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OMR – residential housing dearth and high demand

The Madhya Kailash-Sholinganallur belt, along the Old Mahabalipuram Road’s Information Technology corridor, is witnessing, along with immense commercial growth, an incredible dearth of residential property. This is pitted against a strong demand for the same. ANIRUDH BELLE attempts to take a closer look

Within the next two years, according to studies conducted by Marg Properties Private Limited, the employment figure along the Old Mahabalipuram Road (OMR) is expected to grow from 1.60 lakh to a little more than three lakhs. The belt between Madhya Kailash and Sholinganallur, along the OMR, being the most concentrated phase of the Information Technology (IT) corridor, is witnessing an obvious over plus of demand for residential property. However, with just about 17 well-defined residential projects, the availability of residential units in the area barely corresponds with the shooting requirement for the same, bringing into picture a marked demand supply disparity.
“Till the beginning of 2005, OMR didn’t really boast of a plausible social infrastructure; there was not much of an incentive for developers to pursue largescale residential projects in the area,” says Sivaramakrishnan A S, Vice President, Residential Services, Jones Lang LaSalle (JLL), “The IT boom, between 2001 and 2007, encouraged IT firms from across the country, and the world, to set up office on this belt.” In addition, the Government of Tamil Nadu, in order to propel the growth of the IT sector in the region, increased the Floor Space Index (FSI) to around 3.75, roughly 1.5 times the prevailing value, for IT-related development projects on certain portions of the belt; the incentive to build commercial property augmented even further.
“From 2002, with IT projects dotting the belt between Madhya Kailash and Sholinganallur, the availability of land in the region started to rapidly deplete, thereby leading to a pronounced scarcity of the same,” he adds. The scarcity of land immediately translated into a visible escalation in its prices.

As a result, developers started facing marked impediments in supplying residential property to the region. “The exorbitant land prices have hiked the cost of pursuing residential projects and this has significantly discouraged most developers from supplying residential property in this belt,” says Ramakrishnan S, Chief Executive Officer, Marg Properties Private Limited. Also, the demand drivers in the belt consist primarily of the many IT and corporate professionals in the region. “Given that the price of land is high in this belt, those who plan to build residential units here are bound to sell it at equally high rates. Since these rates may not correspond with the price bracket that is being primarily demanded in the region, (between 30 and 75 lakhs), supplying adequately large residential units at affordable rates in the region will not yield a profitable outcome for the developer,” says N Ravichandran, Chairman, True Value Homes (TVH), who has a project called Svasthi on the Thoraipakkam region of the belt. Mehul Doshi, Director, Doshi Builders, the initiator of three more residential projects along the belt, adds, “As developers, if at all we manage to build residential units in this region, we have to cut down on the apartment sizes, thereby attempting to make the units slightly affordable to the bulk of our customers.”

The consequences of under-supply of residential property in the region are quite far reaching.

According to Marg Properties, there are just about 4,000 dwelling units in the belt between Madhya Kailash and Sholinganallur as opposed to a little less than a lakh of individuals, and their respective families, demanding residential property in the area. “The excess demand has caused the residential property prices in the belt to follow an approximated spectrum of values,” says Sivaramakrishnan, “The prices near Sholinganallur, which is further away from the city, are between 3,200 per sq ft and 3,500 per sq ft, roughly 4,000 per sq ft near Perungudi and can even go up to a bracket as high as between 9,500 per sq ft and 10,000 per sq ft near Madhya Kailash, which is closer to the city.” For instance, Prapancha, a residential project by Aishwarya Constructions at Thoraipakkam, sells its units at around 4,250 per sq ft.

Since the rampant demand for dwelling units between Madhya Kailash and Sholinganallur cannot be satiated, it has eventually spilled into areas beyond Sholinganallur, where the availability of land is adequate and where property developers receive an over-THE GREAT OMR PROPERTY DIVIDE
whelming incentive to supply residential property. As a result, depending upon the age of the project, the residential property rates in this region span between 2,500 per sq ft and 3,100 per sq ft. “With coastal regulations preventing development towards the extreme right of the Madhya Kailash-Sholinganallur belt due to the presence of the Buckingham Canal, and with low social infrastructure in regions towards its left, many developers have responded to the belt’s residential demands by building property in areas beyond Sholinganallur – like Semmencherry, Navalur and Siruseri,” says Ajit Chordia, Managing Director, Olympia Infrastructures. “The increase in residential development beyond Sholinganallur has really helped in boosting the region’s social infrastructure. Three schools – namely Hiranandani Upscale School, PSBB Millennium School and Bala Vidya Mandir – are planning to establish themselves in the area in the near future. In the realm of social infrastructure, multiplexes like the Riverside Mall, (initiated by Marg, and allied enterprises) for instance, are quickly sprouting in the region, making it a more independent and significant entity on the city’s map.”

Although it is unfortunate that the supply for residential property in the Madhya Kailash-Sholinganallur belt is not adequate to meet the consumer demand in the region, a seemingly satisfactory solution has been arrived at in areas beyond Sholinganallur. Moreover, the demand-supply mismatch has implicitly caused less developed areas on the OMR to drastically develop their infrastructure. “At the rate at which the property market is pacing in OMR, it is only a matter of a few years till it transforms itself into a developed adjunct of the city, just as Velachery did a few years ago,” says Sivaramakrishnan.

 Property Times, Times of India 12 March 2011

Categories: Uncategorized
  1. Arun Dwivedi
    May 28, 2012 at 9:51 am

    Mr Apartment owner, that was a very useful and informative post, thanks for the detailed analysis. anybody will like to share such a post and such a blog with freinds and relatives. but unfortunately there are no ready sharing tools like the facebook or email link on your posts. having those links will be beneficial for you as well as the readers.

    Thanks and regards.

  2. September 27, 2012 at 1:06 pm

    The matter said above is absolutely correct. Actually the OMR housings are in high demand.

  3. November 5, 2012 at 4:59 am

    yes thats quite true that thr is a high in demands for residential homes and directly propprtional is the price you need to pay to purchase that. Thr is low in quality and facility you can say is the features yet the prices keep on increasing.


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