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Chennai's residential rental market is witnessing sharp hikes, with year-on-year increases of up to 25% in key areas. Anarock data shows a 22.2% quarter-on-quarter rise in Q3 2024, the highest among major Indian metros. Localities near IT corridors like Velachery, Sholinganallur, and Taramani now see 1BHK rents ranging from INR 25,000 to INR 35,000 per month. Even outer suburbs like Pallavaram and Kolathur are no longer affordable. The surge is driven by demand from Global Capability Centres (GCCs), limited new housing supply, and property tax hikes. Middle-income tenants are moving to farther suburbs, while many professionals are opting for shared housing or co-living spaces. Comparisons to Bengaluru's rental trends are growing, raising concerns about Chennai's affordability. Without proactive housing policies and infrastructure improvements, the city risks facing long-term housing challenges similar to its southern counterpart.
Chennai is experiencing a sharp and unprecedented rise in residential rents, with several neighbourhoods reporting year-on-year increases of up to 25%. The city, previously known for its relatively affordable housing, is rapidly losing that status, placing significant strain on tenants and raising concerns among professionals planning to relocate. Advertisement
According to data released by Anarock, Chennai recorded the highest quarter-on-quarter increase in rents among all major Indian metros in Q3 2024. An average jump of 22.2% has been observed. Areas such as Velachery, Sholinganallur, and Taramani?located near key IT corridors?have seen rents for modest 1BHK units rise to between INR 25,000 and INR 35,000 per month. Even outer suburbs like Pallavaram and Kolathur, once considered budget-friendly, are no longer offering affordable options for tenants.
The situation mirrors the rental trends previously witnessed in Bengaluru, where a surge in tech migration and overburdened infrastructure contributed to years of unsustainable rent increases. Similar warning signs are now being observed in Chennai, which is experiencing rapid economic expansion, digital sector growth, and a mismatch between demand and housing supply.
One of the main factors behind the surge has been the growing presence of Global Capability Centres (GCCs) in the city. These centres, spanning industries such as IT, finance, logistics, and research and development, have brought in a large number of well-paid professionals seeking quality rental housing close to their workplaces. Simultaneously, the supply of new housing has failed to keep pace. Developers had scaled back new launches during the pandemic years, and the recovery in construction activity has not caught up with the renewed demand.
Landlords have also passed on additional costs to tenants, particularly in light of the Greater Chennai Corporation?s policy of imposing a 6% annual hike in property tax. As a result, tenants are facing significant rent increases without any parallel rise in wages or housing availability.
Middle-income tenants are being forced to move to the city?s outskirts in search of lower rents. However, areas such as Tambaram, Kolathur, and Ambattur have also recorded rent hikes ranging between INR 4,000 and INR 7,000 over the past year. Increasingly, single professionals are turning to shared housing and co-living spaces?arrangements once associated mainly with students.
Comparisons with Bengaluru are becoming more relevant with each passing month. In 2022?23, areas like Koramangala and Indiranagar saw rents soar by 30?40% within a year. Chennai, which had long been regarded as a city with stable and predictable housing costs, is now being viewed in the same light as its southern counterpart, where affordability challenges persist.
Tenants moving to Chennai have been advised to plan accordingly. Monthly budgets of INR 25,000 to INR 35,000 must be considered standard for centrally located or IT-adjacent 1BHK units. Rent escalation clauses in new agreements are increasingly pegged at 8?10% annually, much higher than the traditional 5%. While suburbs like Avadi, Guduvanchery, and parts of West Chennai offer some relief in terms of pricing, longer commute times are to be expected. For those staying short-term or moving alone, co-living arrangements continue to be more economical and manageable.
Chennai?s housing situation is a reflection of its growing stature as an economic and professional hub. While this transformation has created new opportunities, it has also exposed structural gaps in urban planning. Unless corrective steps are taken soon?through improved infrastructure, proactive housing policies, and expanded affordable housing supply?the city risks replicating the challenges that have plagued Bengaluru: high costs, congested streets, and the outward migration of skilled professionals seeking better-managed alternatives. The opportunity to avert a full-blown housing crisis still exists, but time is running short.
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