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

Greater urbanisation in Tamil Nadu increases housing demand

Chennai

In terms of urbanization, growth, economy and economic freedom, Tamil Nadu emerges as one of the top players in the country and is securely placed within the top three in terms of attracting investment and development. The Economic Freedom rankings of different States in the country rate Tamil Nadu as the leader in this category and the State itself is one of the highest contributors to the nation’s GDP.

A variety of economic drivers of growth, including ports, automobile manufacturing, IT/Software, electrical engineering, education and more, fuel the development of the State and this in turn creates a cosmopolitan climate within the city of Chennai. According to a study in 2008, 53% of Tamil Nadu’s population (35.4 million people) lived in urban areas (the highest percentage in the country) while it is projected that by 2030 the urbanisation rate will reach 67% in the State with close to 53.4 million people living in cities and urban areas.

Hence, there is a pressing need to create more housing and better infrastructure. Special Economic Zones (SEZs) are an important step, in that context. “The idea behind promoting SEZs was to decentralise industrial growth and promote a balanced activity across regions,” says B Elangovan, General Manager (Projects), TIDCO (Tamil Nadu Industrial Development Corporation. “At the moment, TIDCO is helping develop a variety of special zones across the State and the Chennai region with a view to promoting balanced growth. These include SIPCOT in Oragadam (for the automobile industry) that is showing tremendous promise.

Taramani is seeing more IT SEZs in the stage of completion. Integrated public-private partnerships such as the Mahindra World City and Sriperumbudur SEZ also boost the profile of development for electrical manufacturing and IT industries to grow. The SEZ in Perambalur (3,000 acres) and Ennore that are scheduled to come up, will have far reaching socio-economic benefits. In addition to providing huge employment opportunities, SEZs can bring in urbanisation to the areas surrounding them.

Connectivity of infrastructure between SEZs and other urban areas should be planned. This will bring in balanced growth across the region and promote integrated industrial parks whether there are SEZs or not. While the business climate in the last couple of years, and the sunset clause for benefits in these special economic zones have detracted development, there are immense opportunities and benefits for private developers to come forward and create SEZs at this point.”

The city itself is expanding three times over with the creation of Ring Roads and redevelopment of the existing highways. The development of high speed rails, metro, exclusive bus transport corridors and more will enhance connectivity and lead to significant suburban growth in the next couple of years and this in turn will help fill the demand-supply gap in terms of quality housing.

“We find that migration patterns are westwards from Georgetown towards Kilpauk and Anna nagar to Sriperumbudur,” says Prashanth Gopinath, Senior Manager – Marketing, Golden Homes, “Poonamallee High Road already has all the social and connectivity infrastructure necessary for good living. So our current project is set on 8.10 acres (815 apartments) near Poonamallee on the highway and one of the first such developments in this area. Already enjoying good connectivity by bus, two lines of monorail are also slated to come up here. In addition, the development of the Tirumazhisai satellite township nearby and the Indo-Singapore SEZ development are of major importance.”

With space crunch and soaring land prices in the city, it is good to know that there are plenty of good investment options in the vicinity.

Source: Times Property in The Times of India, Chennai

Chennai office market witnesses growth

Chennai

Chennai office market has notched up absorption of 0.5 million sq ft during the first quarter and the city may witness a surge in SEZ supply during the coming months.

The year began on a sluggish mode due to cascading impact of global meltdown aggravated by the strong supply line across the city. In fact, surveys by international property consultants reveal that the city’s net absorption during first quarter was the lowest in almost two years.

In a related development, manufacturing sector accounted for around 51% of the total transactions, while the share of the IT/ITES dipped to around 36% during the first quarter from around 60% during the previous quarter, according to Jones Lang LaSalle’s quarterly survey. Apart from the investment grade spaces, around 60,000 sq ft of grade B space got leased out during the quarter, of which more than 50% was leased out in the CBD locations.

No new supply was witnessed during the quarter amid delays in the project completion of Platinum Holdings in Navalur and Isana in Arumbakkam.

The transactions witnessed during the first quarter were focused largely on areas like Velachery, Perungudi, Mount Poonamallee road besides GST road, Ambattur, perungalathur, Sholinganallur and Siruseri.

According to CB Richard Ellis’ quarterly survey, the CBD witnessed a dip in demand for office space with negligible absorption of around 0.09 million sqft. The Off / Non CBD micro-market of MRC Nagar, Guindy and Taramani witnessed stagnation in market activity when compared to the previous quarter. The Suburban Business District (SBD) including areas such as Velachery, Perungudi, Mount Poonamallee Road witnessed maximum activity during this quarter with an absorption of almost 0.32 million sq ft being reported, compared to around 0.25 million sq ft in the previous quarter.

Overall the market sentiment continues to remain positive which is expected to translate into healthy absorption over the coming few quarters, according to industry sources. The SEZ segment should continue to witness supply addition, thereby being a major contributor to the office market in the city. IT and back-office operations are expected to continue to remain major contributors of office space demand and transaction activity. Rental values are expected to remain largely stable across most micro-markets over the coming few quarters.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/chennai-office-market-witnesses-growth

Chennai GST Road rental demand rises

Ever since the expansion of corporates and MNCs setting up operations in Mahindra World City and on GST road, there has been a sudden spurt in the number of techies and other skilled professionals employed in and around the area leading to a surge in demand for rental accommodation.

The major work centres on GST are Mahindra World City on a sprawling land area of 1550 acres, Shriram Gateway, an SEZ and L&T Arun Excello’s Estancia. While the residential units coming up on IT corridor caters to the demand of techies on OMR, those employed on GST road will have to invariably look at city areas or other suburbs.

There are quality housing units like the Akshaya Belvedere, L&T Arun Excello’s Estancia, Mahindra Lifespace Developers’ Iris, Hallmark Infrastructure’s Hill County and South India Shelters Safaa but they are rather limited to bridge the growing mismatch between demand and supply in housing.

For instance, in the Mahindra City alone, Infosys has a land area of 129 acres and operational space of 4 million sqft, Capgemini with 25 acres land and operational space of 1 million sqft, Wipro Technologies with 92 acres land and development potential of 4 million sqft and Mastek with 16 acres of land and development of potential 0.7 million sqft.

Infosys alone currently employs 7000 people in Mahindra World City. The demand is getting aggravated from Capgemini in Shriram Gateway and other companies in the corridor. The expansion of these enterprises and the influx of more professionals in the coming years would necessitate the need for improved housing stock.

According to industry sources, OMR and GST road together have 6 non-captive IT/ITES SEZs with 83 per cent occupancy levels. And GST road has 5.1 million sqft of operational captive space including Shriram Gateway and L&T Estancia. It is said that the IT/ITES companies in Mahindra World City would continue with their captive units in the coming years.

Though GST road has airport connectivity and a well-developed business infrastructure, it lacks social infrastructure including retail malls and entertainment options. But Aerens Gold Souk in Vandalur and Abhirami mall in Mamandur may change the skyline of the retail scenario in the area. Besides, malls are coming up in Shriram Gateway and Estancia apart from Laurel Mall.

V Nagarajan

Property Consultant

Source: http://content.magicbricks.com/chennai-gst-road-rental-demand-rises