Urban Development and Land Markets in Chennai, India

The metropolitan area of Chennai, India, presents an interesting case study on India’s transforming economy because it has a unique urban structure for an Indian city of its size. It has an extremely high population density at the city center that is becoming even more crowded. It is also experiencing rapid, but low-density, expansion at the periphery. This paper documents Chennai’s spatial development with detailed data on land use, population density, and land values. A hedonic regression on the price of land suggests that de facto policy differences between political jurisdictions have had a significant effect on land prices. However, the data presented in this paper suggest that land policy reforms in Chennai have been successful in reducing some of the sprawling urban development patterns evident in the 1970’s and 1980’s. Nevertheless, policymakers in Chennai continue to face the double challenge of an extremely dense urban core combined with extensive urban growth.