Is Chennai's OMR Stretch Losing Its Sheen?
Tracing Property Demand along Old Mahabalipuram Road
The third stretch of the OMR is where developers have been able to acquire large land parcels at cheaper rates, leading to more reasonably priced housing units in comparison to other parts of city. The Rs. 3,500-crore Japanese township spread over 1,500 acres (signed between the Tamil Nadu industrial investment facilitating agency, the Guidance Bureau, Ascendas, and a Japan consortium comprising Mizuho Corporate Bank and JGC Corporation) adds more value to this stretch, besides offering more than 200,000 employment opportunities. Notable townships along this stretch are ‘PBEL City’(PBEL) with integrated sports facilities, ‘The Village’(Phoenix Hodu) with fully furnished apartments, and the ’Prime Hub’(Divyashree) with ‘villaments’ and plotted developments. In addition, a number of local and national developers have also been acquiring large land parcels here for future projects. Some notable developers with significant land holdings in the region include Vijayshanthi Developers, Marg, Akshaya Homes, and Hiranandani Developers.
The connecting road between Kelambakkam and Vandallur has especially been attracting residential projects as a long-term investment option. With the state government planning to acquire 66 acres at Vandallur for a mofussil bus terminus, this stretch looks more promising than ever for property investments.
As far as connectivity goes, over the years the OMR has developed various link roads connecting it to the GST (Grand Southern Trunk Road or NH 45), providing added development opportunities for available land parcels in the region. With the elevated highway set to come up soon, the last stretch of the micro-market looks particularly promising in terms of property investment options. The possible spillover of IT activity beyond Siruseri, along with lower land prices in this part of the area are expected to drive organized real estate development in this region. Furthermore, the expansion of the OMR stretch between Siruseri and Mahabalipuram into a six-lane expressway is also likely to amplify organized real estate activity in the long-term.
Despite all such real estate activity, however, the OMR stretch has been losing it sheen with home buyers in recent times. Apart from the general subdued economic climate, it has primarily been the property pricing progression in this micro-market that has dampened demand. Consider the fact that between 2010 and 2014, price points rose by about 60–80%, especially along the first two sections of the area—and it becomes clear why an area that was primarily desired for its affordability, should now be leaving the average home buyer cold. Even areas like Medavakkom, located off-Shollinganallur and recognized as one of the top 10 property locations in the country, have become comparatively unaffordable for the city’s general home buyer over the past couple of years due to climbing price points.
Add the fact that social infrastructure along the OMR is yet to fall in line with the price range of products on offer, and it becomes even clearer what it is that has been plaguing the micro-market of late. The ground reality is that affordable property today has shifted towards the peripheral stretches of OMR, beyond Padur, which is a good 35–40 km from Adyar. And despite social infrastructure along this last stretch having much left to be desired, home buyers have little choice but to invest here. Having said that, residential property along the OMR will continue to attract demand in the long run because of the large IT workforce that the region caters to. But till such time that property prices climb down, the region would have lost some of its erstwhile demand from the average home buyer in Chennai.
—The author is Head–India Retail Services, CBRE South Asia Pvt. Ltd.