Affordable homes in demand in Chennai

Chennai

Post-2008, when the economic slowdown began to tighten its hold on a majority of the country’s industries, the buzzword was ‘affordable’. Consequently, builders in the city began to believe that small and affordable homes were what would now be on the wish list of prospective buyers who now had a considerably lower purchasing power. Added to this, was the already-existing EWS (Economically Weaker Section) segment that was already in need of small, affordable homes.

Affordable housing, it seemed, became the need of the hour and they (builders) had to deliver. It’s been nearly three-years-and-a-half since the slowdown began. While the economic situation hasn’t quite improved as yet, the dream of affordable housing today, continues to merely remain a dream. Unrelenting land prices, the rising cost of construction materials and the fact that nearly one-third of the price of every property is paid to the government in the form of taxes and levies, have undoubtedly played spoilsport in this dream to provide affordable housing for all.

“Make no mistake that a huge demand exists for affordable homes; that has not changed,” said Suresh Jain, Managing Director, Vijayshanthi Builders, “When the economy was going strong, 1,200 and 1,500 sq ft homes were preferred by buyers. But with the slowdown, 400 sq ft is what has become their idea of affordable.” Jain believed that land availability and Government levies play the biggest spoilsport in the delay in providing affordable housing for all. “The first factor can be addressed. The city is expanding rapidly, and with a little infrastructure development, places like Chengalpet could well become part of a new Chennai. However, unless the government does its bit to provide some relief to developers and buyers as far as levies go, we don’t quite see much leeway being made in the affordable housing segement.”

What exactly are these levies? “Stamp Duty, Service Tax and VAT (Value-Added Tax) together contribute to roughly 36% of the cost of a house,” said N Nandakumar, Secretary of CREDAI Chennai and the Managing Director of city-based Devinarayanan Housing and Property Developments. “Some rebate on stamp duty will be desirable, while relief on VAT is also welcome, if there is serious intent to consider affordable housing,” he said, “Given the high land prices that exist and the rising cost of construction, the government will also do well to provide priority status for approvals of affordable housing, or even develop a pre-approval system for housing projects so that developers needn’t wait unendingly for approvals, which inadvertently translates to how much the buyer pays.”

Levies aside, connectivity and infrastructure seem to be the other big worry among developers. “One fact is quite clear. Should affordable housing projects come through, you can construct only in the far suburbs,” said A S Sivaramakrishnan, Associate Director (Residential Services) as Jones Lang La Salle, Chennai. “Let’s consider a suburb like Chengalpet. You have to realise that social infrastructure in places like these are far from desirable,” he pointed out, “If the government were to extend the metro rail project to a place like Thiruporur, then the situation in that locality is bound to improve on account of better connectivity.” According to Sivaramakrishnan, real estate in Chennai is driven in direct proportion to the IT/ITES sector. “If affordable housing activity is directed in proportion to the automobile segment (that has established itself on GST as opposed to OMR), you are likely to develop infrastructure in under-developed localities and affordable housing will thus become all the more easier.”

Urban planners believe that the only way forward for affordable housing is cross-subsidisation through partnerships between the government and private firms. Durganand Balsavar, city-based architect and urban planner, said, “Through cross-subsidisation, linked to the nature of tenure, it is possible to address the needs of affordability. The challenge is however complex. It may be essential to explore a regional perspective rather than one focussed only on urban areas.” GR Dattatri, former town planning officer, concurs. He said that integrated development will go a long way in ensuring that the needs of all income groups are met. “With proper planning and pooling of resources (from the government and private sector), it is possible to implement affordable housing projects, even within the city,” says Dattatri, “For instance, there is a big opportunity for this kind of housing, in Ashok Nagar, where Tamil Nadu Housing Board (TNHB) has land reserves. This has been done earlier in Besant Nagar, Mogappair, Anna Nagar, etc.”

Durganand added that such initiatives have been carried out in other Indian cities like Mumbai, Indore and Pune. “We must take a cue from such projects and explore new initiatives in upgrading slums to ensure safety and hygiene, and better living conditions, while keeping the livelihoods of slum-dwellers in mind,” he added. There is a huge shortage of housing in the country (about 26 million) and most of the demand is in the LIG (Low Income Group) and EWS (Economically Weaker Section) categories. As Dattatri said, “There is a misconception about affordable housing. It is not for the Middle Income Groups (MIG) but for those in the EWS and LIG sections – that’s where the shortage really is.

The government and the developer community need to break the barrier of mistrust between them and work this out together.” Of course, challenges are aplenty. Durganand said, “The challenges that affordable housing confronts is the high land value and construction costs. The strength of the industry is the availability of human resource. Judicious innovation – with a combination of technology and human resources creating livelihoods – could address the needs of affordability.”

In fact, Durganand has been involved in several such projects in the country, mostly in smaller towns, with the involvement of local communities. He explained, “To address affordability, we have often built a core house with two rooms which can be added upon over time as the family saves. At a recent seminar in Mysore, we suggested new models of supporting affordable housing. One of the challenges in affordable housing is sustaining quality, which can be addressed by ensuring that the family and community is part of the process. It requires a socio-economic paradigm, very similar to providing accessibility to education for all. Housing is a basic need. Several forms of housing could be explored like core houses that grow, incremental housing, renew existing houses, rental housing or cross-subsidisation.”

So, there is still hope, after all. How all this translates into viable solutions in the local context, needs to be seen. It is however clear that affordable housing can only happen through a strong partnership between the public and private sectors.

Jude Sannith S and Harini Sriram, Times Property, Chennai

Chennai Office Mart buoyant

Chennai

Chennai’s office market has absorbed close to 6 lakh sq ft till February. Corporates are consolidating their existing operations and are wary about market gyrations in the midst of global uncertainty. Rentals are holding steady and are unlikely to come down, according to industry experts.

The city had recorded a strong net absorption of over 1.6 million sq ft during fourth quarter last year, while net absorption for the whole year 2011 stood at 4.6 million sq ft. Transactions were dominated by the IT/ITeS firms, which contributed more than 60% of the gross leasing volumes. BFSI contributed around 10% and it was closely followed by the utility sector, which recorded around 9% during the quarter, according to Jones Lang LaSalle report.

Cognizant’s lease of 650,000 sq ft in the Ramanujan IT city was the largest lease transaction recorded in the city during last year. This, in turn has boosted the absorption figures.

Despite strong absorption figures, the city’s overall vacancy rates continued to remain in the range bound to previous quarter largely due to the new supply of office spaces during the quarter with notable vacancy.

A total of 1.38 million sq ft of new supply entered market during the quarter with over 55% occupancy level. Notable completions during the quarter include – Carr Tower of Ramanujan IT City with 650,000 sq ft in Taramani, Block 3 of DLF IT SEZ with 684,000 sq ft in Mount Poonamallee Road, and ASV Titanium with 50,000 sq ft in Perungudi.

The SBD sub-market recorded 2.5% quarter over quarter increase in rent as it grew more than the rent in CBD. The suburbs of Chennai also witnessed a notable 3.6% quarter over quarter increase in rent after prolonged stability as the leasing activity strengthens in the OMR pre-toll area.

Outlook

Chennai office market is expected to remain tenant friendly in the near term amid high vacancy levels and uncertain macro-economic headwinds. It is expected that the vacancy rates may stay higher in the SBD and PBD amid massive new supply expected in the coming quarters. As a result, there is limited scope for a significant rental and capital value appreciation in the short-term.

Source: http://content.magicbricks.com/chennai-office-mart-buoyant

Infrastructure issues keep North Chennai values down

Chennai

Chennai has seen tremendous growth, in terms of residential real estate, over the years. However, most of the development seems to be concentrated in the South. The North is comparatively out of the radar.

One is a posh residential haven; the other, an industrial hub. While the former is urbane in character, the latter is known primarily for its innate rustic, old-world charm. The South and North of Chennai couldn’t be more different – geographically and culturally. With urbanisation and growth, some of these differences are blurred and may no longer hold true, yet one cannot ignore the disparity in development between these two pockets. The South, undoubtedly, seems to be the preferred option when it comes to residential real estate. While problems like poor infrastructure, bad roads, garbage disposal, etc, are common across the city, these issues are more pronounced in North Chennai, and in some cases, hinder its progress.

However, the North, despite its hurdles, is slowly charting its own growth story, a metamorphosis, if you like. In fact, the city of Chennai has its roots in the North, in Georgetown, near Fort St George. Areas like Parrys, Perambur, Royapuram, Broadway, etc, are historically significant with a lot of heritage buildings dotting their landscape. As the city expanded southward, the North began to shrink in significance, especially in the residential real estate sector. Why has the North been sidelined? N Hariharan, Office Director – Chennai, Cushman & Wakefield, explained, “North Chennai has traditionally been the hub for industrial and warehousing facilities due to its proximity to the port. This part of Chennai has only recently witnessed infrastructure developments and good quality residential developments which has resulted in real estate growth in select pockets. Lack of quality residential development has also been a primary cause for subdued real estate activity in this region.” According to him, the residential development in the North Chennai has been restricted to certain locations including Tondiarpet, Perambur, Mint among others.

Developers cite several reasons for the lack of quality residential development in the North. D Charles, VP, Green Tree Homes, attributes it to non-availability of large parcels of land. He said, “The South has a huge land bank, so large projects can be put up. The North, however, does not have the luxury of space. Hence, only re-development projects are possible.” His company has primarily developed high-end apartments and villas in South Chennai and is currently planning a 160-apartment project (not named yet) in Korattur. He believes that Korattur has the potential to become the next Anna Nagar. “Anna Nagar is saturated now and Korattur is just a few kilometers from this area. It has its own railway station; besides, with the Metro Rail in Anna Nagar, Korattur is set to become a residential hub, very soon,” he added.

Another reason for the slack in residential activity in the North, as Sandeep Pantvaidya, VP – Marketing, Sales, CRM of SPR &RG Constructions Pvt Ltdputs it, is less focus on SEZs and IT/ITes by the government. He said, “There is a general perception that the North is down-market and investors may not reap valuation benefits here, as they do in the South.” So what North Chennai seems to need is an image makeover of sorts. Areas like Mint, Vepery, Perambur, Tiruvottiyur, Royapuram, Avadi and Ambattur, he adds, look promising, from the real estate point of view. In fact, the group has a 154-project apartment complex, Osian Heights, in Mint, which is almost sold out. In addition, the group is also looking at constructing high-end apartments in Vepery.

Land rates in parts of North Chennai vary between Rs1,500 to Rs6,000 per sq ft. A string of infrastructural initiatives like the Metro Rail up to Ennore and Manali, the Elevated Expressway from Maduravoyl to the Chennai Port, the development of a new port, Kattupalli, the Padi-Ambattur flyover, the new bus terminus at Broadway, etc, will drive growth in North Chennai, said developers. Despite these projects and the soaring prices, issues like bad roads, poor sanitation, infrastructural problems, traffic, congestion, non-availability of land, etc, continue to plague the North. “Only a collaborative effort between the city administration and the public can help provide permanent solutions to these problems,” believed Sandeep.

It is because of these issues that the focus has, for a long time, been on the South, which has comparatively better infrastructure and larger land cover, making it less congested. Where the North lost, the South gained. The easy availability of land at lower rates, the growth of the IT, technology and BPO sectors have made South a more promising destination for both developers and customers.

According to most developers in the city, the pattern of growth has always been southward. T Chitty Babu, Credai president and chairman of Akshaya Homes, said, “If you look at most cities across the world, development has always headed to the South. But I cannot attribute any particular reason for this trend. New commercial developments, increased job opportunities in the IT and automobile sectors over the last 10 years have increased the requirement for homes.”

“Velachery is one place that has witnessed immense development. Proximity to the IT corridor and the Velachery MRTS Station have spurred the increase in land rates,” he added.

The OMR (Old Mahabalipuram Road) corridor, extension of the MRTS (Mass Rapid Transit System), the desalination plant on ECR have only added to the growth prospects of the South, he said, “We have built several properties along OMR, GST Road and have always found buyers. Though in terms of physical infrastructure and basic facilities like water and garbage clearance, both South and North score quite low, at least there is hope in the South. But I cannot completely give up on the North. The infrastructure, mainly built by the British, has stood the test of time,” Chitty Babu said. If the city administration does not get its together, there is no point in having facilities like Metro Rail, MRTS and BRTS, he said. “People are expected to use public transport. But how do they do that unless there is connectivity to the railway stations and the airport? Most infrastructure projects come up without any long term planning. This hinders growth. Unfortunately, the authorities do not realise this. Hopefully, the present dispensation will score better on this front,” he added.

For some developers in the city, the North is an unattractive location as they feel the purchasing power here is quite low and the demand for high-end homes hardly exists. R V Shekar, managing director of Lancor Holdings, said, “The northern parts of the city are mostly populated by blue collar workers. So there is hardly any demand for premium homes. Flats are available even at prices between Rs 15 to 20 lakh. The infrastructure is quite poor and the area is very congested. The South definitely holds promise due to the high growth rates here in recent times which has been fuelled mainly due to the IT sector.” Apart from the OMR corridor, ECR and GST Road, areas like Mogappair and Velachery have also seen major growth, he said.

The company has a huge apartment complex — Abode Valley — coming up in Potheri, of which 400 flats have already been handed over to the buyers. Lancor Holdings has already constructed and sold homes worth between Rs 75 to 80 lakhs on GST Road. According to Shekar, rates in Shollinganallur and places like Thiruvanmiyur have gone up to Rs 5,000 from Rs 2,600 and to Rs 10,000 from Rs 7,000 respectively in just the last two years. The extension of the Metro Rail, better roads and better connectivity will only increase the pace of growth in the South, he says. The firm is set to announce five major projects in the next six months, which will come up places including Nanganallur, Sriperumbudur, Shollinganallur and Guduvanchery.

But not all developers agree that only the southern parts of the city have witnessed growth. Suresh Jain, managing director, Vijay Shanthi Builders, who have constructed some high-end villas and premium apartments in the South, feels development has been almost across the city. “That the North has been left behind in the growth story is just a perception. Property prices are going up everywhere. But the difference lies in affordability. As the outskirts on the southern side are developing people are able to buy huge houses and villas at comparatively lower prices. You can buy a flat at about Rs 3,000 per square feet even now in places like the OMR corridor,” he said. The firm has constructed property in the premium category along the OMR, on Kelmabakkam-Vandalur Road and near the Tidel Park.

While he does admit that South is witnessing a lot of development, he says the North scores in terms of availability of schools, colleges, several large department stores and better railway connectivity. “Though all my projects are in the South so far, I would love to develop a project in the North,” he said.

Developers may not be in agreement over the growth potential of the North and South, but they are unanimous in saying that unless better infrastructure facilities like proper public transport, better roads and basic amenities like water and garbage clearance is provided, Chennai’s growth story may be continue to remain haphazard.

Harini Sriram and Sangeetha Nambiar, Times Property, Chennai

TN government promotes affordable housing

Chennai

With the soaring land prices, input and material costs, lower income groups (LIG) and middle income groups (MIG) are among the worst hit across the state to get their dream homes. While private developers focus on apartments above Rs 30 lakh, there are limited players to focus on LIG and MIG categories.

The Tamil Nadu Housing Board which has land parcels across the state could not do much to provide shelters due to inherent limitations to do residential projects.

However, in a significant development, the state government is now gearing up to mobilise all its resources to enter the area of housing development, according to senior government officials. First, the objective is to go for public-private partnership model (PPP), and float an open tender by inviting private developers to construct apartments and commercial complexes in order to enable them share the developmental proceeds with the TNHB.

The TNHB land ownership limit had dwindled to just 300 acres across the state over the years with 1,600 acres embroiled in legal procedures. It is not far off that the board may even exhaust this land in the coming years, it is felt.

Among other measures include a transparent system whereby the government would develop 30 per cent of the land area besides additional 10% by undertaking the entire construction of the housing complex.

Land pooling is yet another concept whereby 50% of the land area would be acquired at market value from the landowners. The government will undertake to develop the land and provide 20% to 30% of the built-up area to the landowners apart from offering cash incentives.

The government has already announced a satellite township scheme in Thirumazhisai at a cost of Rs 2,160 crore to be developed on 311.05 acres of land owned by the Tamil Nadu Housing Board. The township would include villages like Chembarambakkam, Kuthambakkam, Parvatharajapuram, Narasingapuram and Vellavedu. In all 12,000 flats will be constructed and made available to the economically weaker section and low and middle income groups.

Further negotiations will be held with the land owners to acquire 12.87 acres to create an approach road to the satellite town for providing basic infrastructure facilities.

Source: http://content.magicbricks.com/tn-government-promotes-affordable-housing

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

Pallikaranai realty sees rise in NRI buyer interest

Chennai

Pallikaranai locality in Chennai has seen an increase in NRI buyer interest in the recent past. T. Madavan, a local realtor with Remax Gold pointed out that many residents of this locality, living abroad, are investing in the locality. He attributed this to both, sentimental and investment reasons.

Majority of the residents from this locality have shifted base to countries like Australia, Canada and Dubai. One of the projects that has especially seen increased interest from the NRIs is KG Green Meadows by KG Builders, Madavan added. KG Green Meadows offers luxury apartments for about Rs 5,100 per sq ft.

Another reason that can be attributed to the increased NRI interest here is the presence of neighbourhood areas like New Colony, IIT Colony, VGP Shanti Nagar, Maxworth Nagar, Viduthalai Nagar and Kamakoti Nagar.

As per MagicBricks data, the capital value of builder-floor apartments in this locality is from Rs 3,600 to 3,800 per sq ft depending on the area, location, age of the property, developer, typology and other attributes of the property. The locality has seen an increase of about 4% in capital values of multi-storey apartments in the Oct to Dec quarter compared to the Jul to Sept quarter last year.

Major part of this locality is a part of a reserve forest area and therefore, the locality is surrounded by a calm, peaceful and green environment. Some prominent builders here include Doshi Housing, Maxworth Homes Ltd, Puravankara Projects Ltd, Real Value Builders & Developers, Akshay Builders, among others.

Source: MagicBricks Bureau

Bangalore developers expand operations in Chennai

Chennai

With the overall size of the housing market growing every year, it is the turn of property developers to enhance their area of operation in neighbouring states. The companies which went public a few years ago are now compelled to enlarge their operations across the country. In Chennai alone, around ten Bangalore developers are operating today.

While a majority of them are developing residential projects, companies like RMZ Corp. have focused on commercial development but are now planning to diversify into residential sector as well. The early entrants are Puravankara Projects and Mantri Developers.

Puravankara has two ongoing residential projects in Kelambakkam and Pallikaranai which is the largest project in the city with 3,000 apartments. Mantri has one project in Padur. Ozone group is doing a mixed-use development of 42 acres in Anna Nagar.

Embassy group is developing an integrated township with 2482 apartments spread across 25 acres of land in Perumbakkam, near Sholinganallur. Prestige group and Sobha Developers are the new entrants. While Prestige group has launched a joint venture project in Porur to build 2613 homes on 25 acres of land, Sobha Developers has launched two projects, comprising development of international apartments on OMR and luxury apartments near Porur. Besides, Sobha Developers has also built an ancillary unit to undertake production of building materials in the city.

Brigade Group is developing a hotel project in Kottivakkam and retail development in Perungudi besides planning to launch more projects in the coming months.

There are other developers like Nitesh Estates, Shanders, Salarpuria and a few others who have been exploring the market to identify suitable land parcels for maiden entry but somehow it is getting postponed due to a combination of factors, according to market sources. Whereas, Shriram Properties has more projects under development in Bangalore than in Chennai and has also expanded its operations across Hyderabad, Vishakhapatnam and other cities.

Among the very few developers from Bangalore who have specifically focused on commercial development so far in Chennai is RMZ Corp., but they are also planning to diversify into residential development and considering multiple options. Most of the projects undertaken in the residential sector by the Bangalore developers are under joint development.

Source: http://content.magicbricks.com/bangalore-developers-expand-operations-in-chennai

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

Summer homes popular amongst Chennai home buyers

Chennai

When 47-year-old city-based homemaker Sharanya Shankar, decided to build a house in Kodaikanal 25 years ago, the idea seemed like a smart investment to make. However, as years passed, her children began growing up, and a summer vacation to the hill station was more or less, an annual affair. It was then that a closeness to their second home, developed.

“It was like a home away from home in more ways than one,” says Sharanya, “Our children started making friends at Kodai and before we knew it, the annual visit, especially during the unforgiving summers, became a ritual.”

Purchasing a property in the hillside and constructing a home there, may not exactly be your idea of a new trend. For – as city based architect, Durganand Balsavar points out – changing homes with alternating seasons, dates to centuries ago. “With changing work schedules, moving into a summer home has become quite practical,” he says, “People have the option of working from home and your own business, allows for that luxury anyway. So working from the confines and comfort of a nice little house in the hillside is a great idea.” Durganand points out that summer homes, apart from boasting of a distinct “close-to-nature feel”, also have the ability to evolve with the family. “You move in during the summer with your kids, then begin visiting for longer periods when they go away to college, and even stay there for longer periods of time when you grow older.”

Maintaining a summer home – and the cost that this might incur – is a key factor in purchasing a property in the hills. “Frequency of usage is paramount,” says Mehul Doshi, Managing Director, Doshi Housing, “Short stays and long periods of no occupancy, ensure that maintenance of a summer home drains your resources.” And maintenance, going by what most architects believe, is the biggest challenge that a summer home poses, postpurchase.

“Owing to the climate at the hillside, fungal moulds tend to develop on walls,” says P K Ramanathan, Principal Architect, Ramanathan and Associates, a city-based architecture firm, “So employ a caretaker to ensure that your home stays dust-free and is regularly maintained.” Archana Bhansal, who runs city-based architecture firm, Two Tone Design believes that the off-season (winter months) is when maintenance becomes the most challenging. “Ceilings and walls need to be properly insulated to protect the superstructure from the cold, even as proper checks against termites and dust, must be conducted.”

As far as design of the home itself is concerned, the close-to-nature feel that a summer home ought to provide, is precisely what must matter in its construction, feel developers and architects alike. “Since you are off on a retreat – away from urban claustrophobia – you need a lot of open space,” says Mehul. “So the design has to be minimalist in nature, ever-respectful of its environment,” points out the architect in Durganand. “Then there’s also the need for a sloping roof to tide over seasonal rainfall,” adds Ramanathan.

Can a summer home double up as a worthy investment option? Is an investment capable of fetching profitable returns? “That would depend on the owner,” says Mehul, “Some consider it as a combination of a second home and a smart investment. However, since it is a second home, it may not be bad investment.” Durganand however, feels that investment and summer homes do not go hand in hand. “The main purpose of constructing a summer home is to move away from the hustle and bustle of the urban landscape,” he says, “But when you begin calling that an investment, rest assured that others are going to make a beeline and ‘invest’, thereby defeating the purpose of constructing a summer home in the first place.”

From an environmental perspective, Durganand points out, owning two homes can contribute to an unhealthy carbon footprint. “This is where minimalist designs play a vital role. Mumbai-based architect Charles Correa constructed a home in Ahmedabad that contained living quarters for both summer and winter,” he says, “During summer, the living quarters were located in the east to escape the heat of the setting sun, while in winter, it was the exact opposite, so as to enable its residents to soak in the warmth of the sunset.” Interestingly, as Durganand points out, this was common construction practice centuries ago, before houses became segregated into distinct living quarters. “In these times of environmental instability, it only makes sense to conserve and make the best of what we have,” he signs off.

Source: Times Property in The Times of India, Chennai

Domestic buying sees a rise in real estate market

Once NRIs lapped up almost 40 p.c. of apartment units sold

Bangalore's real estate market, which once saw non-resident Indians (NRIs) lapping up almost 40 per cent of the total apartment units sold, has seen a change now, according to industry insiders.

With the increasing number of domestic buyers investing in the realty sector now, the NRIs share in total sales of apartment units has dropped to about 20 per cent in the recent times.

Bangalore's market has been attracting investments from the expat Indian population, mostly Kannadigas, residing in the U.S., West Asia, Singapore, Australia and New Zealand.

Approximately 30,000 apartment units are sold in Bangalore annually now. In fact, 2007 recorded the highest number of units ever sold annually at 40,000 units.

“The percentage of local buyers investing in apartment units has gone up from 60 per cent to almost 80 per cent now with increasing disposable income with families as well as accessibility to housing loan,” Shankar Sastri, Secretary of Confederation of Real Estate Developers' Associations of India (CREDAI), Bangalore, told The Hindu.

Bangalore as a real estate market, he said, always interested the NRIs so much so that many developers had representative offices in the U.S., West Asia and Singapore even two decades ago.

Besides, the realty market here had done well in the last two years due to stability, pricing, safety, said R. Nagaraj Reddy, president-elect of CREDAI, Bangalore.

He added that Bangalore has always remained a “preferred city” among those wishing to invest in housing sector.

This trend of change in the profile of apartment buyers is being seen in housing applications too, says State Bank of India Chief General Manager (Bangalore circle) Ashwini Mehra.

“There are more number of applications from domestic buyers now though there is a continued interest from NRIs residing in the U.S. and West Asia. Nearly 20 per cent of the total housing loan disbursement has gone to NRIs,” he said and added that nearly 80 per cent of the applications in the NRI category came from those residing in the U.S. and West Asia.

T. Venkatesh Babu, a strategist with a leading Bangalore-based real estate company, said that the number of NRI buyers may have come down, as those regions are facing economic uncertainty.

“People tend to conserve cash in such situations and may not like to make high value housing investment,” he said. Also, the speculative buying in Bangalore-market has come down significantly after the 2008-2009 crash, he said.

Interestingly, a large number of domestic purchasers of apartments in Bangalore are from Delhi, Bihar, Uttar Pradesh, and partly from Hyderabad and Chennai. “Most housing loan applicants are young service sector professionals, including those in IT and ITES, who may have come to work here,” Mr. Mehra said.

He also acknowledged that Bangalore real estate sector may have benefited from the Telangana crisis with some spill-over coming here, though a major share has gone to Visakhapatnam.

Source: http://www.thehindu.com/news/cities/bangalore/article2937502.ece

CREDAI property fair draws positive response

Chennai

The 3-day event by Confederation of Real Estate Developers’ Association of India (CREDAI), Tamil Nadu members, drew an encouraging response from prospective home buyers in and around the city. The property fair showcased 250 plus properties in Chennai Trade Centre from developers across the city.

Over 32,000 people visited the event and the volume of business generated by 65-member developers during the show has been estimated to have crossed Rs 100 crore. The developers are quite upbeat over the outcome of the show and the impending potential for housing market in and around the city for the rest of the year.

Housing finance companies and banks have issued in-principal sanctions for home loans worth Rs 150 crore on submission of basic documents during the show. The encouraging response for home loans could be attributed to the flexibility in terms of lending rate and concessions extended during the show. Even the property developers have offered sops by way of reduction in rates for those who were buying during the event.

According to CREDAI sources, residential properties in the price range of Rs 50 lakh to Rs 4 crore including high-end homes drew good response. The properties showcased during the show varied from Rs 15 lakh to Rs 10 crore covering apartments, villas and developed plots. A majority of the response was from the end users who have evinced keen interest to invest in residential properties.

The number of exhibitors was more than previous years and the layout was done in such a manner to give a thrust to the concept stalls over traditional cubicles. This has given a better image of the exhibits in a market where fierce competition dominates today.

In order to create awareness about the intricacies involved in the home buying exercise, leading law firm Rank Associates has been engaged to provide free legal advisory services to prospective buyers. CREDAI Tamil Nadu has a consumer redressal mechanism and the grievances received have been passed on to the committee for quick processing.

As the overall response to the Fairpro 2012 has exceeded CREDAI’s own expectations, they are contemplating to extend the show to NRIs as well in future in select countries like Middle East, Singapore and UK.

Source: http://content.magicbricks.com/credai-property-fair-draws-positive-response

Chennai

The 3-day event by Confederation of Real Estate Developers’ Association of India (CREDAI), Tamil Nadu members, drew an encouraging response from prospective home buyers in and around the city. The property fair showcased 250 plus properties in Chennai Trade Centre from developers across the city.

Over 32,000 people visited the event and the volume of business generated by 65-member developers during the show has been estimated to have crossed Rs 100 crore. The developers are quite upbeat over the outcome of the show and the impending potential for housing market in and around the city for the rest of the year.

Housing finance companies and banks have issued in-principal sanctions for home loans worth Rs 150 crore on submission of basic documents during the show. The encouraging response for home loans could be attributed to the flexibility in terms of lending rate and concessions extended during the show. Even the property developers have offered sops by way of reduction in rates for those who were buying during the event.

According to CREDAI sources, residential properties in the price range of Rs 50 lakh to Rs 4 crore including high-end homes drew good response. The properties showcased during the show varied from Rs 15 lakh to Rs 10 crore covering apartments, villas and developed plots. A majority of the response was from the end users who have evinced keen interest to invest in residential properties.

The number of exhibitors was more than previous years and the layout was done in such a manner to give a thrust to the concept stalls over traditional cubicles. This has given a better image of the exhibits in a market where fierce competition dominates today.

In order to create awareness about the intricacies involved in the home buying exercise, leading law firm Rank Associates has been engaged to provide free legal advisory services to prospective buyers. CREDAI Tamil Nadu has a consumer redressal mechanism and the grievances received have been passed on to the committee for quick processing.

As the overall response to the Fairpro 2012 has exceeded CREDAI’s own expectations, they are contemplating to extend the show to NRIs as well in future in select countries like Middle East, Singapore and UK.

Source: http://content.magicbricks.com/credai-property-fair-draws-positive-response

CMDA initiates measures for prospective buyers

Chennai

The Chennai Metropolitan Development Authority (CMDA) has initiated several measures for investors in real estate in the city to update themselves on the land use pattern, approval status, etc. This is a virtual boost to buyers and investors in real estate who are otherwise taken for a ride by unscrupulous people in the industry.

A counselling centre provides a wide range of services free of cost to those looking for guidance with regard to land use, approval and acquisition status prior to investment. In fact with the e-governance initiative taking shape, one can obtain the status of land use through CMDA website today by providing location specific information sought for.

A long standing requirement of the real estate sector in Tamil Nadu is the need to speed up the planning approval process. Towards this objective, the CMDA is conducting a trial run of the automatic approval process mechanism that will scrutinise the application as and when it is submitted to the authority. Through this process, architects may submit it in a CD. The department is now conducting a trial run before ensuring that developers can safely submit it online.

The NSC software is expected to be ready shortly, according to senior official sources in CMDA. Once implemented there is no need for developers to swarm the authorities with voluminous documents to represent their cases. They can submit the application online and ascertain the status of their application also online. In fact the system is modified in such a way that they can see at what stage or with whom the application is lying i.e. assistant planner or senior planner or member secretary.

While delivering the inaugural address at the recently held 3-day Credai property show in Chennai Trade Centre, Phanindra Reddy, IAS, Secretary to the Government, Housing and Urban Development Department, has also assured the industry to look into the paramount need of speeding up the planning approval process.

The industry has also voiced concern that the 18% per cent growth rate recorded in real estate development in the state could have been 30% had there been a pragmatic approach on the government front in reforming the archaic rules that act as deterrents in the housing sector.

Source: http://content.magicbricks.com/cmda-initiates-measures-for-prospective-buyers

1BHKs become popular in Chennai

Chennai

With soaring property prices and high disposable incomes among young working professionals, one bedroom flats (1BHKs) are gradually becoming popular among end-users and investors alike.

Chennai, as any real estate expert will tell you, has always been an end-user-driven market. Which is precisely why 2BHKs (bedroom hall kitchen) and 3 BHKs continue to be popular here, thanks to the fact that Chennaiites have conventionally moved in with their families and preferred larger spaces.

However, parallel to the booming market for 2 and 3 BHKs, a small but steady market for 1 BHKs has evolved over the last few years. One of the reasons cited is the CMDA’s (Chennai Metropolitan Development Authority) mandate to reserve 10% of the space in larger projects for economically weaker sections (EWS). As Rajkumar Kamdar, Director, Prince Foundations, points out, “According to the provisions under CMDA’s Second Master Plan, projects spread across 2.5 acres or more must reserve 10% of their area for construction of 45 sq m units (or less) for EWS. Only one bedroom apartments can be constructed in that space. And since 2 BHKs and 3 BHKs are out of reach for the EWS (and the general public, at large), most of them feel that it makes economic sense to purchase a one bedroom apartment.”

But do these apartments necessarily cater to the EWS category? How many of them can really afford an apartment, no matter how small? Mehul Doshi, MD of Doshi Builders, believes that it depends on the location of the project. “One bedroom apartments in the heart of the city are definitely not affordable. But those in the suburbs and outskirts of the city are well within their reach,” he explains. Doshi clarifies that CMDA’s norm classifies these apartments based on size, not necessarily on income levels of buyers. So who are the buyers? Deepak Shah, Senior VP – Sales and Marketing, Prestige Estates Projects Ltd, says, “The buyer profile includes newly married couples, single working professionals from the IT sector, etc.”

These apartments also come to the rescue of bachelors (from the city and other places) who find it difficult to rent a place in the city. Suresh Jain, MD, Vijayshanthi Builders, says, “With the IT boom and the consequent influx of MNCs, owners/developers have been leasing out one bedroom apartments on OMR, GST, etc, to companies. Besides, a lot of young working professionals (from other cities) purchase one bedroom apartments in these areas and dispose of it once they leave the city.” Kamdar agrees that this is becoming a prominent trend. He says, “It serves as a small ticket investment for these working professionals. They pay EMIs instead of rentals, and since these apartments do not cost much, they do not feel financially burdened. They can either decide to keep the apartment and rent it out, when they leave, or sell it as per the market value.” Besides, with changing lifestyles and family structures, the single bedroom concept has found many takers from the younger generation.

As Deepak points out, “The emergence of nuclear families, growing trend of single men and women preferring to stay on their own, high income levels of buyers and the influx of people from other states who are keen on investing in apartments here, as opposed to paying rent, has led to an increase in demand for one BHKs.”

Whether as an investment or rental option, the saleability of one bedroom apartments cannot be overlooked. Take the Prestige Group, for instance. Their new project Bella Vista in Porur has 600 1 BHK apartments, each of which is about 600 sq ft in size. These apartments cost 25 lakhs onwards. Similarly, Osian Chlorophyll, by SPR &RG Constructions, in Porur has 232 single bedroom apartments (665 sq ft each) costing 29.9 lakhs onwards.

Prince Foundations’ Prince Village in Tondiarpet sold out its one bedroom apartments on the first day of its launch. Almost all projects have recorded good sales of one bedroom apartments. While exclusive projects for single bedroom flats may not be in the offing anytime soon in Chennai, developers are waking up to the potential of this segment. Mehul Doshi says, “We launched Doshi Etopia II on OMR a few months ago, and this project has 40 single bedroom apartments, most of which are sold. We’re planning to launch a project consisting of studio apartments and 1 BHKs in Perungudi very soon.”

Deepak Shah is of the opinion that the sector is set to grow further. He says, “As the city is on the fast track to growth and industrialisation, thanks to the booming IT, service and automobile sectors, demand for smaller houses, especially in the age group of 25 to 30, will grow.”

While many developers believe that single bedroom apartments are in vogue, thanks to CMDA’s mandate, some like Rajesh Babu, chief real estate consultant, RECS Group, are sceptical. He points out that single bedroom apartments were popular decades ago, when the apartment concept in the city came into existence. “With the introduction of G (ground floor) +3 or multistoried buildings, 2 and 3 bhk apartments grew in popularity. However, now, as per the second master plan, single bedroom flats have made a comeback of sorts but their proportions continue to be less and they cater to a small section of buyers. It will take ages for our city to even match the volumes that Mumbai, for instance, has recorded, in terms of single bedroom apartments that are popular there for a variety of reasons,” he explains.

Sandeep Pantvaidya, VP – Marketing, Sales and CRM, SPR & RG Constructions, also agrees that 2 and 3 BHKs continue to be the preferred choices. “While there is an opportunity to rent or sell single bedroom apartments as serviced apartments, it is still in its nascent stage. There isn’t much scope for further growth in this sector, otherwise.”

Opinions are divided on the growth prospects for single bedroom apartments in the city. While comparisons to the market in Mumbai may be unrealistic, at the moment, it is however, clear that the needs of a certain section of buyers are being addressed through single bedroom apartments. Where is it projected to go from here? Only time will tell.

Source: Times Property, Times of India, Chennai

Fifth annual FAIRPRO to start off from Feb 17 in Chennai

Chennai - Touted as the fairest property fair in Chennai, 65 eminent developers will be coming together at the 5th annual FAIRPRO, which will be held at the Chennai Trade Centre from February 17 to February 19. FAIRPRO is organized by the local chapter of CREDAI (Confederation of Real Estate Developers’ Associations of India), the apex body for private real estate developers in the country, and will underscore its new ‘Mission Transparency’ initiative. Bound by a rigorous Code of Conduct, the builders exhibiting at FAIRPRO are operating under strict instructions to be transparent in all dealings and documentation with customers and to disclose and declare all components of the sale in consideration. “Transparency is our key focus this year,” says T Chitty Babu, President of CREDAI, Chennai chaper, adding, “We wish to promote our philosophy of Ownership without burden.”

According to him, only properties that have been “legally cleared” and have been approved by CREDAI standards will be exhibited at FAIRPRO. He says, “We intend to offer this platform for homeseekers to help them own a property that is based on the strong values of trust and integrity. As per the rules of CREDAI, customers will be given a clear break-up of all the costs involved of the property they intend to purchase, which means there will be no hidden costs.”

Stressing the fact that only legally approved properties are being exhibited at the fair, Ajith Chordia, Treasurer of CREDAI, says, “Customers sometimes tend to be unaware of the hidden taxes such as vacant land tax and the buyer comes to know about it only after the sale.” This year, CREDAI has gone the extra-mile by offering a legal counter which will be set up at the fair to answer customers’ queries on the legal aspects of their purchases. “The legal corner will be managed by our rank associates, so that buyers can make purchases confidently,” says N Nandakumar, Secretary of CREDAI.

As the number of builders who will be converging this year at FAIRPRO has risen exponentially this year, Suresh Krishn, Convenor of FAIRPRO is optimistic about the positive impact that the fair can create. “The reach of the upcoming fair is estimated to increase by nearly 50 percent. The FAIRPRO website has already registered over 20,000 hits and nearly 85 stalls have been booked so far,” he says. In his view, the most important increase is the sizeable expansion of the product range. “We are offering an unbeatable variety with projects ranging from Rs 10 lakhs to Rs 10 crores. This year, we expect to create transactions to the tune of nearly Rs 250 crores,” he says. With a staggering 250 projects on display, the three-day fair is set to be a unique opportunity for interested buyers to compare prices and projects offered by the exhibitors. Spot booking, numerous discounts and hassle-free home loans are also some of the highlights of FAIRPRO 2012.

Source: The Times of India, Chennai

Investment potential areas in Chennai in 2012

The year 2011 witnessed significant developments that impacted the Indian economy. Rising interest rates, global uncertainties, declining foreign investments, dip in GDP, et al. The real estate sector is by no means an exception especially with limited access to funds by developers, increasing debt and PE funds’ higher expectations.

For end users in housing, the timing is just right as the government is all set to hike the guideline values for registration purposes during January which in turn might increase the housing cost. For medium to long-term investors, developed plots offer potential scope for price appreciation. Here again location and proximity to state or national highways with ongoing infrastructure development should be considered before plunging into investment.

Sriperumbudur and Wallajabad areas are cited as potential areas in Chennai awaiting a number of integrated township projects and limited projects now on offer for blue collared workers in the area. Prices range from Rs 500 per sq ft off main road and industry analysts expect the rates to double in a span of five years, if not earlier.

For HNIs and those having liquidity, the better option is to go for pre launch offers as developers are keen to negotiate on apartment prices and offer discount for upfront payment. A typical investor keen to invest Rs 40 lakh – Rs 50 lakh for a 2-BHK unit with an area of 1200 sq ft can anticipate a return of Rs 800 per sq ft in two years in an average location in Chennai. Besides he has the option either to go in for registration of the unit or exit.

As residential development revolves around growth corridors like OMR, GST road and Oragadam-Sriperumbudur belt, even rental prospects appear better as corporate leasing demand is inching high due to the influx of skilled professionals to the city. In fact leading property developers on GST road have firm commitments for ongoing projects from select corporates for leasing once the projects are ready for occupation.

As regards commercial property, the yield depends on the scale of investment. For large scale investors, it varies from 9 to 11 per cent per annum pre-tax whereas for investors with a targeted investment limit of Rs 10 crore and below, the yield ranges from 7 to 9 per cent per annum pre-tax. Blue chip tenants do not prefer buildings strata title, as a result the commercial property transactions are now seeing a trend where developers are only selling the whole building or at least one owner per floor. This leaves limited room for retail investors, and the opportunities are limited to the high net worth individuals.

Source: http://content.magicbricks.com/investment-potential-area-in-chennai-in-2012

Potential for property management companies in metros

With the continued migration of residents both within the country and abroad, investors in real estate have been finding it difficult to manage their properties during their absence. There were few options except to rely on relatives or friends for such needs. But times are changing, especially with India liberalising investment norms by foreign companies. One area that has virtually caught the attention of the foreign companies involved in property management is the huge potential at metros and secondary towns.

A number of MNCs have set up shows in metros and tier II cities across the country to provide property management services. This is not only beneficial to the NRI globetrotters but even to residents who are compelled to shift their work places across the country. Though, no precise data is available on the size of the industry, industry sources estimate it as a billion dollar business given the volume of units available, value and the growing need for such specialised services in this sector.

Software and management systems, minimising legal exposure by using best industry practice management, procedures, skilled manpower to handle varied jobs are major strengths that differentiate professional players from others in the industry. “About 30% of our business revenues come from property management services”, says Alexander Moore, Chief Executive Officer – India, LJ Hooker, in Bangalore, which is planning to extend its network to Chennai.

“The growing importance of property management services should be realised not only by the end users but by the property developers and architects at the project implementation stage itself,” points out Christie Cherian, Managing Director, Red Sky Property Services, in Chennai.

A number of MNCs have already entered the Indian market. LJ Hooker, Red Sky, Ray White, Remax, among others. Industry sources point out that there are 12 major international brands providing similar services are likely to enter India in the coming years. The range of services includes preventive maintenance, placement, contracting, response maintenance, signage, commercial cleaning, pest control, annual maintenance contracts, health and safety.

In countries like Australia there are five companies for every 30,000 to 40,000 households but in India companies like LJ Hooker are aiming to target one unit for every 500,000 households. Being a consumer driven business, if companies meet the specific needs of homeowners, Indians, particularly NRIs, will heave a sigh of relief while investing in real estate.

Source: http://content.magicbricks.com/potential-for-property-management-companies-in-metros

Chennai tops in NRI demand in US

In a survey conducted during the property show held in Edison, NJ, it has been estimated that 31% of the visitors preferred Chennai for investment in real estate. The demand for other cities ranged from Bangalore, Hyderabad, Mumbai, Ahmedabad, Pune, Delhi, Coimbatore, Kochi to Visakhapatnam.

Unlike earlier, the categories of properties preferred ranged from apartments to villas and developed plots. In fact the demand for villas in the vicinity of Chennai among US NRIs has shown an upward trend with the availability of multiple options, township development and a range of services inbuilt in each and every project. A majority of the visitors desired home loans to partly fund their investment exercise. While a section of the visitors preferred properties for their own use, others opted for getting periodical return on investment.

During the show, guaranteed rental income properties were on display where investors can earn rental income from day one due to tie-up with corporates in Chennai. Investors were keen to enquire more details as that would offset their initial financial outgo as well enable them to offset their EMI through rental income.

Though a full scale recovery is still a long way to go across US, corporates are increasing their spending as is evident from the spurt in demand by techies for rental accommodation in Edison, said a senior official working with an international consultancy firm in New York. There is a spurt in the number of IT projects’ spending in the tristate area with the number of expatriates in particular from India visiting for project related assignments, it is said.

During 2008, apartments were available just for the asking in Edison area due to frequent layoff and expatriates eventually returning home. But today, several apartment complexes are getting filled up, which is a good sign for the gradual improvement in the overall market scenario especially with the H1B quota being utilised fully, said a local resident in Edison.

There is another reason for the trend towards investment in India. NRIs had lost capital values considerably while investing in real estate across US. For instance, an NRI who had invested in housing in Anaheim during 2006 at US$950,000 saw his investment declining to US$625,000 in a matter of just six months. Another NRI who had put his investment in housing in Orlando saw his investment nose-diving from US$400,000 to US$125,000, according to market sources.

Source: http://content.magicbricks.com/chennai-tops-in-nri-demand-in-us