Office space demand down 26% in 2012

Office spaces rented by companies, a clear indication of the economy's health, for 2012 dipped by 26% compared to 2011 in seven major cities, according to a report by leading commercial property and real estate services adviser, CBRE India.

According to the report, about 26 million sq ft of office space was absorbed in 2012 as against 35 million in 2011. "The decline in absorption across key cities is primarily due to the continuing global and domestic uncertainty in the economy which is a deterrent for corporates in their expansion plans. For the demand to revive, the economic reforms in India need to be fast tracked besides global economy has to show some improvement in growth," said Anshuman Magazine, chairman and managing director, CBRE (South Asia).

Real estate developers have witnessed a bad phase in the commercial real estate space since 2008. While the residential real estate saw a rise in demand between 2008 and 2010 followed by a price rise, commercial real estate continued to witness pressure on rents. As a result many developers have converted their commercial real estate projects to residential ones especially in Tier I cities.

While the demand remained slow for the office space, the supply has reduced only marginally, creating further pressure on rental yields. "The total office space supply that entered the market in 2012 was about 31 million sq ft, compared to about 30 million sq ft in 2011," the report said.

The seven cities surveyed were National Capital Region, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

For the original post visit: http://www.hindustantimes.com/business-news/CorporateNews/Office-space-demand-down-26-in-2012/Article1-987885.aspx

What is in Store for India's Realty Market in 2013?

"The silver lining for all those who missed the boat, both developers and consumers, is that 2013 will start a fresh innings. In a country that has an acute housing shortage there will always be takers provided the offerings are enticing," said Rohan D’Silva, the National Director of Knight Frank India, reports Economic Times.

For commercial real estate, some of the most promising location in India include Gurgaon and Noida, which is likely to maintain its growth and may witness over 85 percent of office space transaction in the coming year. Whereas, Mumbai’s commercial complex that include Bandra Kurla Complex will observe the emergence of top multinationals and Nariman Point will observe less demand and lower rental values.

“With business sentiments getting improved, the downward trend will change in FY14 and each quarter will see a 9-10 million of absorption, with overall absorption likely to surpass 40 million in FY14,” said Balbirsingh Khalsa, National Director, Office Industrial Agency, Knight Frank India, reports Live Mint.

In Southern places like Hyderabad and Bangalore, the demand for office space might take-up, whereas in secondary business districts and peripheral business districts of Chennai will see over 70 percent share in the market.

For the original post visit: http://www.siliconindia.com/realestate/news/Indian-Property-Market-Likely-To-Revive-In-2013-nid-136606.html

Property prices in TN stabilising: Sundaram BNP Paribas Home Finance

Coimbatore, Sept. 10:

Real estate prices in the Chennai market, which had trebled in the past five years, have taken a breather with property prices in the metropolis stabilising, according to Srinivas Acharya, Managing Director, Sundaram BNP Paribas Home Finance Ltd, Chennai.

He said though his company is not into reverse mortgage right now, it is open to the concept and would respond positively to any customer demand.

Speaking to Business Line here on Monday on the sidelines of the opening of its second branch in the city, he said the company’s loan profile has witnessed robust growth. He expected to close the first half of the current fiscal with a disbursement of about Rs 1,200 crore equalling what the company had disbursed in the whole of 2010-11 FY. In 2011-12, the loan disbursement was about Rs 1,950 crore

He said while demand was ‘still there’, what was happening at Chennai and Coimbatore was that real estate ‘prices have stabilised’ and property price increases were not taking place as frequently as in the past. Describing it as a ‘good sign’, he expected this development to draw more people to investment in housing.

While this could partly be due to buyers’ resistance, a key factor was that mega projects were taking time and absence of any price escalation in them was having an impact on smaller projects.

He said the Chennai real estate market had witnessed the sharpest growth in the country during the 2007-12 period. According to the NHB Residex, the 20-city housing price index with 2007 as the base year, Chennai realty prices had more than trebled in five years. Its nearest competitors were Faridabad, Pune, Bhopal and Indore but their gains were far less — just double the base rate. He did not expect the demand for residential space in Chennai and Madurai, among others, to come down.

Confirming the slowdown in growth in commercial real estate projects, Acharya said this segment was dependent on economic growth. The slowdown in the economy was having an impact on this sector as corporates have put the breaks on branch expansion. Even in the mall space, there was oversupply, particularly in Delhi. But Chennai could see some more malls that were specific to the residential areas where they spring up.

S. Rajagopalan, VP & Head-Operations, SBNPP Home Finance, said a big mall was coming up in the OMR area in Chennai that would fill the need for such a facility in the area.

On whether home loan rates would head South, Acharya said “home loan rates have more or less stabilised” in the past few months and the rates would go down only if the interest rates fall. But he felt that the interest rates did not have a great bearing on the purchase decision of home buyers.

He said the home finance companies are also becoming alive to the changing social situation that is reflected in loan tenures. Earlier, the home loans were made co-terminus with 60 years of age of the borrower. This was extended to 65 years and today loan closure up to 70 years is possible in exceptional cases. What has facilitated tenure extension is that companies are extending the retirement age of their employees to beat back attrition.

Referring to the home loan companies re-jigging products such as waiver of last year’s instalment for prompt repayment, Rajagopalan said in the experience of most home loan providers, the maximum loan tenure has been 12-13 years. This was because of the preference for pre-closure of loans. Besides, the loan’s tax efficiency tapers off as the term progresses.

On whether his company was eyeing the reverse mortgage space, Acharya said his company did not offer this product now. But as more parents were left to take care of themselves, the need for it would grow. There has been no request for it from its clients but his company was watching the trend and would ‘certainly come out with it’ once the demand arises in the coming years.

He said the branch opened in the R.S. Puram area in Coimbatore today was the 89th branch and 39th in Tamil Nadu. So far this year, 13 new branches have been opened and 12 more were slated for opening in the remainder of the year, enabling the company to cross a century of branches.

Source: http://www.thehindubusinessline.com/news/states/article3881135.ece

Professionals drive demand for PG accommodation in Chennai

Chennai

Chennai is a major commercial, cultural and educational center in south India. It is home to some of the best education institutes and research centers. The emergence of industrial growth and employment opportunity in the city attract a steady stream of skilled professionals, which further fuels the demand of PG accommodation. But unlike Delhi, the city attracts more working population who come to establish their careers than students across India.

The non-Tamilian populations that migrate to Chennai for jobs prefer to stay in PG accommodation as it provides the best and cheap temporary staying options. “Demand for PGs is driven by the working class in Chennai. This is due to the fact that most of the educational institutes have accommodation facilities and students prefer to stay within their campus,” says Ramesh Babu from Bhairv Foundations, a local realtor.

“This demand is comes more from boys as most of the non-Tamil working population is male. Men have more mobility for employment as compared to women,” he adds.

According to realtors in Chennai there is a huge demand for PG accommodation but supply is lower than the demand. Therefore the rents are high in a few localities which can be afforded by working section of the society.

“The advance for a rented apartment is as high as 6-10 months whereas for PG it is limited to just 1 month. 90% of the IT professionals do not settle here and hence PG is safer bet for them,” says Vipul Chaudhry, a local realtor from Earth Homes.

MagicBricks.com finds out which are the localities in Chennai that offers good PG accommodation and at what price.

The areas like Anna Nagar, Triplicane, OMR, Thrivanmiyur are few localities which high in demand for PG accommodation owing to its high residential occupancy rate, accessibility and connectivity. These areas are well surrounded with many schools, colleges, IT Parks, plus all facilities like shopping complex, transportation facility, such as buses, electric trains, etc.

Also, these areas offer a rent that easily fits into the pocket of a working population.

The PG accommodation in Thrivanmiyur and Triplicane areas are almost same. The rent varies between Rs 1200-8500 per month, depending upon the occupancy whereas the PG in locality like Anna Nagar starts at higher price.

This is because the area is one of the prime residential areas in Chennai that hosts number of well established schools and colleges, places of worship, shopping areas with both independent shops and chain stores and numerous restaurants. There are also a number of mid size hospitals and nursing homes catering to the local population.

Anna Nagar is also well connected with roads and railways. The locality has two bus terminuses and railway station. Therefore the area is best suited for outsiders who come with concerns of getting to know their way about, and learning to deal with people in an alien land. Here the rental values for PG accommodation starts from Rs 5000 and can goes up to Rs 8000 per person depending upon the facilities.

Another locality Chennai which has seen the spurt in demand for PG accommodation is Oragadam. The town is known for its various industries and workshops pertaining to the automobile sector. Oragadam has seen major investments from foreign companies in recent times. International Automobile majors like Daimler, Renault – Nissan, Komatsu have set up their car manufacturing plants here and will use it as a base for sourcing for their international markets. This has further open many job opportunities, and hence, the rush of working population looking for PG accommodation is obvious. Looking at the commercial development happening in the locality, the local realtors, said that today Oragadam is high in demand for PG accommodation by the migrants coming to work in the city.

Neha Nagpal, MagicBricks.com Bureau

Visuals by Harsha Khattar

Source: http://content.magicbricks.com/professionals-drive-demand-for-pg-accommodation-in-chennai

Realty sector hit as IT industry demand goes down

BANGALORE: The commercial real estate market is facing tough times, with office space absorption across India's seven largest cities dropping 12% quarter-on-quarter in the January-March 2012 period due to uncertain economic conditions coupled with the euro zone crisis.

The trend is likely to continue for the next few quarters, with absorption of office space expected to drop by 10-15 % for 2012 due to lower demand from the information technology sector.

Demand from IT/ITES sector has dropped from the peak of 68% in 2005 to 35% at present due to increasing cost pressures faced by these firms. Growth expectations of India's IT sector has been lukewarm so far, with software services exporters complaining of clients' delay in deciding on the technology spend. Compared to around 16% growth in year to March 2012, trade body Nasscom has forecast an 11-14 % growth rate for the year to March 2013. "Things are not as rosy as they were in 2010.

Most corporates are adopting a 'wait-and-watch' policy . The majority of demand in the first half of 2012 was spillover of work-in-progress deals from 2011. The demand thereafter will be influenced by the Indian economic performance and outlook of global markets," said Rohit Kumar, head of research, DTZ India, a real estate consultancy firm. Total commercial office space absorption for Q1 of this year was 7.4 million sq ft, representing a decrease of 12% q-o-q and 15% y-o-y. Vacancies across cities are expected to rise in 2013, except Bangalore," a recent report by DTZ India said.

Currently, demand for Grade A office space is driven by foreign companies from the US and European Union, which contribute a lion's share of lease transactions across major cities in the country. Demand for office space from the US-based companies have been stagnant; these companies have been contributing 48% of the total office space demand in the country, followed by India and European countries.

Larger IT firms such as Infosys and Wipro have projected negative to flattish growth in June ending quarter, and analysts expect at least another 1-2 quarters before the sector hits the growth track, depending on recovery in the US and Europe. "There has been no escalation in realty budget as companies look to reduce operating costs.

IT/ ITeS firms have reduced their real estate budget by 5-8 % this year as they wait for renewal of contract from clients before they can take on additional floor space," said Sridhar Raghavendra, founder of FM Zone India, a real estate and facility management firm representing IT/ITes firms.

Some of the companies, which are looking to occupy large space and are yet to sign deals, are Juniper Networks (500,000-700 ,000 sq ft), Intel (120,000 sq ft), Cyprus (200,000), Volvo (700,000 sq ft) and Eurospace (300,000-500 ,000 sq ft) "There are some larger commercial space requirements floating in the market, but no deals have concluded so far. Decision making by corporates have slowed down since fourth quarter of last year.

Companies are also staggering occupancy time line and do not want to occupy large space at one go," said Naveen Nandwani, director of property consulting firm Cushman & Wakefield at Bangalore.

Source: http://timesofindia.indiatimes.com/tech/enterprise-it/infrastructure/Realty-sector-hit-as-IT-industry-demand-goes-down/articleshow/13390862.cms

Why is real estate lobby so special and powerful?

It’s now taken as almost axiomatic that no matter what kind of economic reform is proposed, someone or the other will loudly oppose it. Whether it’s insurance, or retail or pensions or airlines or petroleum pricing, the battle lines are clearly drawn,stoutly defended and often not attacked with much determination anyhow.

However, there’s one aspect of the economy where the action is mostly underground. No one stands up and opposes fixing this sector and yet, nothing happens. I’m talking about real estate. While the real estate regulatory bill is now the most thoroughly forgotten of the reforms bill, the finance minister’s quiet and unasked-for rollback of a crucial tax reform in the budget tells you how powerful the forces of status quo in the real estate are.

In the Union Budget proposals, there was one of mandating the deduction of TDS in real estate deals worth more than Rs. 20 lakh. The idea was that unless this TDS was deducted, no real estate transaction would be valid. As revenue officials explained at the time, the idea behind this tax was not so much the revenue as the collection of data. Once this happened, the cleaning up of black money and the enhancement of tax collection from real estate gains would get an enormous boost.

Unlike so much else in the budget, there were hardly any objections to this measure. But when the final finance bill was passed, this measure had been quietly rolled back. A finance ministry that has defended every piece of enhanced taxation with great ferocity has meekly given in to the forces that would like to keep real estate awash in black money and tax evasion.

It’s a great puzzle. If 1% was too much, the goal of data collection could even have been met with 0.1% or a 0.01% TDS. Does anyone have any idea about why real estate is so special?

Source: http://www.hindustantimes.com/business-news/ColumnsBusiness/Why-is-real-estate-lobby-so-special-and-powerful/Article1-855222.aspx

Chennai retail witnesses limited transactions

Chennai

With no new supply of mall space entering the market during the first quarter, Chennai’s high streets gained healthy leasing transaction. Limited number of transactions has also contributed to the stable rental and capital values. High interest rates, global macro-economic conditions and lack of quality mall space have resulted in fewer transactions which in turn left the financial indicators to remain stable. Vacancy levels decreased from 14% in fourth quarter of 2011 compared to 13.5% in first quarter of 2012.

The largest deal was by French Home furnishing retail chain Ebony Gautier, which took around 10,000 sqft space in Express Avenue mall.

According to Jones Lang LaSalle’s review, small format stores in the CBD were in demand during the first quarter. Canon Image studio, Gem Palace, Lasya, Kryolan, Timex, Eye T World were some of the brands which occupied vacant spaces in Ramee mall during the review period. Ground floor office buildings continued to attract retailers with Spectrum Shoppe’s leasing out around 1,900 sqft in Ambit IT Park, Ambattur industrial estate.

Lack of new mall space helped high streets to gain healthy leasing during the quarter. LG opened two stores, one in Nungambakkam high road and another in Chrompet. Louis Philippe, Van Heusen and Zimson opened shops in Adyar, while Harley Davidson and Apple opened stores in Nungambakkam. Roshal Lal women’s ethnic wear and Helios opened shops in Shanti colony, Anna Nagar whereas Reliance Trendz opened its shop in Chrompet.

A significant factor is that no new mall supply was added during the first quarter. Ten Square mall coming up in Koyambedu near the mofussil bus stand is now ready for fit-outs stage and is expected to come during the second quarter this year. This will add around 150,000 sq ft of mall space taking the total supply of city’s mall space to 3 million sq ft. In a small market, no sales transactions were recorded in the retail malls sector over the past few quarters as new malls in the city operate on lease model. However, the city’s retail segment delivers high returns on investments which compels the investors to hold on to their investments.

Outlook:

With the Union budget putting more money in the hands of avid shoppers, sales for the retailers are likely to increase, feel property consultants. Vacancy levels are likely to rise in the next 12 months amidst the supply of over 2 million sqft of mall space. Though vacancy rates are expected to surge, absorption in the new malls are also expected to improve amid flourishing residential and commercial activity in the suburbs.

Chennai saw an unprecedented number of residential project launches during the first quarter this year. Over 14,500 residential units were launched by various developers during the first quarter when compared to an average addition of 4,550 units during the past four years. The government’s clearance of pending approvals was considered as one of the major factors that contributed to the historic record number of launches in the city.

Demand for residential units skyrocketed during first quarter with over 9,500 units getting absorbed when compared to 5,076 units in 4Q11. Southern and western suburbs together contributed around 85% of the total net absorption.

Rental and capital values for retailing are likely to improve in select pockets of suburbs and in prime locations while peripheral areas may remain stable.

V Nagarajan, Property Consultant

Realty market booming in Chennai

Post the 2009 slowdown, the demand for property has been robust in Chennai so much so that the city is leading other metros.

Chennai is witnessing steady demand for budget and luxury properties and properties in the bracket of Rs 20 to 45 lakh is the most sought after, said a group of leading realtors who will hold a three-day Chennai Realty Property show at the Nandambakkam trade centre here.

The organisers pointed out that there is a shortage of 24,000 homes in the city in the budget home segment and added that more than 80 builders and banks that provide housing loans will put up stalls offering 50,000 property choices.

“A wide range of properties ranging from Rs 5 lakh to Rs 2 crore will be on the display and we expect a footfall of around 15,000 to 20,000 during the three-day event,” said Kishore Kumar, director, Eyeball.

“Property seekers were in a wait-and-watch phase because of Reserve Bank guidelines and market fluctuations and now the phase is over.

The investors and those who need homes should come forward to purchase properties and the Chennai real estate market is steady and booming,” said Kalyan Jayaprakash, managing director, Inno Geo City.

Chennai suburbs have potential and the public should start thinking about leading a peaceful life in a suburb, where there is no traffic chaos and congestion, said J. Kishore, director, Evocon.

He also pointed out that properties in the suburbs of Mumbai and Delhi were sort after by people, and a similar situation would soon arise in Chennai.

Jayanthi of Vijay Shanthi Builders spoke about new projects coming up at Ambattur, Kovalam and Besant Nagar.

Source: http://www.deccanchronicle.com/channels/cities/chennai/realty-market-booming-chennai-885

Chennai realty market rates zoom ahead of guideline values

Chennai

If you need any proof of how buoyant the real estate scene in Chennai is, here it is. In the five months since the guideline values (government-notified rates for registration of properties) were revised across Tamil Nadu, the market rates have already overtaken them by 10-45%.

The guideline value is used by the state government to assess the actual value of the property for levying stamp duty. Guidelines values were revised late last year after a gap of five years so that they would be indicative of prevailing market rates.

Growing demand for housing in the city has resulted in a steady climb in apartment prices both in the city and the suburbs over the last six months. “Hence, in most areas, the guideline value is below the market price and the difference ranges from 10% to 45%,” real estate consultant S Ramaswamy of RECS Group said.

For instance, the guideline value of land on the Arch Bishop Mathias Road in Boat Club is 18,000 per sq ft whereas the prevailing market value for the street is around 33,000 per sq ft. Similarly, guideline value for RK Salai is 19,000 per sq ft whereas the market rates are close to 25,000 per sq ft. Guideline values are on the lower side even in central business districts. Guideline value on Khader Nawaz Khan Road, which is a premium shopping hub, is only 9,500 per sq ft. Guideline value on Haddows Road is also similarly low.

Experts say prices in most parts of the city have increased by close to 20% in the last six months, going by the residential price index (Residex) brought out by the National Housing Bank.

According to recent figures, Chennai is one of the fastest growing real estate markets among all metros, but this boom is not reflected in the new guideline values finalized five months ago. Guideline values were revised after a span of five years. In the meantime, prices within city had increased two to four-fold while the jump was about five to six times in the suburbs.

However, property consultants also point out that many buyers and sellers are keen on registering properties at market price. “Whenever a property is registered for a price higher than the guideline value, that becomes the new benchmark for the locality. Hence, over a period of time, the gap between guideline and market rates will reduce,” said P Ramesh, a mediator.

While guideline values in the city are higher than market values, in the suburbs it is the reverse, and that is a matter of concern, say realtors. This disparity is partly owing to the slow growth of real estate prices in suburban areas. “Even if properties are available at lower rates, we have to pay a higher stamp duty and registration fees there as they are calculated based on guideline values, which are higher than market prices,” Chitty Babu said.

There is also a section of developers who feel that in some areas, the guideline value revision has been far too steep. “With such upward revisions, middle income people will find it difficult to buy properties in the city. Already, many of them are moving to suburban locations,” PV Sanmugam, managing director, Kgeyes Residency said. But how far this argument will cut ice is a matter of debate.

Even when the guideline values were low, builders kept apartment prices high, said P Manikandan, who ended his five-year hunt for an apartment a month ago.

Source: The Times of India, Chennai

Velachery emerges as a key locality in South Chennai

Chennai

Velachery is growing at break-neck speed but it still manages to retain its old world charm. Take a walk down the Taramani Link Road and the by-pass road and you can see a huge crowd of hip, 20-something girls and boys hanging out at the local eateries or busy shoppers making a beeline to high-end branded showrooms that dot the main road.

Walk a little further and you are greeted by skyscrapers and large residential complexes. Amidst traffic snarls and a new landscape, this sleepy neighbourhood has etched its own metamorphosis. The new Velachery is vibrant, and is a work in progress.

“Velachery is one of the older localities with good social infrastructure. However, land is scarce as most of it has already been developed. But it is in the throes of development as builders are keen on setting up projects here,” says R Williams, a senior citizen and a resident of the area for the past 38 years.

“In the last five to six years, the locality has undergone a sea change. A lot of old buildings, particularly large bungalows, have been razed and very high-end commercial and residential buildings have come up. These have changed the very face of Velachery,” explains Stanton Morrais, Director, Vindhya Homes. “Velachery has developed into a residential hub today providing quality residential developments, commercial offices and glitzy malls with good retail options. One of the main reasons why Velachery is witnessing a huge facelift as compared to other older localities of the city, like Adyar, is its proximity to OMR. Another reason for the development in the area is its huge contribution to the IT industry. Nearly 30 to 40% of IT employees are from this neighborhood. Their exposure to modern developments abroad and demand for quality residential space has pushed up the real estate development in this area,” he adds. However, residents in the locality still like the area for its innate old world charm. “Despite the change it is witnessing, Velachery retains the flavor of good old Chennai,” adds Stanton.

N Ravichandran of True Value Homes (TVH) says, “The government lacks clarity in promoting infrastructural developments here. This locality has the potential to be a very huge separate township by itself. People of all income groups are nested here and witness the growth of the locality everyday. However, frequent powercuts and long-pending road widening projects are impediments to its growth.” Water supply lines, better sewerage system, development of link roads and stormwater disposal systems are expected to be completed soon. Besides these, a number of other projects are being implemented in the area. A number of projects – Monorail, satellite bus terminus, lake beautification, Phoenix Mall, Grande Mall, etc, have been planned in this area.

Once all the proposed retail malls, commercial buildings, hotels and commodity markets are operational in the next couple of years, there will be a surge in economic activities in the area. This will also lead to demand for real estate, both residential and commercial, in the area. “This locality has good connectivity and it will improve further in the coming years. I wanted to purchase an apartment here when I came back from the US in 2005 and I’m glad that my investment in here has proved to be a wise decision,” says Srikanth Menon, an employee of Cognizant Technology Solutions.

“Residential apartments in the locality command a very good price, particularly projects that offer the latest amenities. Prices for residential built-up areas range from 5,500 to 8,000 per sq ft, depending on the type of construction. With the opening of the Pallavaram Highway which leads to the International Airport at Meenambakkam, Velachery is the new gateway to South Chennai and is fast emerging as one of the most sought-after hotspots of the city,” says G Ramanarayanan, a real estate consultant in the locality.

Source: Times Property in The Times of India, Chennai

Senior citizen homes gaining momentum

Chennai

With nearly 100 million senior citizens in India now to cater to in the coming decades, there is a vast untapped potential for investment and development in the sector. India provides an opportunity to developers, service providers, healthcare players and operators to create solutions specific to India while leveraging learning from across the world, says Jones Lang LaSalle survey.

As per census of India projections, the percentage of elders as a percentage of total population in the country would jump from 7.4% in 2001 to 12.4% in 2026 and touch 19.7% in 2050. In 2011, India had about 76 million seniors above the age of 60 years and it is expected that this figure will grow to 173 million by 2025, further increasing to about 240 million by 2050.

In Chennai, Covai Property Centre has announced a senior specialty apartment project at Vandalur for the retirement community. The company had earlier implemented a project in Coimbatore and they are set to expand with similar units in Pondicherry, Hyderabad and Pune.

A number of leading developers who have all along be focusing on residential development in and around the city are also planning to enter the senior citizens’ homes category as they realise the huge potential shrouding the sector. Demand for such units is growing if the number of enquiries received by select developers is any indication in the city.

Unlike traditional housing complex, retirement homes for senior citizens will have to be self-contained including the setting up of a modern central kitchen with dining facilities. A medical centre with a resident or visiting doctor, resident nurse and a physiotherapist with a fully equipped ambulance will be an integral part of such projects to take care of medical needs and emergencies. Besides leisure and entertainment activities, the maintenance and support services will have to be strong with 24×7 security.

As the development of such projects will have to be in proximity to hospitals and retail centres, location plays a key role taking into account the din and bustle of city life as well. Property developers agree that suburbs and peripheral areas offer immense scope for development such projects with improved connectivity levels and tranquility is a major factor to kickstart such projects. With the migration of a number of skilled professionals from Chennai leaving behind their parents to fend for themselves, the demand for such units is likely to grow in the coming years, feel industry analysts.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/senior-citizen-homes-gaining-momentum

The two faces of OMR

Behind the modern visage, Old Mahabalipuram Road's pastoral past remains intact. We present you the striking contrast

With its imposing and contemporary structures, swanky eateries and a growing number of entertainment zones, Old Mahabalipuram Road (OMR) offers a vignette of modernity. However, a little beyond this glitz, lies a world that moves to a different rhythm, a world of freely ranging livestock and gaudily painted houses. The interior areas of OMR still bear the vestiges of village life.

Here's a slice of this contrast: About 500 mt behind the posh Aloft Hotel and the chic Express Hyundai showroom in Sholinganallur, there are houses with cow sheds. Sixty-three-year-old G. Radhakrishnan, a fifth-generation resident of Sholinganallur, says, “At least 25 families rear cows to supply their need for milk. People in these families may be employed in big companies, but they don't want to break away from tradition. Ten years ago, all the families in this locality kept cows. Those days, I had 20 cows. I have held on to three of them.” Radhakrishnan also points out the presence of ‘arasamarangal' (bodhi satva trees) and ‘veppamarangal' (neem trees) that still serve as congregating points for villagers. Another distinctive mark of the past is the temple car of a deity that is drawn through the streets during festive seasons.

Modernity and tradition

This striking interplay between modernity and tradition is probably what gives OMR its uniqueness among the major stretches of roads around Chennai. Take Arcot Road, which was once a single-lane, macadam road that snaked unremarkably through what was an aggregation of small villages. This road was freed of its rural character long ago: it no longer bears any signs of its pastoral past. The rural-urban contrast is displayed by certain sections of the GST Road, but it is not as pronounced as on OMR.

The unstoppable push of modernity will ultimately overpower OMR and recast it in a completely contemporary image, but there is reason to believe that this change is a long way off. Encouraged by the high rates of appreciation in land value, 32-year-old Manivel, a son of the soil who ekes out a living as window maker, is holding on to his one-ground house on Madha Koil Street in Okkiyam Pettai.

“During the real estate boom on OMR, local residents who owned large parcels of land sold only portions of their properties. They improved their lifestyles with the gains and stayed on,” says Manivel. “Some people have extended their houses and let out portions to IT professionals and students. Hard pressed for money, some sold their houses and cashed in on the boom and bought land at relatively lower prices in areas further down OMR — such as Thiruporur — and settled down there.”

Sabyasachi Debnath, an engineer working on OMR, believes local villagers thrive on an ever-increasing demand for living spaces. “Rather than selling their properties and making a one-time killing, they turn their properties into a steady source of income. I have seen people with single-storey houses adding an upper floor to them and letting out one-room portions to bachelors from other States employed in the offices on this road. While the demand for office space hit a plateau long time ago — thanks to software companies looking to other growing corridors to set up their offices, GST Road with its Mahindra City being one example — the demand for living spaces on OMR has been constantly rising.”

In stark contrast to most of the other major roads in Chennai, OMR experienced a big bang of development. Before the advent of the IT industry, interest in this stretch was low and, as a result, land had stayed in the hands of the locals. Most outsiders began to buy land on OMR only after real estate prices had gone through the roof.

“Local residents know that nothing sells like real estate on OMR. They are holding on to their properties because prices can only go higher and higher,” explains T. Chitty Babu, chairman of Akshaya Homes. “Many of these longtime residents — whose ancestors practised agriculture on this stretch — will continue to stay on. And the colour they bring to OMR will contrast sharply and beautifully with the ultra-modern features that are giving this stretch its distinctive character. OMR is actually taking on the character of the people that work there: young IT professionals who are global in their thinking.”

Keywords: Old Mahabalipuram Road

Source: http://www.thehindu.com/life-and-style/metroplus/article3006488.ece

CMDA plan to digitize Chennai land records on the backburner

Chennai

A project to digitize all land records and documents in Chennai has been pushed to the backburner. It was proposed in 2007 and a Madras high court appointed monitoring committee sent a reminder in November 2011 but the Chennai Metropolitan Development Authority (CMDA) is yet to move on it.

The project, based on studies of similar models in foreign countries, was mainly aimed at making land-use systems and policies more transparent and efficient, ensuring that there would be no loopholes. The HC panel asked the CMDA to digitise all documents to ensure easy access to the public.

A highly-placed CMDA official admitted that no move was taken in this regard. “It was mainly to avoid delays in carrying out punitive measures against illegal structures. All documents, including those relating to land sites, dimensions and surrounding areas in detail, were to be in electronic form,” he said.

CMDA sources said a study would be undertaken on the quantity of documents and the quality of decades-old records. “Technical help from an external agency is a must as it will be a massive project involving lakhs of pages,” said the official. He added that a group of officials was purposefully delaying the project due to political pressure.

In 2001, Andhra Pradesh took up a digitization project and completed the pilot programme, digitizing records based on cadastral surveys, employing modern instruments and techniques. In October last, the Centre asked states to initiate digitization of land records. The National Council of Land Reforms suggested computerization of records, setting a two year time framefor a survey.

Source: The Times of India, Chennai

Chennai malls and infotech parks may have to pay more tax

Chennai

Mayor Saidai S Duraisamy presented his first budget without hiking property tax rates but hinted that commercial space such as buildings housing multinational firms and IT companies may have to pay more from the next financial year.

Presently, there are different tax slabs for commercial and residential properties and a separate slab for hotels, theatres, private hospitals and marriage halls. Malls, offices of multinational companies and IT parks may be included in this category later.

According to revenue department officials, the 175 sq km area of the old limits of the corporation has 12,417 private companies. Officials said many shopping malls, multinational companies and IT parks have been categorized as ordinary commercial buildings.

“Some of these companies’ profit margins are higher than theatres and hotels, but they are not part of the special category,” said a revenue officer. The amendment in taxation may soon change that. However, National Association of Software and Services Companies regional director K Purushothaman said, “Higher taxes should not be imposed only on IT industries as they are generating huge job opportunities. They should also be considered on a par with other industries.”

The corporation is also planning to survey residential buildings to find those which are being used for commercial purposes. “Many property owners are misusing the rebate of 25% guaranteed by the Chennai City Municipal Corporation Act, 1919, for owner-occupied buildings,” an official said. “Tax assessors are made to believe that the tenants are relatives of the owner and the dwelling units are not rented out,” the officers said. The corporation which has not hiked property tax since 1998, is hoping to mobilise more revenue through these measures.

Statistics show the 2012-13 budget of the Greater Chennai Corporation at just 2,922 crore is much lower that that of other metros and some state capitals.

Source: The Times of India, Chennai

Surge in demand for developed plots in Chennai

Chennai

The growth corridors of Chennai and the resultant infrastructure development have pushed the land prices to a new high. As a result, there is a spurt in demand for developed plots in peripheral and suburban areas. Investors prefer developed plots in the medium to long-term so that it will serve as a hedge against inflation.

Due to surge in demand, land prices in plotted development projects are up by 12% in the last one year alone in specific areas like Singaperumal Koil, Sunguvarchathiram-Wallajahabad road, Sriperumbudur and Trivellore. With the improvement in connectivity levels and proximity to both rail and bus transport, there has been a sudden spurt in the number of plotted development projects mushrooming in peripheral and suburban areas. While some are sold as plots others are keen to undertake housing development especially when it is developed on a larger land area.

According to land developers, those looking for a 5-year horizon investment period should invest in areas within 50 km radius of the city and those looking at a minimum investment period of 7-10 years can opt for 100 km radius. It is only then substantial return on investment can be derived as connectivity levels and infrastructure development take time and play key roles in deriving the maximum yield for investors.

An estimated 10 private limited companies are developing land development projects with a range of amenities like landscaping, clubhouse and 24×7 maintenance services. There are several unorganised players in the market.

Plot loans are available from a few institutions but at a higher lending rate and the quantum of loan are restricted to the guideline value of the property which is less than the market value. This increases the upfront margin money for investors seeking plot loans. A majority of the housing finance institutions insist on construction within the prescribed period and so investors may not be able to benefit much out of plot loans if the intention is to just make medium to long-term gain.

There are ground realities for investors before plunging into plotted development projects. Among the basic documents that need to be verified include title deeds, revenue documents like Patta, chitta and adangal, encumbrance certificate for a minimum period of 30 years, sanctioned planning permission from DTCP, authentic document to establish the identify the vendor, etc.

Source: http://content.magicbricks.com/surge-in-demand-for-developed-plots-in-chennai

Redevelopment in Chennai poised for next major leap

Chennai

Strategic location advantages, vast open area, eligibility for higher FSI and an ever ready developer community to convert the existing site into a modern day multi-story apartment complex have all made erstwhile Tamil Nadu Housing Board occupants to wonder how best they can make better use of their crumbling units in prime city areas in Chennai. There are at least 10 medium to large-scale developers who have undertaken the task of redevelopment assignment in main areas in the city. An estimated 1,000 such projects may undergo transformation spinning a huge opportunity for both developers and occupants.

The momentum has already started and the coming years will see Chennai’s vibrant city areas like K K Nagar, Anna Nagar, Thiruvanmiyur, Besant Nagar, Korattur and Mogappair replacing housing board units with private multistoried buildings with better amenities, higher FSI, and a chance for the owners to earn monetary incentives as well in some cases. There are areas where the frontage is substantial ranging from 500 to 700 ft.

Among the city’s developers who have undertaken the development include Ramaniyam, KGS, Pushkar Properties, India Builders, Landmark, Green Peace Foundations and a few others.

Enhanced FSI from 1.5 to 2.1, opportunity to use premium FSI, possibilities of mixed development, leverage to get additional amenities like covered car park, lift, gym, club house and children’s play area are the cascading affects of redevelopment for housing board flat owners. Industry experts say that it is a win-win situation for both the developers and those owning the housing board units to realise their lifetime of living in large sized units with better amenities and that too within the city areas. Moreover, increased rental prospects will be a big boon to those in the retirement ages for whom the main income would be from the housing units.

All said and done, it will be a time consuming process as housing board projects vary in sizes and the association members will have to marshall the efforts of those who may not agree to the terms and conditions prescribed by the developers. Yet, many developers have already made in-roads in this area for whom a big redevelopment opportunity is awaiting to be encashed in the coming years.

Source: http://content.magicbricks.com/redevelopment-in-chennai-poised-for-next-major-leap

Is Chennai ready for retail space boom?

Chennai

The dynamics of commercial spaces in Chennai is undergoing a change. For a city that has not seen a radical growth in terms of commercial rentals in the past five years, the shift may signify an emerging trend in the real estate. The volume of office space demand by IT and ITES companies may shrink in the times of come, impacting the commercial rentals in different locations of the city.

Prakash Challa, managing director, SSPDL Group, said, “The absorption of office spaces by the IT sector is beginning to taper and restrict itself to SEZs. On the other hand, non-IT requirements are drastically up. The demand is coming from engineering-led companies, educational institutions, hospitals and retail segment.”

According to Cushman and Wakefield the IT/ITES sector accounted for 67% of total absorption of office space in Chennai in 2011 and a majority of the space taken up by the sector is in the suburban markets of Perungudi, Taramani and Manpakkam. Listing out the key contributors to the demand for office spaces in the city during 2011, Hariharan, Chennai Director, Cushman and Wakefield said,“several industries including IT/ITES, banking, financial service and insurance (BFSI), manufacturing and construction contributed towards the spurt in demand for commercial spaces.”

Market observers feel that the rentals for IT driven office spaces grew by 5% to 8% in the last financial year. Rentals around OMR and Guindy remained stable at Rs 50-55 sq ft per month. The areas to have posted a marginal growth in commercial rentals are stretches along Ambattur.

“The situation is bad in OMR. There are not many takers for office spaces except in the earlier part of OMR. Ascendas is commanding premium over Tidal Park,” explained Ajit Chordia, CEO, Khivraj Tech Park, reiterating that IT led demand for office space is on the ebb.

Future hotspots

IT/ITES related trend, however, is not indicative of the overall market sentiment. Corporate entities posting even marginal growth are looking at expansion but supply crunch within the city restricts their choices. The micro-market from Tidal Park to toll gate continues to attract occupants. Office spaces in MRG Nagar, Guindy Industrial Estate, 100 ft, stretches along Raj Bhavan, Velachery and Greams Road are in demand. “CBD leads the tally of hot office destinations, followed by OMR and GST SEZ corridor,” said Challa, adding that there is lack of ‘A’ grade space within the city. CBD posted a maximum of 10% growth in rentals and is currently drawing Rs 80 per sq ft per month.

Connectivity and availability of parking space are the two deciding factors when it comes to rental values of office spaces. “The later parts of OMR and Ambattur have a long way to go. Infrastructure makes or mars the prospects of the office space. MRT connect to Ambattur is missing. This impacts the rental values in the area,” explained Chordia.

According to Cushman and Wakefield, office spaces in CBD and off-CBD locations have registered the maximum growth in rental values during 2011 followed by the suburban Guindy market. “The appreciation in CBD and off-CBD rentals can be attributed to the limited availability of Grade A space,” said Hariharan, adding that the two office markets are likely to remain most expensive office destinations in Chennai. Going forward, however, suburban markets of Taramani, Perungudi and Guindy will command higher rentals in the next five years span.

Boom or no boom

The other significant component of commercial space dynamics is mall/retail space. Chennai currently has around 2.89 million square feet (msf) of operational mall space. Fresh supply of around 0.49 msf of mall space was registered in 2011 taking overall vacancy in mall space during the fourth quarter of 2011 to 6.60%. According to Cushman and Wakefield the mall rentals during the year were impacted by subdued market sentiments. When compared to NCR and Bangalore, the mall penetration index (number of malls per million populations) is lowest in Chennai. While NCR scores with 2.08, Bangalore is slightly better at 2.76 on the scale. As against this, Chennai has 0.54 mall penetration.

Spelling out the intricacies of mall space rentals Hariharan said, “The success of a mall is primarily determined by zoning and pricing strategies. Malls in CBD locations have consistently witnessed low vacancy levels and are successfully drawing footfalls. However, it might be too early to determine the success of the malls in the suburban locations with several malls in these markets yet to become operational.”

Chordia said, “The city has a huge requirement for retail spaces. Even if it doubles or triples the retail space, the supply lag might still be visible. Except for the upcoming Phoenix mall, nothing much is in the offing in the near future.” Malls in CBD locations are quoting maximum rental value of Rs 265 per sq ft per month, followed by those in western suburbs that fetch Rs 230 per sq ft per month. Malls in peripheral Chennai (South) have the least rental value at Rs 200 sq per ft per month.

Oscar Braganza, ED, Marg, said, “The old model of city centric malls is losing its sheen as the working population is moving to suburbs of the city. Junction Mall located on OMR Road is positioned well to leverage both working and residential pockets.” Braganza feels Khader Nawas Khan Road and T Nagar will continue to be the most expensive retail space destinations in Chennai.

Meanwhile, the leasing strategies for retail spaces have evolved due to supply crunch clubbed with the impact of 2008-09 recession. The retail space rentals are now a function of the revenue generated by the retail outlet instead of flat rates. Zoning, traffic management, parking, customer flow or footfalls are some factors that determine retail space rentals. With projects such as Ampa Mall and Forum Mall in the pipeline, is Chennai poised for retail space boom?

Source: http://content.magicbricks.com/is-chennai-ready-for-retail-space-boom

Builders seek changes in proposed bill

CHENNAI: The Real Estate (Regulation and Development) Bill, set to get Parliament's assent soon, has been dubbed by builders as a unidirectional legislation aimed at strangulating the developer community.

The bill, in its present form, aims at safeguarding the interests of consumers and taxing developers, said Confederation of Real Estate Developers' Association of India secretary T Chitty Babu, at a seminar organized by the Builders' Association of India ( BAI) here on Tuesday.

Listing out lacunae in the bill, Babu said other stakeholders like government agencies, regulatory bodies, financial institutions and banks had been left out of the purview of the bill.

He said a developer had to obtain nearly 50 clearances to complete a project. Often, residential projects were delayed due to obtaining plan approval from regulatory bodies and getting service connections like water, power and sewerage, he said. If banks were not brought under the bill's purview, they would withdraw funding for projects when the market became sluggish.

Babu doubted the effect the bill would have the real estate sector when land is a state subject and wondered if there was any guarantee that all states would follow the Central legislation.

Another drawback, he said, was that the bill sought to cover only projects that were 4,000 sq m and above. Since a lion's share of development projects was on a small scale, the bill would cover a very small section of builders, he noted.

He, however, welcomed the provisions to create transparency in apartment sales by making in mandatory for builders to specify carpet area and common area. Similarly, the condition that only approved projects could be marketed would put curbs on unauthorized buildings, he said.

Source: http://timesofindia.indiatimes.com/city/chennai/Builders-seek-changes-in-proposed-bill/articleshow/12076895.cms

Realty funds are back in business

Chennai

The global financial crisis has put the private equity players on a cautious path. However, Indian success story continues to remain intact and drives PE players to its fold. As demand picks up, realty projects that are put on hold are likely to be resumed to meet the pent-up demand in many cities.

There is no denying that expectations of PE funds have gone up and the valuations are becoming stringent now. It is quite natural that more efforts are being made to evaluate the business rationale behind new investment activity.

All said and done, with the liquidity crunch posing formidable challenges to the realty sector, most of the doors in the banking sector are either shut or norms have become more stringent. Mid-term capital requirement will have to be met by PE players, according to industry sources.

In Chennai, PE funds have made an investment of US$76 million in two projects. Though the numbers of deals have reduced to half when compared to last year, the quantum of investment has gone up from US$125 million to US$154 million, according to Venture Intelligence sources.

Though the current liquidity scenario is causing concern among property developers, it is time to seek PE funds to tide over the current scenario and put efforts to meet the mismatch in housing between demand and supply in Chennai. The growing potential for housing sector need not be overstressed and PE fund houses are expected to focus on such sectors in the coming years.

“There is no dearth of PE funds available today but the only criteria in the current scenario is that the project should be viable with a thrust on marketing and demarcation of exit route for investors”, feel developers who have been approached by various PE funds to forge strategic alliance in residential development.

Most of the funds are keen to commit for residential development only taking into account the surge in demand for select categories of housing due to demand-supply mismatch in the city.

On the flip side, land prices are deterrents and some of the projects are becoming unviable to undertake development by property developers even if PE funds are keen to commit for financing the project, according to industry sources monitoring the investment by PE funds in real estate deals in the city.

Source: http://content.magicbricks.com/realty-funds-are-back-in-business

Trichy witnesses increased interest from home buyers

Chennai/Trichy

It is aptly called the heart of Tamil Nadu, and located in a manner that a trip to either the southernmost tip of Tamil Nadu, Kanyakumari or the capital, Chennai is approximately a six-hour drive.

In many ways, the simple life that the city professes – has inspired many from different parts of the State, to invest in the city and its charms. Their dream home, after all, needs to be located in a land of peace. And Trichy is the ideal destination for more reasons than one.

TRANSPORT

It is one of the most accessible cities, connected by a vast network of roads, railways and air routes. It is also home to the South Indian Railway Company, established during British rule. Frequent train services to all parts of South India begin here and domestic flights fly in and out of the city regularly.

INDUSTRIES

Trichy is home to industrial giants like Bharath Heavy Electricals Limited (BHEL), Indian Ordnance Factory, Trichy (OFT) and Cethar Vessels, have helped the city grow in providing employment and better living standards. “Trichy has grown massively in the industrial sector and many companies are looking at invest in the city today,” says S Senguttavan, CEO, G K Industrial Park, “Currently, there are eight companies from Malaysia, Chennai and Coimbatore that operate in the park and we planning to open more in the future.” Such industries and parks help in the improvement of the city’s outskirts.

CENTRE OF LEARNING

One of the most important features of the city is its many educational institutions. It is said that even during the British era, these institutes were recognised as renowned centres of learning. Colleges like Bishop Heber and St Joseph’s were established during this period. Nationally renowned institutes like Indian Institute of Management (IIM), National Institute of Technology (NIT), Bharathidasan Institute of Management (BIM) and Sastra University are all located in the city and provide many opportunities to the student community. “As an institution, NIT has grown over the years and ensured quality education to students who come here from different parts of the country,” says Dr S Sundarrajan, Director, NIT.

HEALTHCARE

Trichy is well and truly a healthcare hub. Leading medical stalwarts like Vasan Health Care, Kaveri Medical Hospital (KMC) and the recent foray of Cethar Vessels into the scheme of things, has made the city an ideal destination for the healthcare industry. Dr S Chandra Kumar, Managing Director, KMC, believes that the city has grown at a significant rate in its health standards over the last five years. “We have performed over 100 renal transplants, 500 open heart surgeries and a joint replacement surgery too,” he says, “We also offer health services for rural people at subsidised rates and have plans to promote better health standards in general.”

A RETIREE’S RETREAT

Trichy is highly regarded as a retirement paradise and many elderly folk have settled down here, enamoured by its peace and quiet. People like investing in small houses or flats and thus get some rest in this city, which is still a small town at heart. P Arunachalam who has recently launched with a retirement gated community – Ponni Delta in the city believes that factors like low congestion and less pollution make Trichy a preferred retirement destination. “Trichy is a Tier Two city that guarantees a peaceful retired life at an affordable price,” he says, “We thus came up with the concept of providing high-end facilities like security, housekeeping and health services apart from other factors that promote peaceful lifestyle to senior citizens.”

A HUB OF INVESTMENT

Given all these favourable qualities, Trichy has now become a major destination for real estate players to set up base. Many gated communities, high-rise apartments and villas are now being constructed. “The construction of large-scale gated communities has led to the growth of the city and has increased its land and market value,” says B Senthil Kumar, Secretary, CREDAI Trichy who feels that the most important reason behind big investments is the fact that the city is one of the safest regions in the State. “The government should now develop water and transportation facilities to ensure that uniform development takes place,” he signs off.

Source: Times Property in The Times of India, Chennai