Chennai Real Estate: Renting More Preferable to Buying?

In light of the skyrocketing rates of properties in India, the realty market seems to shift gears. An average buyer is now more inclined towards renting a house rater than making a buy. Same is the case with Chennai where this trend is quite noticeable. According to Makaan's Buy Rent Index(MBRI), this city has witnessed a rise in tendencies for hiring properties on rent rather than buying them. Over last two years, MBRI value increased by 7 points, shifting hitherto neutral Chennai real estate market to rental range. A value of more than 25 indicates that renting properties is more preferable than owning a house. While North Chennai MBRI stood at 27, South Chennai's index stood at 28 in the last quarter of 2013.

With more demand for flats for rent in Chennai, the prices have escalated across its several localities. The stock of inventories is limited while the demand is on the higher side; this has resulted in price appreciation of rental home. The space crunch was also brought about by the non- availability of vacant spaces: the rental flats in the city have the tendency to get consumed quickly, thus keeping several tenants in lurch. This, in turn, made the landlords raise rents. Ashok Nagar and Egmore witnessed an appreciation of 13% and 8% respectively over Oct-Dec, 2013.

But there are several Chennai real estate localities where rental rates underwent depreciation in last quarter of 2013. Prices in Besant Nagar, Chromepet, and Chetpet went down by 8-10%, while in Alwarpet and Kilpauk, the rates saw a 3-5% decline if compared to the previous quarter. However, on the whole, Chennai's increased preference for rental properties indicates that people find it more viable to live on rental spaces rather than purchasing their dream home.