Humongous Demand of Affordable housing in Chennai suburbs

News Posted - 2010-04-21

The city is fast expanding, and proof of this is the fact that about 7,000 housing units are developed in Chennai Metropolitan Area (CMA) annually. More than 95% of them are promoted in the suburbs. Still, the city faces a shortage of more than one lakh houses. At least 50% of them are in the affordable housing segment and going by the present pace of development, this shortfall could mount to eight lakh units in the next 15 years as per Chennai Metropolitan Development Authority (CMDA) estimates.

The primary concern of most prospective apartment buyers is that there isn’t enough supply of affordable houses. Whenever a builder promotes budget housing project, it gets sold out fast. Akshaya MD T Chitty Babu says he had to sit in his office till late in the night to accept bookings when he launched a budget housing project on OMR last year. Plaza group, which launched a 176 apartment project at Perumbakkam, off OMR, last month, sold out the entire stock in five hours. JBM Dakshin, which launched a 120-apartment project in the Rs 15-42 lakh price bracket on the GST Road last month, sold the entire lot in two days. Every promoter of budget housing has a similar story to narrate.

“A real estate boom in Chennai is led by a locality. In 1998, it was Velachery. The 2006 boom was led by OMR. Next, it is a race between GST Road and Sriperumbudur,” said Chethan Jhabakh, partner, JBM Dakshin. All the three growing corridors — OMR, GST Road and Sriperumbudur — had specific triggers for their development. “For OMR, it was Tata Consultancy Services setting up shop at Semmancheri, for GST Road, it was Ford starting its factory at Maraimalainagar, and for Sriperumbudur, it was the Hyundai factory at Irungattukottai,” said Ramesh Nair, MD, Jones Lang LaSalle Meghraj, an international realty consultant.

Irrespective of attractions like employment potential in new industries, there has been substantial migration from the city to the suburbs in the last 20 years. CMDA estimates that about 10 lakh move out of the city into suburbs every decade. This is the fallout of conversion of residential space into nonresidential for uses, such as offices, shops and hotels within the core city. It leaves the rest of the residential space unaffordable for middle-income groups, who escape to the suburbs. Lack of social infrastructure is a cause of worry. Though integrated townships, which which provide everything from schools, and healthcare to malls and multiplexes, like Hiranandani Palace Garden at Oragadam, Estancia on GST Road, and DLF on OMR are being developed, there aren’t similar facilities in stand-alone residential projects.

The CMA’s outlying areas have not seen planned development so far. Much of the haphazard growth can be attributed to the failure of the government in preparing and implementing a development plan for the areas. While the CMDA spent close to two decades preparing the second master plan, builders and layout promoters went about developing land parcels in bits and pieces.

Source: Indian Realty News 19/4/10