crore range. And that is just the start.
Wait for a couple of months and you will see even more premium houses being launched, they say.
This is not just a passing phase, but there is a clear market segment where the demand is expected to continuously outstrip supply. Housing shortage, obviously, is not a problem just for middle and lower income!
A few years back a project with half-a-dozen apartments in this price segment made news, but now large scale projects in this price bracket is the norm and the affluent are lining up.
Whether it is Prince Foundations, TVH, Appaswamy Real Estates, or DLF, they all say there is a keen demand for high-end homes in Chennai. It is another matter that soaring land prices have made large premium projects a necessity. The land cost accounts for over 70 per cent of the project cost in prime residential areas, they say.
And all these developers have finalised plans for even more premium products in the coming months.
What is driving the demand? And who are buying?
Buyers
People who have travelled, experienced quality lifestyles and want to replicate that at home. “It is as simple as that,” says Mr Ravi Appaswamy of Appaswamy Real Estates.
Value addition for comfort and a location in the heart of the city are vital in this segment, say developers. People are willing to pay for the products and services; what they cannot afford is the time, they say. They have their businesses or work in the city and do not want a long commute or the burden of daily chores.
In Kotturpuram, an affluent residential area, where ultra luxury developments are in the offing, Appaswamy Real Estates has launched a 64-apartment project with units priced at Rs 2.5 crore to Rs 6.5 crore and villa-style apartments for about Rs 8 crore. The project has not been formally launched but buyers have booked 20 houses here, he says.
The buyers are a range of professionals, businessmen and NRIs. DLF, the Delhi-based developer, created a flutter in the Chennai market a couple of years back when it launched Commanders Court in Egmore. The project with 356 apartments priced between Rs 1.6 crore and over Rs 5 crore was launched at Rs 10,500 a sq.ft, and prices appreciated by about 70 per cent to Rs 17,000-18,000 before the project was sold out.
“Purchasing power of the people in Chennai is more than what it is perceived to be,” remarks Mr K. K. Raman of DLF. The diverse industrial base in Chennai is attracting people to the city. The economic growth here is driving surplus and disposable income.
There is a huge sustainable market in the city, he says.
Mr Ashwin Kamdar of Prince Foundations which recently launched Prince Courtyard with 155 apartments priced between Rs 3 crore and Rs 5.5 crore, says sales is not a concern. Demand will far outstrip supply.
Set on a two-acre plot, where originally, the iconic Dasaprakash Hotel stood, on the Poonamallee High Road, the project has attracted businessmen, film stars, doctors, lawyers and, yes, developers.
An untapped market
A senior executive in TVH, which is developing the Quadrant, a 100-apartment tower with houses priced between Rs 3.5 crore and Rs 6 crore, says “Chennai is an untapped market” in this segment. Bookings are on at a brisk pace, and there is a waiting list for apartments in this project launched just a few days back.
The challenge in this luxury segment is not demand but supply, say developers. How many acre-sized parcel of land are available in the city, they ask. Mr Raman pointed out Chennai has traditionally developed as a ‘small site’ city. Layouts and plots of land were added on in stages as the city grew. Options are limited for such large scale projects. So supply will always be an issue rather than demand.
Ask Mr Kamdar, the ideal locations for a project of this size, “First you tell me where is the land?” he asks.
North Chennai is congested. There are no buyers for apartments priced higher than Rs 50 lakh. It is only in South and Central Chennai there is potential for such projects. But large sized land parcels are few and far between.
Such apartments have become a necessity as there is no place to spread out in the city. Families with more than one child cannot build more bungalows but need that space and lifestyle. So apartments are the only option.
That is another reason these projects offer a wide range of apartments from 2,000 sq.ft to more than 4,000 sq.ft to fit the pocket of the affluent on a budget, said a developer.
rbalaji@thehindu.co.in
(This article was published in the Business Line print edition dated July 14, 2012)
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