Chennai Housing Sales to Grow 2-5% in FY27: ICRA Report

Chennai residential real estate market is expected to see moderate growth of 2–5 percent year-on-year in area sold in FY2027, driven primarily by steady end-user demand and a stable project launch pipeline, according to ICRA. In its report titled “Residential Real Estate-Chennai: Sales likely to grow by 2–5 percent in FY2027; YTS stays comfortable”, the rating agency said growth is likely to moderate on a high base, though demand fundamentals remain stable.

ICRA estimates area sold growth of 5–7 percent in FY2026, before easing in FY2027. During H1 FY2026, area sold stood at 16 million sq ft, marking a 17 percent YoY increase, largely due to accelerated housing launches. However, second-half FY2026 sales are expected to remain relatively flat.

Key Highlights

• Chennai residential real estate growth seen at 2–5 percent in FY27
• Luxury housing dominates new launches in Chennai
• ICRA flags stable demand and comfortable housing inventory

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The Chennai housing market witnessed a strong recovery between FY2021 and FY2024, with sales volumes growing at a CAGR of around 15 percent to 26 million sq ft, supported by affordability and end-user demand. Growth slowed to around 2% in FY2025, mainly due to a decline in the affordable housing segment, while mid-income and luxury housing continued to perform well.

Residential launches in Chennai remained healthy at 31 million sq ft in FY2025, reflecting a 20 percent CAGR over FY2021–FY2025, driven by metro expansion, improved connectivity, and urban infrastructure upgrades. Launches are expected to rise 5–7 percent in FY2026 and 4–7 percent in FY2027.

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Inventory levels remain comfortable, with years-to-sell (YTS) expected to inch up to 1.6–1.7 years by March 2027. Buyer preferences are shifting, with luxury housing launches accounting for 42 percent of total launches in H1 FY2026, overtaking mid-income housing for the first time.