Chennai residential market is likely to reach pre-Covid sales level in 2024

The Chennai residential market has seen a growth of 5 per cent in home sales at 14,920 units in 2023. However, the market has yet to surpass its pre-Covid volumes.

2023 saw a good recovery in home sales and with the continued momentum, sales are expected to be back at their pre-Covid levels in the coming few quarters. During H2 2023, sales increased by 6 per cent to 7,770 units, according to a report by Knight Frank India and CREDAI (Confederation of Real Estate Developers’ Associations of India), Tamil Nadu.

During the last calendar year, realty players launched 16,272 units, a 6 per cent increase over 2022 numbers. Most of the launches were concentrated in the southern and western micro-markets representing 61 per cent and 28 per cent of the total launches respectively. In terms of ticket size, launches in the affordable and mid categories increased by 22 per cent and 10 per cent y-o-y respectively, while there was a 17 per cent decline in launches in the luxury segment.

Surge in demand

Chennai’s booming manufacturing, hospitality and logistics sectors are attracting a large workforce, leading to an increased demand for affordable housing, said the report.

In 2023, the mid-segment properties, priced between ₹50 lakh and ₹1 crore remained predominant, accounting for 40 per cent of sales. With a 28 per cent increase over 2022 volumes, the affordable or less than ₹50 lakh segment accounted for 37 per cent of sales.

“There was strong traction among first-time buyers and budget-conscious individuals in Chennai,” it said.

Sales in the Chennai residential market were predominantly concentrated in the south and west micro-markets. Notably, locations along the Old Mahabalipuram Road (OMR) and Grand Southern Trunk (GST) Road in the south micro-market and areas such as Porur, Valasaravakkam and Poonamalle in the west, accounted for the second highest share of homebuyers’ interests.

Houses prices above ₹1 crore in the luxury segment constituted 23 per cent of the total sales during 2023 and witnessed a 2 per cent y-o-y reduction during the year. It is gathered that a niche group of buyers in Chennai are seeking larger spaces and enhanced amenities.

Prominent central locations in Chennai, including Anna Nagar, T Nagar and Adyar, remain premium real estate areas. Since the pandemic, the market has been in recovery mode, with the South and West Zones experiencing price appreciation. In 2023, there has been a steady 4 per cent y-o-y increase in property prices in Chennai.