Final-Report_Battle-of-the-Neighbourhoods

Final-Report_Battle-of-the-Neighbourhoods

Capstone Project – The Battle of Neighborhoods
CLIENT: VOQUE CONSTRUCTIONS
Site Selection Study for Residential Development Project in Chennai, India Author: Amal Putti Date: March 2020

(Picture Courtesy: CBRE)
1. INTRODUCTION
Capstone Project – The Battle of Neighborhoods
VOQUE CONSTRUCTIONS is one of Asia’s largest real estate companies. Headquartered and listed in Singapore, it is an owner and manager of a global portfolio comprising integrated developments, shopping malls, lodging, offices, homes, real estate investment trusts (REITs) and funds. Present across more than 60 cities in over 10 countries, the Group focuses on Singapore and China as core markets while it continues to expand in markets such as Indonesia and Vietnam. Voque is determined to foray into the Indian market and are considering in developing a multistory apartment project in Chennai. Chennai is the fourth largest metropolitan city of India. It is both the commercial and cultural capital city of the south-eastern state of Tamil Nadu. The city is developing rapidly and has become a fast-growing city in India. Currently there are many major industries in the field like automobile, Hardware manufacture, technology, health and education. It is ranked as a second major exporter of IT and is also well-known as the automobile capital of India.
Since this is Voque’s first project in the country, and being unfamiliar with the local market of Chennai city, they have reached out to me to perform a study to:
1.
Identify neighborhoods in the city which have a low density of residences, as they consider these areas as ideal for their projects. Further classify these neighborhoods on the
2. Classify these neighborhoods based on the average price per square feet (Price PSQFT) into:
Low Budget Market
• • Premium Market •
Luxury Market
3. Provide a list of the inventory of residential apartments currently available for sale in these
neighborhoods and include their features such as:
• Price • Floor Size • No. of Bedrooms • No. of Bathrooms • Furnishing Status (Unfurnished/Semi Furnished/Furnished) • Property Condition (Resale or New Property)
2. DATA
Data used in this report was collected primarily from two sources – a leading Indian online real estate property listing website (Magicbricks) and a location data platform (Foursquare) 2.1. Inventory of Apartment Listings from https://www.magicbricks.com
The Magicbricks website gave us all the relevant information on the apartments that are currently for sale in Chennai. Data was scraped using Python libraries to extract the following information:
• Neighbourhood – This included all the localities in the Chennai Metropolitan area broadly
classified into Chennai North, Chennai South, Chennai West and Chennai Central.
2

Capstone Project – The Battle of Neighborhoods
• Neighbourhood Coordinates – Latitude and Longitude of each neighborhood •
Listing Information – Price, Floor Size, No of Bedrooms and Bathrooms, Furnishing Status, Property Condition and Developer Information (where applicable)
• Price per square feet (Price PSQFT) – This Price per square feet was not directly available and was indirectly computed using the Price and Floor Size details from the Listing Information.
2.2. Residential Density of Neighborhoods from https://foursquare.com
Foursquare Places API’s were leveraged through their Developer Platform to download Neighbourhood Attributes.

3. METHODOLOGY
The primary data for this analysis was scraped from the Magicbricks website. Since there is no accurate sales data on residential apartments for Chennai, an alternate approach was using data from a real estate listing website. The one limitation of using this data is the price of the listings is based on what the seller is expecting for the property, and not necessarily the final price which the unit would sell for. Pricing fluctuates based on market conditions and so it’s not easy to predict what the sold price is. However, for the analysis needed to perform our client’s study this data provides the most recent data available and all provides all the attributes of the available apartments in the market including Listing Price, Floor Size, # of Bedrooms, # of Bathrooms, and Geocoordinates. The data further allows us to classify the data based on listings for new developments vs. resale properties. This information is especially critical as it provides a valuable insight into how other developers are pricing their inventory. 3.1 Cleaning the Data
The data scraped from the magicbricks website had a few duplicates and missing information that was removed. Also, the Neighborhood (Locality) names were cleaned to remove the sub locality names as that is not necessary for our analysis. We also had to convert the data into appropriate Data types. We obtained data for 108 Neighborhoods in the city.
3.2 Computing Price per sq. ft (Price PSQFT)
Price per sq. ft was not an attribute available in the data and had to be calculated. Since we had the listing price of the property (Price) and the size of the property (Floor Size), the Price per sq. Ft calculation was straightforward and was computed using the formula: Table 1: List of attributes extracted from the magicbricks webpages
Price PSQFT = Price / Floor Size

ListingID
Locality
SizeType
Furnishing
Society
Price PSQFT
Property
Type Region
Price
Bedrooms
FloorSize
Bathrooms
Property Condition Developer
Longitude
Listing URL
Latitude

3

Capstone Project – The Battle of Neighborhoods
Figure 1: Data subset extracted and cleaned from the Magicbricks webpages
3.3 Exploring and Analyzing the neighborhoods using Foursquare API

Foursquare Places API’s are leveraged through their Developer Platform to get the Neighbourhood Attributes for the localities. Fortunately, one of the attributes we get from this data is the ‘Residence’ category which allows us to identify residential neighborhoods which is one of the key data points required for our analysis.
Table 2: List of categories obtained using Foursquare API
Arts &
Entertainment Outdoors & Recreation
College & University
Professional & Other Places

Event
Food
Nightlife Spot
Residence
Shop & Service
Travel & Transport
Figure 2: Data subset extracted from Foursquare API and appended to our data from magicbricks
With data extracted using Foursquare, we not only have the Neighbourhood attributes (categories) for each Neighbourhood but also the count of the number of venues that fall in those categories. The count of venues can also be interpreted as the density of occurrence of a given category in a particular Neighborhood. For ex, if we have a Neighborhood with a higher count of Residence categories, we can infer that the neighborhood is a residential neighborhood.

3.4 Clustering and Classifying Neighborhoods using k-means clustering algorithm
In this study, we use K-means algorithm for clustering neighborhoods. K-means is an iterative algorithm that tries to partition the dataset into K pre-defined distinct non-overlapping subgroups (clusters) where each data point belongs to only one group. It tries to make the inter-cluster data points as similar as possible while also keeping the clusters as different (far) as possible. In our study, the neighborhoods will need to be grouped into clusters to identify neighborhoods with low residential density, and compare the other attributes of these neighborhoods with neighborhoods in other clusters.
4

Capstone Project – The Battle of Neighborhoods
3.4.1 Scaling the Data Before we apply the k-means algorithm, we would need to scale the data. Scaling of data is necessary to normalize the data so is can be scaled to a fixed range between 0 and 1.
Figure 3: Data subset transformed to a scale between 0 to 1 after scaling
3.4.2 Computing the optimum number of clusters We used the ‘Elbow’ method to compute the optimum number of clusters for our dataset. From the “Elbow method” we see the optimum value of k as 3. This clusters the neighborhoods in the city into: 1) City Center 2) City Suburbs 3) City Outskirts.

However, we found that increasing the value of k to 4, further splits the City Suburbs into Neighborhoods with established infrastructure and new neighborhoods with developing infrastructure. This is ideal for our study as typically new neighborhoods is where people prefer to invest in as the costs are lower, but they still have advantage of the new infrastructure being developed. For our study further, we use the value k=4 and group our data into 4 clusters.
5

Capstone Project – The Battle of Neighborhoods
Figure 4: Plot of density of neighborhoods in a cluster by Category
We will further map these neighborhoods on a map and visualize the neighborhoods clusters to be able to make observations. Figure 5: Map of neighborhoods visualized by cluster

From the visualization and mapping of the clusters, we can make the following observations:
• Cluster 0 are well established residential neighborhoods in the City Suburbs • Cluster 1 are neighborhoods with high density of both residential and commercial venues.
These, as expected, are located in the center of the city.

6
Capstone Project – The Battle of Neighborhoods
• Cluster 2 are neighborhoods with a low density of residences but have a similar profile as that
of some of the more well-established residential neighborhoods.
• Cluster 3 are neighborhoods in the outskirts of the city with a low density of both commercial
and residential areas.
From these observations, neighborhoods in Cluster 2 and 3 have low density of residences. Given the proximity of Neighborhoods in Cluster 2 to the center of the city, which is advantageous, we will study them for further classification and analysis
3.5 Classifying Neighborhoods in Cluster 2 based on Average Price per sq. ft (Price PSQFT)
We further classify the neighbourhoods by the average price per sq. ft (Price PSQFT). The Price PSQFT allows us to understand how expensive a particular neighborhood is and determined as an average price per sq. ft. of all the individual active property listings in that neighborhood. In Chennai, the well-established classifications of the markets based on Average Prices per sq. ft are:
Low Budget Market – INR 2,500 to INR 6,000 per sq. ft
• • Premium Market – INR 6,000 to INR 10,600 per sq. ft •
Luxury Market – INR 10,600 per sq. ft and above

Figure 6: Data showing Neighborhoods classified by Premium and Luxury Market

7
Figure 7: Map of neighborhoods visualized by Market
Capstone Project – The Battle of Neighborhoods

4. RESULTS
• We started by analyzing 108 Neighborhoods in Chennai City, and we were able to select 27 Neighborhoods that had a low density of residences and also had similar profile as that of some of the more well-established residential neighborhoods.
• Of these 27 Neighborhoods, we classified them further and identified 9 Premium Markets and 2 Luxury Markets which are potential neighborhoods to consider for a multi-story real-estate development.
• We are also able to provide a list of 893 active listings of apartments currently for sale along with their attributes for each of these listings in 9 Premium Markets and 2 Luxury Markets. This can be found here.
5. DISCUSSION
To further analyze the feasibility and cost benefit analysis of the shortlisted locations, one key data point required is the cost of land. If the cost of land is high, then the developer needs to sell the apartments at a higher price per sq. ft. If this price is significantly higher than the average selling price of the apartments in that neighborhood, the developer may find it difficult to offload his inventory. This study can be further augmented by factoring in this datapoint. The land price data can easily be obtained from magicbricks website.
Another datapoint that would be valuable for this study is the trend of the unsold inventory in these neighborhoods. If the trend shows that unsold inventory has been increasing, it indicates that the supply is exceeding demand and the developer would be competing with other developments. If such is the case, it wouldn’t be advisable to launch a project in these neighborhoods.
8
6. CONCLUSION
Capstone Project – The Battle of Neighborhoods
In this report, we were able to provide recommendations of potential neighborhoods that meet the client’s requirements. We were also able to give the client an understanding of the pricing in these neighborhoods, how the neighborhood profiles compare with each other, as well as provide an insight to compare other developments that are launched/to be launched in these neighborhoods.
We also recommend expanding this study to include analysis factoring in the cost of land prior to making a decision on the project.

9

About The Author

Leave Comment