Schools move south for more space

CHENNAI: When Irudaya Gandhi's husband left for Dubai last year, she had two options - continue to live with her children in their apartment in Royapettah or move closer to her parents' house in Chitalapakkam. For the 37-year-old the choice was obvious and she moved.

"Three years ago, the choice may not have been so easy because I have the children's education to think about. I realised there are many schools in the suburbs and decided to move," said Gandhi, whose children study at N S N Matriculation Higher Secondary School.

Five to seven years ago it was not uncommon to find families moving out of the suburbs in search of good schools in the city. Over the last couple of years, with the development in the suburbs, urban experts have been noticing a trend of reverse migration where families are moving back to the suburbs.

"While education is among the driving forces for this trend of reverse migration, there are other factors such as congestion in the city, pollution and skyrocketing real estate prices that are driving people to the suburbs," said Raj Cherubal, founder of Chennai City Connect, an NGO that works on infrastructure issues.

The lack of space and soaring real estate prices within the city have pushed people wishing to start schools outside the city limits. "To start a new school within the city is close to impossible. The management has to deal with outdated and unnecessary regulations regarding the size of the buildings and space, among others. The process is relatively hassle-free while setting up a school in the suburbs," he said.

Many schools have mushroomed in the southern suburbs such as Chromepet, Chitalapakkam, East Tambaram, Palavanthangal and Madipakkam. "When we set up our school in Nanganallur, there were hardly any educational institutions here. Within a decade, at least 10 recognised schools have come up," said K Vasudevan, principal of Prince Matriculation Higher Secondary School, which has more than 2,700 students.

With the development of the suburbs, connectivity to the city has also improved, drawing more students from the city. Although education is the driving force, families who have moved say staying in a suburb has other advantages. "Water is available in plenty. It is relatively less noisy, congested and polluted," says K Jeevan who moved to Indira Nagar two years ago after renting out his house in Vadapalani.

"Today, only a few banks are headquartered on Anna Salai. A large number of companies and factories are in Sriperambudur or on OMR, which were very different places 15 years ago. Residential clusters have started coming up here. With different types of schools coming up, people have no reason not to set up base here," said P Vishnucharan, correspondent of Shree Niketan Group of Schools in Tiruvallur.

Real estate prices have gone up by close to 40%, say builders. "The prices have touched Rs 3,200 to 3,500 per sq.ft. Despite the rise, the demand is high as the cost is less than the city," says Prakash Challa, national vice-president of real estate body CREDAI.

For the original post visit: http://timesofindia.indiatimes.com/city/chennai/Schools-move-south-for-more-space/articleshow/18327309.cms

Demand for high-rise projects in Chennai

Chennai

There was a time when the 15-storey LIC building was the only skyscraper in Chennai and it was common to see residents and visitors gawk at it in awe while trying to count the number of floors each time they passed by. But over a period of time, the skyline of the city has changed remarkably with several high-rises all set to come up here. The demand for high-rises has gone up exponentially in recent times, as the city dweller now increasingly prefers to live far away from the ground, with lesser pollution and increased privacy and doesn’t mind shelling out a premium for such a lifestyle. Another important factor that has spurred the development is that with international travel becoming common, people expect similar facilities in the city.

P A Unni, Director, Vasan Eye Care, who stayed in high-rise apartments during his trips to Singapore and Dubai, wanted a similar apartment back home in Chennai. “I felt that skyscrapers are going to be the future of Indian cities, and investing in one would be a wise decision. While I was abroad, I completely felt the benefits of these highrise structures. You get an amazing view of the city, plenty of fresh air and the whole experience is fantastic,” says Unni, who bought an apartment at True Value Homes’ Ouranya bay, on OMR, which gives a view of the sea and the Muttukadu Lake.

Developers too prefer going vertical, as it allows them to set aside land for greater amenities and landscaping. “The primary reason behind the interest of property developers in such projects is to give more open space for the residents; they have more space to move around freely, the children have large play areas and there are better amenities,” says Wilson Mathews, Director – Sales and Marketing, True Value Homes. Wilson believes that the market for such apartments is bound to grow in the time to come. “Every family wants to experience the joys of fine living in these high-rise units. In the modern scenario, people are looking for their own space, which is free from pollution, dust and space crunch. High-rise buildings not only give them these benefits, but also prove to be a good investment option, fetching better rentals and resale value. The skyline of a city gradually changes with more such projects,” says Wilson.

Added amenities and new features help promote the project to prospective buyers, who demand more open space with better view and less pollution. Chitty Babu, Chairman, Akshaya Pvt Ltd, strongly recommends vertical development as the buildings consume lesser footprint. According to him, the company’s new project Abov, a 32-floor skyscraper, will use only 8 to 9% of the 1.66 acre area which will help him earmark the remaining space for other amenities for the customer. Abov has several new features including a swimming pool on every floor, an all-round deck overlooking the surroundings, a fine dining multi-cuisine restaurant and a spa. He has used a smart home model where ipads will control the entire apartment. According to Chitty Babu, in a competitive market, you cannot survive unless you come up with different strategies and innovations regularly. While for some, it is the desire for an international lifestyle, for others, it is the safety and community feeling that such high-rises offer that tilts the balance in the favour of such buildings.

Arvind Santhanam, a top official in a private company, says he has always preferred to live in a high-rise. Arvind, who has bought an apartment on the 17th floor of Olympia Opaline on Old Mahabalipuram Road (OMR), says, “For a working couple, it makes sense to live in such places as the maintenance is better, safety requirements are met with, and the children also find friends. Parking, which is a big problem in most places, is also taken care of here. There is also a sense of community bonding in such places as you don’t feel cooped up in your home.”

With competition picking up, most developers are trying to capture the buyer’s interest by coming up with better amenities and facilities. The Archean Group has prepared the ground to launch Albatross, a 50-floor skyscraper, also on OMR, which has got clearance from the Directorate of Town and Country Planning (DTCP).

Nakshatra Roy, Director, Archean Design & Development Pvt Ltd, says swimming pools, saunas and jaccuzis and other facilities have existed in buildings in Chennai from as early as 1998. Now the emphasis is on providing more outdoor facilities. “Albatross, for instance, will have a camping site, study centre, vegetable garden for children, a simulated driving arcade, a toddlers’ pool and a pool with a water slide. The demand for high-rises has gone up in Chennai in recent times because a house on the top floor offers several benefits. Pollution is low, you have greater privacy as you don’t end up looking into someone else’s kitchen or living room, and the view is fantastic,” he says. “The construction cost is slightly higher but land costing remains the same and there is the extra benefit of greater amenities and facilities. So the biggest beneficiary is the consumer,” he says.

Besides, a high-rise apartment also allows the builder to utilise the FSI in a more optimum fashion. “When a building grows vertically, there is better utilisation of the FSI. Even when a project is spread across a wide area, we try utilising maximum space for landscaping and developing the common amenities as people are now looking for space. They wouldn’t want to open their window and see what is happening in their neighbour’s home. Besides benefits of space, ventilation and view, there is far less mosquito menace in a sky scraper,” says Ajit Chordia, MD, Olympia Tech Park, whose 19-storeyed Opaline Sea View is located along the OMR. These projects do come at a cost, as Wilson explains. “While there is a huge rise in the cost of land and an additional cost for constructing these structures, we still find consumers preferring the highest floor even when it comes at a premium rate,” he says. Concerns about the safety of such buildings in the wake of natural disasters also seem to have been taken care of. “We have recently launched a high-rise building on the LB Road Quadrant, which gives an amazing view of the green cover in Adyar and the Adyar river. We have used the best structural engineers and the best of technology in these projects,” says Wilson.

In spite of all these facilities, not everyone seems to agree with this concept. Malavika A, who recently bought an apartment in a 19-floor building doesn’t really see an advantage in shelling out extra to live on one of the top floors. “For every floor that you move up, you have to pay an extra 30 per sq ft. For someone like me who has bought the house as an investment, it does not make sense to shell a couple of lakhs extra only to live on the top floor,” she says. With more and more high-rise projects being launched in the city, the skyline is definitely slated for a gradual, but sure change. Only time will tell us how far-reaching its impact will be in the real estate scenario of Chennai.

Source: Times Property, The Times of India, Chennai

Festive offers on properties in Chennai

Chennai

With the festive season bringing cheers to home buyers to get better bargains in home loan lending rates, sops by way of reduction in processing charges and discounts from developers, the residential property market in Chennai is gearing up to notch up robust sales in the coming months. A few project launches are also coinciding with the onset of festive season to drive in sales.

India’s premier institution HDFC has recently reduced lending rates to 10.25 per cent for loans below Rs 30 lakh and 10.50 per cent for loans beyond Rs 30 lakh.

Apart from Standard Chartered Bank that offers varied sops during the festive season for home loan borrowers, HSBC has introduced a novel concept for takeover loans upto Rs 75 lakh at 9.99 per cent. Axis Bank has two tier structure at 10.25 per cent and 10.50 per cent for floating rate options. Kotak Mahindra Bank offers home loans above Rs 30 lakh at 10.40 per cent. SBI offers home loans at 10 per cent for loans below Rs 30 lakh and 10.15 per cent for loans above Rs 30 lakh.

“Festive season always offers an ideal opportunity for fence-sitters to jump on the bandwagon as it is yet another opportunity to strike bargain deals at get competitive prices”, said P Seshadri, CEO, gethomegetloan.com. The festive season offers might be extended upto March 31 next year in view of the continual festive season and also impending financial year end to enable more people avail the tax sops, he added.

It is not only the housing finance companies and banks that extend sops to home buyers and more importantly developers who want to push up sales and also those who are launching new projects to make an impact in the market. Akshaya is due to launch its tallest tower in Tamil Nadu, a 38-storied hyper luxurious lifestyle product. There are more developers who are planning to launch new projects during the festive season, according to market sources.

In a related development, a few developers have already forged strategic alliance with home loan lending institutions to absorb pre-EMI interest during the project implementation stage. Puravankara Projects had earlier offered such a facility for their Swan Lake project on OMR. Hirco is now offering pre-EMI interest waiver for investors in its Oragadam project.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/festive-offers-on-properties-in-chennai/

Residential rental and capital values expected to grow in Chennai

Chennai

The demand for residential units in and around Chennai has remained stable in the third quarter, with around 5,600 units absorbed in the quarter when compared to some 5,550 units in April-June 2012 quarter, according to Jones Lang LaSalle. The growth corridors like OMR and GST along with its link road and neighbourhoods continued to remain the most demanded areas in the city with healthy absorption levels. However, strong demand for housing was also witnessed in emerging locations like Porur, Ambattur and their neighbourhood areas. Rentals and capital values across the sub-markets are also expected grow.

With IT SEZ’s and easy access to emerging locations such as Orgadam and Sriperumbadur, demand for housing continues to improve in the western suburbs sub-market. In addition, attractive office rentals and quality office space in Ambattur has been attracting IT/ITES occupiers, which in turn has triggered housing demand around this location, situated in the western suburbs.

Supply

Chennai’s developers continued to bet on the demand potentials of the city residential market as they supplied 10,165 units in July-September 2012 quarter compared to 8,570 units in April-June 2012 quarter. More than 33,000 residential units were supplied during the first nine months of the year in comparison to around 18,000 units supplied during the same period last year.

The supply level in the southern suburbs continued to dominate this quarter, however, increasing housing demand in western suburbs continued to attract developers to launch more units in this sub-market. Around 44 per cent of the residential units launched during the third quarter were launched in western suburb sub-market and 35 per cent of the total launches in the first nine months were witnessed in this sub-market.

With increasing demand for villa projects, developers supplied 1332 villa units this quarter. This represents around 13 per cent of the total launches during the third quarter.

With housing options within the city getting costlier, suburbs sub-markets offering relatively affordable housing options, continued to witness faster capital value growth. Strong housing demand along with investor interest in the western and southern suburbs sub-market have increased the rental and capital values. Moreover, on-going and upcoming infrastructural activity within the city continued to support the capital value growth across all the sub-markets.

However, the rate of growth in rentals, residential and capital values will highly depend on the implementation and completion of the upcoming and on-going major projects such as the Monorail, the Metrorail, the Outer Ring Road, and the Greenfield airport.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/residential-rental-and-capital-values-expected-to-grow-in-chennai

Old Mahabalipuram Road paves the way for realty development

Chennai

The setting up of TIDEL Park on Rajiv Gandhi Salai or Old Mahabalipuram Road (OMR) in 2000 changed the landscape of the stretch forever, paving the way for the development of the IT corridor, as we know it, today. This development, naturally, led to the creation of a premium residential housing market along the belt starting from Madhya Kailash, all the way to Thiruporur, and beyond. OMR may have seemed like a distant suburb a few years ago, but now, it is very much a part of the city.

As Chitty Babu, MD and Chairman, Akshaya Pvt Ltd, points out, “OMR, up to Sholinganallur, is essentially an extension of the city, and should not be considered a suburb anymore. Take Velachery, for instance. Until recently, it was considered a low lying suburb that was only in the news during monsoons. But now, it’s a thriving residential and commercial zone, and very much a part of the city.”

The location of OMR – its proximity to Adyar, for example – has attracted large scale residential development here. This gives the area a distinct pricing advantage, says Chiity Babu. “The prices (per sq ft) are almost half of that in Adyar,” he adds, “So, at a distance of less than 5km from Adyar, one can procure an apartment for half the price.” Another factor that works to its advantage is its proximity to ECR. Badal Yagnik, MD, Jones Lang LaSalle, Chennai, says, “Prices on ECR are 50-60% higher than that along OMR. And both corridors are witnessing plenty of development in the residential/ commercial sectors.”

Although it was the IT sector that initially fuelled growth along OMR, it’s no longer the sole growth driver. As Badal Yagnik says, “It’s the demand for housing that has been driving growth in this area over the last few years.” He continues, “Last year, for instance, the city saw office absorption to the tune of 5 million sq ft, while this year, it is only 2 million sq ft. A large chunk of this space lies on OMR. Despite the fall in absorption rates, the demand for housing has been soaring along the OMR.”

While the stretch from Madhya Kailash to Sholinganallur has been witnessing maximum demand, even beyond Sholinganallur, the demand, though not as robust, exists. Badal says, “Prices along the Madhya Kailash-Sholinganallur belt have been increasing by 20% year-on-year. However, some of the best schools are coming up in large townships planned in the latter half of OMR.

Places like Padur, for instance, are set to grow, with malls like Marg Junction, and residential projects planned in the vicinity.” Any further development on OMR is bound to happen after the toll gate, due to non-availability of land on the stretch from Madhya Kailash to the toll gate. Chitty Babu adds that while prices (per sq ft) range around 7,500 until Sholinganallur, they are about 3,000 to 4,000 in the area from the toll gate to Thiruporur, and lesser as you move further.

Source: Times Property, The Times of India, Chennai

A rise in plotted development projects in and around Chennai

Chennai

Industrial growth, better connectivity and infrastructure development have led to a spurt in the number of plotted development projects in and around the city. While there is a constant demand for apartments, villas and other housing projects, over the years, there has been a rise in the demand for plots as well. S Ramaswamy, Assistant director, RECS Group, says, “GST Road, Sriperumbudur-Oragadam belt and ECR are the top three growth corridors that have seen a surge in the demand for organised plots. There is a good demand for plots in and around Chennai due to factors such as good road connectivity and the horizontal industrial development in the suburbs. The availability of transportation facilities plays a major role in the organised plot development market, especially on the outskirts of Chennai.” S Mohan, MD, Wisdom Properties, says, “Individual plot development in and around Chennai is on the rise.”

Mohan says, “The primary areas include the Southern Suburbs comprising Chengalpattu, GST Road, Oragadam till Kanchipuram and the Eastern Suburbs – areas till Mahabalipuram. Development in the Central suburbs that include prominent localities such as MRC Nagar, Triplicane, Teynampet, Nungambakkam and T Nagar will gradually pick up over the years.”

He adds that with the number of software and manufacturing industries foraying into the city, the demand for plots in peripheral and suburban areas of Chennai has increased manifold. “There are a number of employment opportunities in the city, and people migrate not only from other states but countries as well. This has further increased the demand for plots,” he adds.

Highlights of the three primary growth corridors

GST Road

- Proximity to already developed areas such as Tambaram and Guduvanchery

- Connectivity by rail and road to localities such as Oragadam and areas along OMR

- The presence of a number of industries such as the Maraimalai Nagar Industrial Estate, for instance

- A viable investment for future developments, thanks to the kind of residential and industrial development along this belt

Sriperumbudur-Oragadam

- Hub of industrial development in the city – An affordable alternative to investing in apartments

ECR

- Good connectivity and proximity to the city centre – Proximity to OMR and prominent IT establishments – Scenic beachway with good social infrastructure

Source: The Times of India, Chennai

Chennai drives more NRI buyers

Chennai

The rupee volatility against US dollar and other linked currencies, overseas institutions’ lending at 4 per cent and favourable exchange rates have all convinced NRIs/PIOs to take advantage of the instant opportunity and plunge into real estate investment in Chennai. In a nutshell, it has become 20 per cent more affordable for NRIs/PIOs due to rupee parity rates alone. Leading developers have reported a quantum jump in the number of enquiries over a period of 3-4 months.

According to industry sources, most of them prefer built units for ready occupation of their parents or relatives and some are looking for periodical return on investment. They are willing to pay the extra premium to get the built units over ongoing projects in and around the city. The preferred price range for apartments varies from Rs 30 lakh to Rs 1 crore. This is apart from the surge in demand for developed plots and villas in and around the city. However, leading land developers do not agree with the view and see no perceptible shift in trend for demand.

There are others who feel that the preferred investment locations are OMR, ECR and parts of Velachery as considerable development is visible in those areas. Competitive lending rate from overseas financial institutions is yet another tilting factor that has encouraged a number of NRIs to mobilise upfront payment overseas for investment in real estate back home. A few of them are even finding it more convenient to raise local funding than through home loans with Indian housing finance companies and banks now.

Moreover, favourable exchange rates have given them additional benefit to borrow locally and remit to India. India has been consistently maintaining its top slot in NRI remittance in the world received from Indian Diaspora globally. Even though Gulf countries are taking more time to recover in the aftermath of economic meltdown, expatriates are now convinced that the job market has become stable unlike a year ago, say Gulf realty outlets. This has resulted in the quantum of NRI enquiries for investment in immovable property in the city going up by 50 per cent over last year, say leading developers.

Interestingly, the demand from NRIs in USA has increased considerably. Local funding at competitive lending rates and loans for expatriates maintaining good credit history at zero per cent interest rates have nudged NRIs to take advantage of the current situation and plough back money into real estate back home.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/chennai-drives-more-nri-buyers-2

Office rentals remain stable in Chennai

Chennai

The office market in Chennai has absorbed 1.7 million sq ft of space till the end of second quarter. This includes SEZ space as well. A significant development is that most of the transactions has been reported in and around the IT corridor (OMR). Industry sources attribute to the spurt in the number of ongoing residential projects and improved connectivity levels in and around the IT corridor. According to industry sources, rentals for office space across all micro markets are stable and are unlikely to show any marked improvement during the coming quarters.

The absorption level during the second quarter was mostly attributed to the spill-over effects of office space requirements initiated by corporates during last year. No new transactions for large floor plates could be seen recently which, according to the market sources, is again attributed to the slow decision-making process aggravated by the cascading impact of global meltdown. However, a major thorny issue in Europe has been resolved as a result of which new enquiries are expected to trickle in the coming quarters, say market sources.

Vacancy levels are coming down and rentals are stabilising across all micro markets and in some cases there is a marginal pressure on the rentals, say realtors. Though transactions beyond the toll gate on OMR are said to be on a limited scale, large floor plate requirements can be catered only in this market as availability and multiple options abound in and around the area.

According to property consultants, vacancy levels are expected to remain higher amid influx of new supply level at 6.24 million sq ft before the end of the year. There are others who feel that the absorption level is likely to improve in the second half of the year, as an employer survey has revealed optimistic hiring trend during the period.

Leased commercial properties continue to be in demand across all micro markets and the expected yield ranges from 9 to 10 per cent per annum. A few developers are not keen to sell the leased commercial premises in anticipation of the continues demand from MNCs and corporates. This is one reason why the options are getting narrowed across the city for investors in commercial property.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/office-rentals-remain-stable-in-chennai

Chennai witnesses rise in demand for villas

Chennai

According to a recent survey conducted at a property fair at Edison, New Jersey, an estimated 31% of the visitors preferred Chennai for investment. The report also revealed that the Chennai real estate market is witnessing a growing demand for villas as compared to conventional apartments.

Rajesh Babu, Founder of RECS Group, a city-based real estate consultancy firm says the main advantage of owning a villa is having complete ownership of land. “Such properties have better resale value and, if not bound by a clause, the owner has the right to demolish and reconstruct a structure in the future as well. When compared to apartments, a villa does cost more, as the cost of land is involved, but they are ideal investment options and come with a range of amenities.”

S Ramesh, a city-based business professional feels investing in a villa is beneficial in the long run. “I have been on the lookout for viable investment options in the city and I have booked a villa on an upcoming project on OMR. The range of amenities that they offer cannot match any apartment,” he says. Elaborating on the preferred locations for villa projects, Rajesh adds, “The top locations include ECR, OMR, Sriperumbudur/Oragadam and GST Road. Suburban and peripheral locations are preferred for villa developments and there is limited development of such projects within the city due to the non-availability of land parcels inside the city and their high costs,” he says.

Considered a viable investment option, there is a rise in demand for villa projects on the outskirts of the city, especially among NRIs (mainly the US, South Asian countries). The Town and Country Project, being developed by Lancor Holdings at Sriperumbudur, is said to house over 400 villas and caters to this very niche segment. R V Shekar, Managing Director, Lancor Holdings, is confident that the first phase of the project will witness 50% investment from NRIs. “The trend of NRIs investing in villa projects within the city is on the rise and they make for perfect summer homes, besides being great investment options.”

Each villa comes with its own exclusive garden, two car porches, terrace, sit-out areas and combines the luxuries of an independent home with the advantages of a the lifestyle of a gated community ,” he says. Suresh Jain, Managing Director, Vijayshanthi Builders, says villa projects cater to a premium and niche segment of buyers. “Investing in a villa has a range of benefits such as amenities, privacy, no overhead costs and security. With land prices being on the rise, villa projects fare better than conventional apartments, from an investment perspective,” he says.

Highlighting the advantages of such projects, Rajesh adds,”Well-made roads, gardens/landscaping, parking areas, play areas, swimming pools, gymnasiums and club houses are common amenities found in any such project. Different formats are available to suit the needs of different categories.” Pratish Devadoss, Managing Director, VGN Properties, says the concept of mixed development caters to a wider segment of buyers and has its own benefits.

“Constructing apartments and villas as part of the same project offers buyers a range of options. Villas are mainly purchased by individuals from high income groups. Chennai is catching up with the trend after cities such as Delhi, Bengaluru and Hyderabad.”

While most villa projects are developed in the outskirts, Naresh Jain, Managing Director, Influence Infrastructure, decided to set up a project in the heart of the city. “Apart from two similar projects on ECR, the current project ‘Masterpiece’ is coming up at Nungambakkam. There is a huge demand for such projects even within the city and thus I decided to venture this untapped segment.

People are willing to invest 15-20% more than a conventional apartment and the wide range of world-class amenities that we offer make it a wise investment option. Also, the per sq ft usage is more in a villa rather than an apartment which is a hidden advantage,” he says. Each villa sprawls across 4,250 sq ft and will cost Rs 9 crore on an average. “In my opinion, the amenities offered in a villa project make all the difference. An underwater gym, snorkeling bay, indoor gaming arena, swimming pool, spa are some of the amenities that will be part of every villa,” he says.

Nidhi Adlakha, Times Property, Chennai

Source: http://content.magicbricks.com/chennai-witnesses-rise-in-demand-for-villas

Chennai’s office space demand slows down

Chennai

Chennai’s office market has slowed down with less than a million sq ft of office space being absorbed till May this year. While corporates are deferring their decisions to commit large spaces, smaller deals in the area range of 10,000–25,000 sq ft are happening across micro markets. This is because of the availability of good quality office spaces in CBD areas.

According to market sources, commercial property developers are only servicing the existing requirements of clients, whereas new enquiries are slowing down, a clear indication of the impending overall slowdown in the market. Even the existing requirements were initiated during last year and in the beginning of this year and the spill over effect are only seen now.

There is another reason for the reduction in supply level. Most of the property developers and landowners prefer residential development which has resulted in the restricted supply level of office space in non-IT building both in city areas and suburbs. As a result, in the medium to long-term, supply level of good quality non-SEZ office space will be restricted in the coming years.

Rentals for office space are firming up across micro markets but they are marginally up in CBD areas. Rentals are marginally up on OMR before the toll gate, but they are softening for buildings located after the toll gate. However, the preferred locations among corporates continue to be OMR, as there is organised supply level in the corridor. Whereas for non-IT sector, a few office buildings are coming up in CBD areas like Anna Salai and Greams road.

A significant development is that supply level of office space in the non-IT sector is getting restricted both in city areas and suburbs. With the result rentals may harden in the coming years if adequate development is not forthcoming for commercial space, say property consultants.

Though the vacant spaces across micro markets in the city look high in today’s scenario, it is not in the preferred locations by corporates and MNCs. Land owners in city’s prime areas are not even contemplating commercial development but predominantly focus on residential development. The cumulative impact of all this will be negligible non-IT office supply level in the coming years, according to realtors monitoring the supply movements of office space in the city.

The demand for SEZ space is growing with the supply levels on GST road, Mount Poonamallee road and OMR firming up.

Outlook:

According to industry sources, those who have already taken a plunge for expansion requirements in Chennai may go ahead with their plans. But others who are in the process of decision making on expansion may slow down and even postpone their requirements, a situation that does not augur well for the commercial property market in the city. The city is likely to witness absorption of 5.3 million sqft by the end of this year.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/chennais-office-space-demand-slows-down

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

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