Chennai rentals at a high

Chennai residential rentals might have gone up by an average of about 12-15 per cent, and in some localities as high as 40 per cent over the last one year. But there are bargains to be had by the diligent.

The hike has happened across segments with residential areas in the heart of the city and suburbs becoming costlier. But conversely there are some localities that continue to be sober.

One and three bedroom-hall-kitchen residential would appear to be most in demand as indicated by the sharp increases in rental values for these units in Chennai while the hike in the 2-BHK segment lags.

13.5-per-cent rise

A study by Sulekha.com, which analysed over 130,000 rental advertisements posted on its site for apartments and independent house has shown that house rents have increased by a weighted average of 13.5 per cent in the first three months of 2011 when compared with the same period last year. There is a sharp increase in the rentals of 1-BHK and 3-BHK units.

However, those on the look out for renting apartments in the city can take heart as there are bargains to be had even in plum residential localities in the heart of the city and in the suburbs.

The Sulekha.com study covers advertisements posted by individuals and brokers. The year-on-year analysis compared 72,000 property ads for rent in January, February and March 2011 with 62,900 ads in the three months of 2010.

According to a press release from Sulekha.com, the key findings are: rental prices for 1BHK units have gone up by 12 per cent and 3BHK by about 15 per cent. Rent for 2BHK apartments and houses has risen a little less – about 10 per cent.

On an average in prime residential areas such as Adyar, Alwarpet and Chetpet, a 3-BHK unit fetches a rent of about Rs 30,000.

In areas such as Anna Nagar, Kilpauk, T' Nagar, Ashok Nagar, Mylapore, Purasawalkam and K K Nagar in the central part of Chennai and Sholinganallur, Neelankarai, Besant Nagar in the South two bedroom units fetch Rs 20,000 a month.

But in select areas single bedroom units have gone up by about 30-40 per cent.

These are primarily the southern suburbs such as Perungudi, West Mambalam, Porur, Vadapalani, Nanganallur and Medavakkam.

Changing face of city

Explaining the trend, Mr Sanjay Chugh of Skylines Property Consultants says it is the changing of face of Chennai as employment generation in new industries attracts young professionals and migrants – people willing to spend money for space and privacy, but with no immediate plans to invest in a property of their own.

This segment is driving the demand for small residential units, the single bedroom units. New supply in this segment has been low, with developers primarily concentrating on the two- and three-bedroom units.

The single bedroom units came back into the market only in recent years following the slowdown in 2008.

It is for this reason the 2-BHK unit is lagging as those who can afford large units will prefer to stretch their budget to a 3-BHK unit as they will generally be in need of the extra space in a joint family.

According to the Sulekha.com study, in some areas such as Kilpauk, Triplicane and Anna Nagar, rents appear to have dropped indicates the study. In the city's outskirts in Porur and Tambaram a 2-BHK apartment is available for sub Rs 10,000 while 3-BHK apartments are available in Madipakkam and Chromepet for less than Rs 15,000.

Lack of new supply

Traditional areas in the heart of Chennai are seeing a slight drop in rentals as there is a lack of new supply in the heart of the city in the middle income segment with land prices on an upward spiral, says Mr Chugh.

Also, these are end-user driven areas where people prefer to own their property rather than rent space unlike the newer areas to the south of the city.

Sulekha pegs the average rent in Chennai across areas as of March 2011 as follows: 1BHK – Rs 5,740 (up 12 per cent); 2BHK – Rs 10,080 (10 per cent costlier over the year); and 3BHK average rent – Rs 17,270 (increase of 15 per cent).

Individuals can save about 10-15 per cent by interacting directly with landlords who list their apartments and houses, in addition to the 1-month brokerage cost, says Sulekha.

In the next few weeks, Sulekha.com (www.sulekha.com) will release similar city-specific reports on the housing price inflation in Delhi, Mumbai, Bangalore and Hyderabad.

Sulekha.com is a global, interactive, mobile and Internet platform for connecting Indians worldwide and serves them through a portfolio of industry-leading services.

The company is headquartered in Chennai in India and Austin in North America. Sulekha.com has offices in Mumbai, Delhi, Hyderabad, Bangalore and New York.

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