For Chennai realty, South grows while North wanes

It is ‘South-Side Ho’ as far as Chennai real estate is concerned. Unprecedented one may call it, but the city is growing at a phenomenal pace, albeit unevenly. There is a clear north-south divide as southern localities have been growing at a faster rate with newer locations frequenting on the realty map almost every month, while north city has been left to fend for itself.

Shocking it may be, but some of the localities in North such as Madhavaram, Puzal, Tiruvottiur, Avadi, Manali or Meenjur, which are within Chennai Corporation limits, do not even have basic facilities like tar roads, sewage and drinking water connection and streetlights, leave alone other amenities like parks and recreational facilities that their southern counterparts are endowed with.

The alleged step-motherly treatment to northern localities has indeed affected the real estate growth and investors and realtors seldom look for investing or launching new projects there, due to locational disadvantages coupled with poor infrastructure and lukewarm demand. 

 Static growth

According to a recent report, almost 90 per cent of the projects are presently concentrated on South and North Chennai localities, with more than 60 per cent of them are under various stages of development in peripheral areas.

“I bought a flat in Thiruvottiur four years back for Rs 15 lakh and when I tried to book profit, I was quoted somewhere around Rs 17 lakh citing ‘not much growth’ and lack of basic facilities. Had I invested this money in a property at any of the southern Chennai localities somewhere on GST Road, OMR, or even in Sriperumbudur, which is one the fast growing areas in Western corridor, I could have got atleast 40-50 per cent appreciation in capital value,” rued Sadagopan, a realty investor from Ambattur, who is now planning to shift his focus to OMR, ECR or GST Road locations.

Denying that there is any such divide, N Nandakumar, Managing Director, Devinarayan Housing and Property Developments, said, “As North Chennai developed to an industry-centric area much before South, the dominance of blue-collared community had paved way for the growth of residential, basic and social infrastructure to suit people’s necessities and affluence. However, unfortunately, one may call it, the presence of industries has failed to transform, modernise or upgrade North Chennai to a formidable region as the focus of development of the city had shifted to South and its peripherals areas for various reasons.”

 Key drivers of South

Explaining that the disparity in realty development between north and South was due to the key drivers the latter was enjoying such as employment, physical infrastructure, connectivity to important locations, access to social infrastructure, planned development, proximity to premium office spaces, accessibility to southern districts and vast land availability, WS Habib, Managing Director, Ramky Wavoo Developers and Treasurer of CREDAI Chennai, said, the IT/ITeS, manufacturing and automobile sectors are going to be the major driving force for overall growth in Chennai.

Over the next five years, 21 million sq ft of additional office space will be absorbed in Chennai with southern areas alone accounting for 18 million sq ft. This would further trigger the housing demand in this part of city, he explained.

Agreeing that IT boom has made all the difference for South Chennai, Nandakumar, who is also the Chairman of CREDAI, Tamil Nadu, said, “Dominated by white-collar segments’ affluence and IT boom, South Chennai has seen phenomenal development in tandem with the urban agglomeration. Having said so, in recent times, North Chennai too has started attracting developers as large land parcels are being transformed into residential and related social infrastructure development.” However, north has a long way to go to catch up with south, feel realty experts.

Change in sight

Arguing that physical and social infrastructure in North Chennai did not keep pace with growth in South Chennai leading to a widening of gap in preference of South over North among homebuyers, Sanjay Chugh, Head of Chennai, Residential Services, Jones Lang LaSalle (JLL) India, a leading real estate research firm, said, “North Chennai was the first commercial hub and home to traders and wholesalers who had established their business right from the British era. The area around the commercial hub also gradually developed residentially due the captive demand from the community that had their business interest in North Chennai. However, post 1960’s there was a gradual move towards Central and South Chennai and these areas witnessed development of social and physical infrastructure. With the IT boom in the 90’s there was a quantum jump in demand for commercial, residential and retail space in the Southern parts of the city and property prices saw a healthy appreciation.”

However, the gap between the North and South areas of Chennai is showing some reduction, thanks to the shifting of focus of some of the leading builders towards several areas of North and North West Chennai for the last 2-3 years.

Sanjay added, “Over the last few years prominent developers from Chennai like Prince Foundations, VGN, Arihant, TVH, Landmark, Chaitanya, Ganga Foundations and Navin’s have ventured into North Chennai in a bid to create quality living spaces. Metro Rail connectivity to North Chennai is expected to further stimulate growth prospects.”

Blaming the mindset and overall poor infrastructure for its current status, Habib said, ‘Even after several years, people still reminisce rickety buses, narrow by-lanes, overflowing sewers and mechanics and hawkers doing business on footpaths in north Chennai. Much of North Chennai is industrial land and has traditionally been the hub for industrial and warehousing facilities due to its proximity to the port. The residents are largely from labour and fishing communities. The purchasing power of these people is comparatively very less for a premium development.”

The traditional perception of north Chennai having high crime rates is also hitting the realty development, he pointed out.

On the other hand, South Chennai with its proximity to the IT parks is seeing high development due to employment opportunity, which drives the overall growth of the real estate sector here. “However, in the recent times, the purchasing power of lower and middle income groups in North Chennai has increased manifold. The second and third generations to those who worked in railways, industries here are moving up in the economic ladder. The increased purchasing power is changing the skyline with a number of large-scale properties setting up base there,” he reasoned.

About having even growth throughout the city, Habib added, “If IT zones and other industrial zones are notified in various parts of the city, rather than in one particular location, development would be evenly distributed.”

 Perceptions matter

Pitching his view on the uneven development in Chennai, Dr R Kumar, MD of Navin Housing and properties, said, “Actually, it is the chicken and egg question, and we cannot say that it is because of Governments’ intervention/inaction or it is because of the elite's preference, but the fact is, the combination of these two factors virtually created north-south divide. You can see parallels in the Hoogly and Calcutta divide as also the old Delhi and New Delhi divide, where it is more pronounced.”

“In addition, I also think there is a certain amount of cultural difference, in perceptions and in lifestyle, between North and south Chennai. I think, we have a responsibility to change these perceptions and lifestyle differences by physical intervention, by developing well-planned townships in North as well. At Navin's we are trying to do our bit by developing a integrated project, with all modern amenities, a project, which even South Chennai would be proud of!,” he added.

Price factor

Irony one would say, the distance from Chennai Central Railway Station to IT hub Siruseri on OMR and Katankulathur on GST Road is around 35 km and 43 km, respectively, while, the distance between the Central to Thiruvottiur and Manali is about 11 km. However, the real estate prices in the south locations are far higher than the two mentioned northern localities. While one could purchase a home for about Rs 2000 to 2500 per sq ft in Thiruvottiur and Manali areas, the price is more than double in areas near Siruseri and Katankulathur. However, people who buy a home in some of the northern Chennai localities have to face problems due to lack of sewage and water connection, frequent power outage, darker streets, uneven roads and lack of shopping facility. This tells the ambiguity of real estate development in Chennai.

Since the transport connectivity is awfully inadequate, people from northern localities are finding it difficult to travel to their work place situated in south and other areas.

Though North Chennai areas are being consistently ignored and overlooked for many years, there is hardly any move from the government’s side to develop these localities at par with their southern counterparts. To break the ice, a few builders have recently launched residential projects in and around Ambattur (which is well connected to fledgling Annanagar), however, not many projects are in the offing to trigger realty growth there.  Sad, one may call it.