Thaiyur, Chennai: A fresh infusion of 'feel-good' factor

In Chennai, prices of residential property remained stable and realistic in 2012, helping maintain the general market momentum. As the Reserve Bank of India has already embarked on softening interest rates, demand is set to rise in this price-conscious city. This would soon start exerting upward pressure on pricing.

Considering a fresh infusion of the 'feel-good' factor, this year would be an ideal time to invest in residential property in Chennai. Let's examine the city's most promising investment locations and consider what makes Chennai's real estate market tick.

Though Chennai's economy also rides on telecom, manufacturing and other allied sectors, residential real estate is primarily driven by information technology (IT), as salary levels, and therefore affordability, are higher in this sector. As a result, Old Mahabalipuram Road has performed better in terms of residential sales, compared to areas such as Grand Southern Trunk Road, Oragadom and Sriperumbudur - Chennai's other growth corridors. Old Mahabalipuram Road is a fairly large stretch and is divided into different segments - Madhya Kailash, Taramani, Perungudi, Thoraipakkam, Sholinganallur, Navalur, Padur, Kelambakkam and Thaiyur.

Of these, Madhya Kailash, closest to the city, shows the most impressive pricing trends - Rs 10,500-12,000 a sq ft. This is, more or less, as unaffordable a price range as areas within the city.

At Perungudi, prices stand at Rs 5,500-6,000 a sq ft. In this area, residential prices rise in line with flat sizes, as Perungudi caters to the upper middle class. When the social infrastructure improves in this area, it would see even better capital appreciation.

Further from the city, Thoraipakkam has smaller flats and lower price points. This has led to higher demand here than in Perungudi. This makes Thoraipakkam a suitable destination for retail investors with lower budgets.

Thaiyur is one of the hottest destinations in the Old Mahabalipuram Road region. Here, the price points stand at Rs 2,800-3,000 a sq ft, ideal for the largest cross-section of Chennai's IT work force. Because of the affordability factor, the demand here is huge. In the coming years, Thaiyur would see increasing market traction because as a market, Chennai has always thrived on this particular price range.

The writer is Managing Director - Chennai, Jones Lang LaSalle India