Chennai is one of the key residential markets in India along with Delhi, Mumbai, Calcutta and Bangalore. In the recent past the city has witnessed substantial surge in demand for residential units on the backdrop of development of new IT parks and SEZs along with emergence of a vibrant retail and hospitality sector. Mentioned below is the Strength, Weakness, Opportunities and Threat (SWOT) analysis of the Chennai’s residential reality market.
SWOT analysis of the Chennai residential realty market
Strength of Chennai
- One of the major metropolitan cities in India with 80% of the real estate market comprising of the residential market.
- Undergoing rapid industrialization comprising of financial services, automobile, hardware and software services in the recent past, which is stimulating the residential markets as well. In the last five years over 10 million sqft of IT SEZ space has been supplied.
- Robust retail, logistic and hospitality infrastructure.
- On the backdrop of industrialization, new cosmopolitan class of consumers are emerging thereby also stimulating demand for ambience based apartments, villas and cottages along with regular units.
- Language is a barrier, which turns off numerous buyers and prospective investors other parts of India and abroad.
- Overall market sentiments are still subdued in India and the recent past has not been great for the industry
- Rupee is still weak in comparison to USD.
- In comparison to markets such as Mumbai and New Delhi, Chennai is still touted as one of the emerging market and is far off from being saturated. The future scope is believed to be tremendous. Major developers such as Mantri, Prestige, Sobha, Mahindra and Hiranandani are entering the Chennai market with big residential projects.
- Chennai residential market is believed to be associated with great potential in the coming time as the home prices in major residential areas such as Nungambakkam, Egmore, Mylapore, Alwarpet, Old Mahabalipuram Road (OMR) and T Nagar are consistently increasing.
- A new government change in the center is expected to be followed with better investment sentiments.
- Cut in Repo Rate will stimulate availability of home loans and credit, thereby fueling the market.
- On the backdrop of rise in income and newer job creation, demand for residential units is expected to further increase.
- A comparative weaker Rupee can stimulate higher NRI investment.
- Subdued global economy can affect the investments from the international markets.
- In some of the areas such as GST and OMR there has been a rise in unsold units
- With increased trend of investing with tier 1 and 2 developers, there could be downward pressure on other small time developers.
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