Chennai is vibrant with activity across all sectors but demand from the information technology sector was emerging as the key factor driving demand and leading to a visible increase in the real estate activity.
IT sector has a spin off to the residential developments in the southern suburbs of the city as well.
With the geographical growth of the city there is a need for integrated developments offering good quality life and neighbourhood with workplaces and shopping etc in the same premises, according to a report released by Trammell Crow Meghraj Property Consultants.
More than 20 major residential projects are coming up in Velachery and Perangudi side.
Middle and high segment housing will see more than 2000 dwelling units coming into the market in the next two years.
If the Mahindra city and Singapore Township were taken into account, another 3000 units would be added by the year 2007-08. In commercial sector, more than 15 million sft of A-grade space was expected to be added in the next two years.
Owing to the rising presence of an increasing number of IT and ITES companies in the southern part of Chennai, there was strong demand in areas like Velachery, Perungudi, and Thiruvanmiyur for budget apartments to house employees and for top-end residences for the senior company executives.
The year 2004 was the best year in terms of absorption and price increase in the last eight years in the Chennai residential market.
The market witnessed an 8-15 per cent increase in capital and rental values in almost all the residential micro-markets.
With the development of the IT corridor on the Old Mahabalipuram Road, Velachery and Perungudi had become a preferred destination for many new generation software professionals.
According to the report, IT sector growth in India in general had emerged as a driver for boosting real estate development in all sectors.
In most cities, rising costs driven by growing demand for large volumes of world class commercial spaces, had led IT companies to move away from the traditional CBD areas to fringe areas, where new developments could take place at lower prices while offering a more green and better ambience.
Creation of these large commercial districts had simultaneously triggered off the development of supporting residential areas to cater to the needs of the work force employed in the commercial sub-CBDs in the vicinity.
After this initial cycle, the image of these new areas had been enhanced, leading to escalated demand in these areas giving further impetus to real estate growth.
The city structure in both cases has responded to the trends in the real estate market with initiatives from the State governance following subsequently.
This has led to some problems of infrastructure management in the initial phases. The trend of formation of townships at the periphery of existing metropolitan cities has become a national urbanisation phenomenon, showing signs of an emerging successful urban model.