Calibrating the Ticket Size Affordable Housing - Chennai
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Affordable Housing in Chennai Calibrating the ticket size Affordable Housing - Chennai Executive Summary • Chennai’s residential market can be segmented • A sharp rise in property prices in Chennai has into six different micro-markets—premium, led to a steep decline in affordability. central, off-central and the northern, southern • Today, the affordability quotient of end-users in and western suburbs. the annual salary bracket of INR 3–8 lakhs is in • According to the 2001 findings of the Census the range of INR 1,700–,600 per sq ft. of India, the overall population of Chennai • Pragmatic approaches such as the reduction in Metropolitan Area (CMA) grew by 1.93% unit sizes, investment on amenities like libraries per annum between 1991 and 001. The instead of club houses and schools instead population, which is currently at about 7 million, of swimming pools and focus on maximising is likely to touch 1.5 million by 06. efficiency of the carpet area to the built-up area • The percentage of the working population in will help optimise project costs. Chennai was about 35% as per the census • Reserve Bank of India’s (RBI) move to give in 001. We estimate this percentage to have ’priority sector status’ to home loans less than increased to more than 40% in recent times, INR 0 lakhs will help drive demand for homes with the number of migrant working population in Chennai. in Chennai on the rise. • Government initiatives such as speedy project • Most of the housing demand arose from workers approvals can reduce project costs and in the services industry such as IT/ITES. Close maximise internal rate of returns (IRRs). to 48% of the total non-working population in • Cross subsidies in the form of optimal floor Chennai falls under the age bracket of 15–59. space index (FSI) provision or transfer of We foresee a large proportion of this non- development rights (TDRs) will act as growth working population to graduate and commence pills for the affordable housing sector working. This will lead to an increase in the • Value engineering (VE) with optimal construction number of double income no kids (DINK) cost and enhanced quality will make homes families in Chennai and will result in a rise in technologically affordable. housing demand over the same period. • All three stakeholders—developers, regulatory • India’s Rising Disposable Income at CAGR authorities and the government—must come of 17% gets dwarfed when compared to a together and develop a common agenda to whopping rise in residential capital values at make the dream of owning an affordable home 40% CAGR in Chennai in the period 005 to a reality. 008. Affordable Housing - Chennai 3 Introduction Over the years, Chennai City has geographically expanded, and developers have contributed to the growth of the city to a large extent. The residential landscape that was restricted to the Chennai metropolitan limits underwent a rapid expansion phase and now includes suburban areas towards the periphery of the city. The city map in Table 1 details Chennai’s residential market landscape along with its micro-market definitions. Chennai’s residential market can be segmented into six different micro-markets - premium, central, off-central and the northern, southern and western suburbs. All these residential micro-markets have witnessed tremendous demand and growth in the past three years. Since 005, each of these micro-markets has more than doubled in terms of capital values. Table 1: Chennai Residential Market Segmentation – Key Locations by Micro-Market Premium Boat Club, Poes Garden, Chetpet, Nungambakkam Central Abhiramapuram, Adyar, Alwarpet, Anna Nagar, Besant Nagar, Egmore, Kilpauk, Kotturpuram, Mandaveli, MRC Nagar, Mylapore, Nandanam, Poonamallee High Road, RA Puram, Santhome, Shenoy nagar, T Nagar, Off-Central Kodambakkam, Thiruvanmiyur, West Mambalam, KK Nagar, Velachery, Kodambakkam, Rangarajapuram, Ashok Nagar, Vadapalani, Triplicane, Koyembedu, Virugambakkam, Nelson Manickam Road, Purasaivakkam Southern Suburbs Adambakkam, Chrompet, East Coast Road, GST Road, Jamin Pallavaram, Kelambakkam, Madipakkam, Medavakkam, Nanganallur, Navalur, Neelankarai, Old Mahbalipuram Road (OMR), Oragadam, Pallikaranai, Selaiyur, Sholinganallur, Siruseri, Tambaram, Thiruporur, Thoraipakkam, Urapakkam. Western Suburbs Ambattur, Avadi, Chennai Bangalore Highway (NH4), Kattupakkam, Kolapakkam, Korattur, Madhuravoyal, Mogappair, Mugalivakkam, Nolambur, Padi, Porur, Ramapuram, Sriperumbudur, Thirumangalam, Valasaravakkam, Vanagaram Northern Suburbs Ayanavaram, Kolathur, Madhavaram, Perambur, Puzhal, Redhills, Royapuram, Sembium, Thiruvattriyur, Tondiarpet, Villivakkam Source: Real Estate Intelligence Service, Jones Lang LaSalle Meghraj Research The Chennai residential market during 3Q08 • Allowing a 0.25 additional floor space index witnessed the approval of the second master plan (FSI) to private promoters developing housing for Chennai Metropolitan Area (CMA) by the Tamil projects for low-income groups (LIG) and Nadu government. With a focus on Vision 06, economically weaker sections (EWS) by the Chennai Metropolitan Development Authority providing for 10% reservation of land where the (CMDA) has devised a strategy around the second site exceeds 1 ha. master plan to develop the metro as a more • The above-mentioned provision also includes liveable, economically vibrant and environmentally the development of LIG/EWS housing with flat sustainable place. Key salient features of the plan size not exceeding 484 sq ft (45 sqm) each, that have direct impacts on the residential sector either within the site or on a separate site within include the following: a radius of km. C D 4 Affordable Housing - Chennai MA A RO T D AD E A D E HM R T ATTUR HIGH Pozhal H Madhavaram U B T M A O A ROAD S S VA Milk Y Indian CHENNAI H R T Colony A A Organic M R A HIGH S Chemicals H T R MANALI HIGH R Odeonmani PA OAD NH- ROAD Jambuli T E 5 E l Lake TIRU R Pozhal VALLUR T D Northern ROAD S A (Red Hills Lake) I Kadirvedu O IN N R S A G D BA Madhavaram M N A CHENNAI I A O R R Sattangadu ROAD R G YR E N N LA N HIGH I A LO E H O Mottur Selaivayal C A Suburbs KC H GREA ENNOR S D Madhavaram MIL E A D S O Rettai Eri TN A SEL R A O IVAY ORTHER R AL LS SU RO RA I AD IL P L PATTU KK R DH ROAD R A RE IZ N NT Nagar WA MA R RUNK N E R D O A H D 1 IL ROAD RVNagar 1 L S M T A R E D D A O ) TIRUV E H R O Tiruvallur A D A ALLUV T R D A VA AR l Banu Nagar 30 FEET R OA LS D ST AS O REET IL R na a R A A AY Madanankuppam C D N L DH Kalpalaiyam M E N E G R m D New A HI OA ME IN S G HR Washermanpet R T R ROA Oragadam EN E kingha HR R O E c A E AD u T AD MB IG RO N Ponniammanmedu TO B UPPAM D N ANK A A MADAN Odeonmani O D (IN LR IA R RH KAMRAJ R T P E E Lakshmipuram P D O T D A R A R D DIA A O TON O D O A A ROAD RO D R D A K O LS Pudur Mookambika IN HR IL R L ROAD T IG ANA EDH E D Tondiarpet R E N 2 AY 0 F S LINK ROAD 8 V TVS K NEHRU T TIRUVOTTIYU A RED R L Erukkancheri ANAP U MA LA MH Y K HILLS A K Peripheral D K UM A SUR N Sembiyam K A AHAR ROAD O W A A W TTRAI VAADAI S TRE Mahakavi I N ET E IV N K Menambedu JA S R U Kolathur MADH T TH O P Bharathiyar A A P AV A K D M E E N Nagar Korukkupet r R A Venkatapuram VA O Peravallur A Korattu A U S T D E R N T O Tank E R A E T Poompukar AV Korukkupet. Kasimedu HP R M T A D R Nagar E S SOUT PULLAL STR N KS EET H OA A IG TR R U E E Royapuram E M PP HP H T A A N A PP Perambur R U R N O E KS D IK Siruvallur Vyasarpadi MAI A MA A R ROAD TREE LL D A N Balaji O U K Pattaravakkam ROAD R MELP A K T TTI PONNAPP K Washermanpet T Nagar LS E Korattur L A I STREET PA ANCHERI THINAM E PE R RM T DH ILLS S E Peripheral R R IL OA CEMENT Agaram D RAJARA O Old Washermanpet Villivakkam Vyasarpadi RY ROAD K HIGH Y KONNUR HIGH ROAD Perambur Jeeva Washermanpet M D A Perambur AIN ROA Loco Perambur AMBURM S PER ROAD R Carriage A Ambattur DAIRY R N OAD N A D Kathibada SOU A T H A VENUE M O R Royapuram MANIKKA VINAYAKAR KOIL STREET TVS PERA E MBUR G HIG N Industries HR A Ayanvaram OA H D C Sidco Railway OLD X Periyar E Crown Industrial U CONS JAI EE Pulianthope Nagar N TA N BL LR D E E R OA O C Estate H D A OA H E O AV P N P D N AN OWD R E D ST T A ERS E XAVIER L I ONR Ekang RM STREET S Muthialpet E E TIR IL O G T A U D VA LS I A E R Kondithope LLU B R D Puram HIG R IN 2 HR P O S 2 U A O LIAN A A THO B D PE H D VO IGH O AD George Town T CHENNAI Nathamuni NE E E WA K CR ONNU R R EET TIRU VADI HIGH R Basin T OA S VA D ET DEMELL R LLU R RE STRAH Bridge AD Dunlop OA ST AN ROAD T U S OA Ambattur R HIGH ROAD D SA PPA O O S NTHI YA WSR R MB D OA Industrial A D( Padi A D T ROAD O SAM Estate BRID TH IN R E Mannurpet ROAD AT WA Chennai S M AIN G G 1ST ROAD T ROAD C Chennai K R ER OSS ROAD ROAD AN Beach K H Mannady ESI C P OA RAKA E LL DM P Off CentralA EL D AN AIN R ROAD 3R T KLIN R ROAD TA 6TH A VENUE A DM RK NEHRU AM B Chennai XR 2N R Anna PA Beach L KK BRICK U Chennai A Jawahar Lal Sowcarpet MAINS Purasavakkam B A NET Nagar E Institute of AV OAD) Port M L Nehru U AJI D A West Extn N Mental 1ST S ENUE Otteri U R Stadium E BAS ME Health E AV ROAD P H A BOSE R SOUTHERN AV AV CHANDR ENUE D A T J AHAR Anna Nagar 3R S Abirami A NE AMBATTUR E ST ROAD 1 W T Anna D MUTHAIAH H Central OA WA R Nagar Attipattu JA HR U PURASAVA HIG KKAM STREET V East Vepery D A A V L O ADI Jayalalitha L R 2ND A VENUE I U M ROAD MINT V A I Nagar A D AD RO SW R N A E ROA Chennai D KILPAUK GARD A O R HU R ROAD O O Madras 4TH AVENUE Central GH ROAD Fort R A D Kilpauk R ALA SALA G MUT D A D Medical M PPA ROAD A Shenoy SALA Chennai I P Sundaram ENUE EVR I Mission P ARCH AR Fort U Nagar Chennai Medical AV PERIY TTUR K I Sangam Egmore D Foundation Kuvam Nolambur B PA ANNA Tiru Vi Ka Park Town Chennai H FLA RAJAJ AMBA Park Ega A M R D AT Park A Park G A River RO Fort R DR HI Town S IN T A NAI W ROAD) R A St.