Guide for Chennai Residential Real Estate Investment

Besides being Tamil Nadu’s capital, Chennai is also the largest and most populated city in the state.  It’s the sixth most populated city in India and  the 36^th largest urban area globally. 

It is the country’s second-largest Information Technology (IT) and Business Process Outsourcing (BPO) hub and houses the lion’s share of the nation’s automobile industry.  The presence of these industries attracts job-seeking individuals from all over the country, leading to a massive demand for residential properties. 

According to a report by Knight Frank India, Chennai’s residential property market has recorded a year-on-year growth of 21% in the first half of 2022. During this  period, there was a record sale of 6,951 residential properties, with the rate of new home launches growing by 40%.  

For residential real estate investors, Chennai can be a gold mine for  real estate investment opportunities.  If you are considering purchasing residential property in this city, read this blog.  You will find all  you need to know before investing in this sector. 

Top Reasons to Invest in Chennai Real Estate

Some of the main reasons why you should consider investing in Chennai’s real estate sector are as follows:  

• An Abundance of Job Opportunities

Financial services, software and hardware manufacturing and healthcare, are some of Chennai’s core industries.In addition,  1/3^rd of India’s automobile manufacturing activities are  based in this city, giving it the nickname the ‘Detroit of India’. Top automobile brands like Ford, BMW and Hyundai have set up their manufacturing operations in Chennai, thus bringing billions of dollars  worth of foreign investment. 

Furthermore, this city also accounts for 14% of India’s IT services. All these industries create massive employment opportunities that attract working professionals from all over India. Thus, there is always a need for affordable housing options, giving you a chance to earn passive income from your property. 

• Excellent Transportation Facilities

A significant benefit of purchasing property in Chennai is its excellent transportation facilities. Roadways, railroads, seaports, and airports connect it to India’s main cities.  For moving around inside the city, there are adequate public transportation facilities like buses, autos, taxis, etc. Additionally, Chennai has a system of local trains and metros that make daily commuting seamless. 

• Ample Educational Opportunities

Chennai is also home to some of India’s finest educational institutes. IIT Madras, Anna University, Stanley Medical College and Central Leather Research Institute (CLRI) are some of the names that adorn this list. 

Being such a big education hub, many students relocate to Chennai for educational purposes. So naturally, this creates a massive demand for residential spaces and housing projects. 

Residential Real Estate Investment Opportunities in Chennai

If you wish to invest in Chennai’s residential real estate sector, these are some of the areas which you can consider:

• Urapakkam

It is a rapidly developing suburban area on the Grand Southern Trunk (GST) road between Guduvanchery and Vandalur. This area has apartment buildings, high-rise gated communities and independent houses. Individuals living in this location have easy access to healthcare facilities, educational institutions, departmental stores, entertainment and financial services, all within  arm’s reach.  

In addition, an upcoming metro rail project and bus terminus will increase this area’s connectivity with other parts of Chennai. Thus, Urapakkam should be your target for real estate investments.

• Pallavaram

Pallavaram is one of the finest areas for residential property investments.The Pallavaram-Thoraipakkam Road and the Old Mahabalipuram Road provide excellent access to all of Chennai’s important areas (OMR).  You can find affordable real estate options here in  building floor units, apartments and houses. The average property value in this area is about ₹5,400 per square foot. 

Moreover, commercial centres like the Chennai Trade Centre, Olympia Tech Park and SIDCO Industrial Estate are all located nearby, thereby increasing the rental yield of this area. 

• Choolaimedu

This area is one of Chennai’s most prominent residential and  commercial hubs. Moreover, It is  near educational institutes like Panimalar Polytechnic, Meenakshi Engineering College and Loyola College, which create a massive demand for housing spaces in this area. 

In addition,  many IT parks located nearby, like DLF IT park, Olympia Tech Park and Tidel Park, which  also drive up the demand for residential real estate in Choolaimedu. 

These aspects have increased property prices in this area by around 4% year-over-year. Hence, Choolaimedu can be the ideal location for real estate investments. 

Read Also: Guide for Ahmedabad Residential Real Estate Investment

Things to Consider Before Buying a Residential Property in Chennai

Here are a few things that you must consider before purchasing residential property in Chennai:

• Location and Transportation Facilities

The plot or property location is one of the essential things that you must keep in mind before investing in real estate. In addition, basic amenities like hospitals, schools, markets, banks, etc., should be  conveniently located.  The area should also have adequate transportation facilities to facilitate easy commuting for the residents. In this regard, selecting an area with a nearby train station, metro station, or public bus terminus is an excellent idea. 

• Resale Value

Before purchasing a property,  keep its resale value in mind. Choosing a property in an area with significant future growth potential is a good strategy in this regard. . Furthermore, to get good returns on investment, you should buy real estate in prime locations around the city. Doing so will ensure a better return on investment than  homes in  the interior parts. 

• Access to Basic Amenities

Another thing you must keep in mind while selecting a residential property in Chennai is to check whether the area has proper water and electricity supply. These are two of the most basic amenities, and their uninterrupted supply is a must for living comfortably. 

• Check Authenticity via the RERA portal

RERA is an administrative body formed by the Real Estate (Regulation and Development) Act of 2016, under the Government of India and is present in all states.  It  was done to promote accountability and transparency in the real estate sector and minimise the chances of fraud.  

Thus, before purchasing any property in Chennai, you should verify its authenticity via the RERA portal of Tamil Nadu. This will ensure you invest in a property that pertains to all legal requirements and adheres to the norms of RERA. 

Stamp Duty in Chennai

When buying real estate, stamp duty will be a part of your total expenses. Thus, you need to stay aware of the stamp duty charges applicable in Chennai before purchasing a property. 

Take a look at them in the table below:

Registration Charges in Chennai, Tamil Nadu

To transfer the ownership of a property to your name, you are required to pay a few to the State Government. The registration charges applicable in Chennai are: 

Chennai Residential Real Estate Sector: What’s the Forecast?

As one of India’s top 12 metropolitan cities, the demand for Chennai’s residential properties is growing rapidly.  Moreover, the presence of many big industries, prestigious educational institutions, and world-class infrastructure attracts people from all over the world,  further increasing this city’s real estate value. 

Recently, the rental income sector has been witnessing massive growth  thanks to the increasing number of housing projects  cropping up every month. As per a Knight Frank report, Chennai recorded sales of 6,951 housing units within Q2 of 2022 compared to 5,751 housing units sold during the same period in 2021. 

Furthermore, according to market experts, the value of residential property in Chennai will appreciate manifold.  As a result, residential property sales in Chennai have witnessed an 8% year-on-year increase. 

The main contributors to this growth have been Chennai’s IT and automobile sectors, which provide numerous job opportunities. With a massive influx of working professionals, the primary goal is to provide them with comfortable housing units close to their workplaces.

Hence, investing in Chennai’s residential real sector can be quite lucrative. 

Residential Real Estate vs Other Asset Classes

Here is a comparison of residential real estate with other asset classes:

Residential Real Estate vs Gold

Purchasing real estate in a city like Chennai will give  you an  excellent return on investment. However, gold is also a viable alternative. It provides high liquidity options, which is different from  real estate investments. 

Residential Real Estate vs Stocks & Mutual Funds

Investing in stocks and mutual funds can offer you exceptionally high returns. However, they are prone to high volatility. In this regard, purchasing residential real estate is a safer option as they are less prone to market fluctuations and also provides you with a good return on investment in the long run. 

Residential Real Estate vs Bonds

Both bonds and residential real estate can serve as reliable  passive income sources. But, selling off real estate has numerous hassles, including high transaction costs. Furthermore, leasing property to tenants has significant credit risks. 

On the other hand, bonds have more liquidity and very low credit risk. If you wish to invest in bonds that offer 9-11% fixed returns, check out the list of top-rated bonds on our website and start your investment journey today!

Residential Real Estate vs Commercial Real estate

Getting tenants for residential property is relatively easy compared to commercial real estate because their returns on investment do not fluctuate much with market volatility, and their operating costs are significantly less than their commercial counterparts. 

Discover More: Guide for Chennai Commercial Real Estate Investment

As you know  how residential real estate compares to other asset classes, please  look at how they compare based on factors like returns, liquidity, risks, volatility and ticket prices.

Steps to Invest in Residential Real Estate in Chennai

The steps to invest in residential properties in Chennai are as follows:

Step 1: Fix the amount of money that you want to invest. 

Step 2: Properly research all your selected properties. 

Step 3: Once you shortlist a few properties, consider conducting  a field visit to assess the locations based on infrastructure, connectivity, and proximity to hospitals and educational institutions. 

Step 4: After finalising a property that meets your requirements, prepare the necessary documents like title deed, sale agreement, building plan, etc. 

Step 5: Transfer the property to your name by completing all the stamp duty and registration formalities. 

Step 6: Pay the service charges if you have  assistance from a property broker or consultant. 

Step 7: Lastly, consider purchasing an insurance policy to safeguard your finances in case your property incurs any damage in future. 

Read More: Guide for Kolkata Residential Real Estate Investment

Final Thoughts 

With strong market demand and increasing infrastructure development, Chennai’s residential real estate market has a promising future. So, if you plan to buy residential properties in this city, now may be the best time.  

Frequently Asked Questions (FAQs)