Chennai’s commercial property developers’ long pending request to permit IT buildings for non-IT sectors like finance, education, hospital, hospitality and retail may soon become a reality if the recommendations of the CMDA are accepted by the state government. However, it may come with a sting attached in that developers may have to pay premium FSI charges for the additional FSI availed for IT buildings. But a final decision is still awaited from the government.
According to officials, a proposal has been sent to the government taking into account the plight of commercial property developers due to current market scenario and the prolonged delay in leasing IT buildings. The proposal has been examined very seriously now and the government will take a final decision on the modalities in a month, say officials.
Earlier Credai Chennai had represented to the government that most of the buildings were promoted in the year 2006-07 even before the introduction of infrastructure and amenities charges. As they have already suffered additional levy which was not factored in while budgeting their projects, they felt that any further penalties/levies for conversion would only be counter-productive. This will only curtail developers from coming forward for conversion thus continuing the impasse in the city.
The CREDAI Chennai has also requested the state government to make it equitable to the developers/owners who have not availed the additional FSI, those developers/owners keen to convert the IT buildings for non-IT purposes, alternative uses may be considered given the financial impact such vacancy levels may create for both the developer as well as the exchequer. As the STPI scheme has been discontinued, fiscal sops available for IT/ITES companies could only be seen in SEZ premises thus discouraging corporates/MNCs to occupy standalone IT buildings in the coming years.
As most of the developers have taken loans from banks for the development of IT buildings, any delay in resolving the issue would only be at the cost of increased NPAs for the lending banks. If there is flexibility in leasing, then it would benefit all sections of the society including the state government by way taxes and levies, say developers.
A list of vacant buildings in the city has been forwarded to highlight the gravity of the situation and the cascading impact on the overall economy. Among the specific requests made by Credai Chennai include enhancing the area of utilisation for non-IT purposes from the existing 10% to 25% of built up area for any purpose unconditionally and permission to include sectors like banking, financial services, engineering services, hotels, hospitals, educational institutions, finishing schools and retail space.
The Maharashtra government has permitted IT buildings for non-IT purposes. In Hyderabad, limited option is available for IT buildings to let it for sectors like banking, retail and food court but here again it depends on the project size. These are treated as basic services while permitting 30 per cent of the building for non-IT purposes.
V Nagarajan, Property Consultant