Tag Archives: Chennai Real Estate

Property market potential of top 5 cities

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Bottom Line: The realty markets of Mumbai, Pune, Chennai, Bengaluru and Hyderabad are proving to be magnets that attract potential home buyers from all over due to their massive infrastructure development, affordable rates and good job catchment opportunities.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news“Form is temporary but class is permanent,” goes an old adage in cricket. But class being permanent is equally true with the best asset class called property. Since the very nature of the business is cyclic, that goes up and down in its critical linkage to the overall economy; it often leads to lending credence to the prophets of doomsday that the market is down and out.

However, a closer look at some of the leading property markets of the country, like Mumbai, Pune, Chennai, Hyderabad and Bangalore, clearly suggest that the market is poised for an upswing in the next few years. More importantly, it is not just the analysts but also the home-buyers who are today; ready to bet high on the long term growth story of the property market in these leading cities.

City realities

Home-buyers are bullish over the medium-to-long-term growth story of the property market

Cities that are mostly being preferred are Mumbai, Pune, Bangalore, Chennai and Hyderabad

Infrastructure developments and job catchment are the investment magnets in these cities


“I don’t really subscribe to the view that Mumbai is saturated and hence, is facing a slowdown. The same was opined before the emergence of BKC (Bandra Kurla Complex) as well but the new destinations for both, residential and commercial spaces changed this outlook,” says Jessy Kutty, an NRI, who is soon planning to invest in the city’s property market.

After all, the kind of infrastructure upgrading, like the Eastern Freeway and Western Expressway, the metro rail, Jogeshwari – Vikhroli Link Road (JVLR), Andheri Kurla Link Road, etc, have had, they have changed the outlook of the city.

Add to it, the upcoming infrastructure projects like the Mumbai Trans Harbour Link and an international airport in Navi Mumbai, has suddenly given birth to a twin city that is ready for investment. Needless to add, these developments are on the stretches of high business corridors and hence, are all set to fuel the housing demand in the city.

Advantage Mumbai

Mumbai 7th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Impressive investment along the new growth corridors of upcoming MTHL and Navi Mumbai International Airport

New corridors of development emerging as the government pushes for Rs 46,000-crore expressway to connect Mumbai-Nagpur with Samruddhi Expressway


The story is no different in the neighbouring city of Pune as well where the Pune Municipal Corporation (PMC) has set up five special funds for urban projects. The PMC has set a target of raising:

INR 55 crore for the Pune Infrastructure Fund;

INR 23 crore for Critical Infrastructure Funds for Information Technology and Enabled Services (ITES);

INR 2 crore for Heritage Conservation Funds;

INR 20 crore for Urban Transport Land Development Charges and;

INR 40 crore for Urban Transport Building Development Charges.

“Pune is no more just a hot destination but the best market for investment today. Even in the wake of a slowdown, the performance of the IT industry in the city has been phenomenal. Even Cushman & Wakefield has placed Pune among the top 10 markets across the Asia Pacific region. For me, this is the market to bet on for a long-term growth story,” says Gaurav Gupta, an IT professional.

Advantage Pune

Pune 8th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Pune sells India’s first municipal bond since 2007 worth $31 million for 10 years for smart city project and aims to modernize the city

A detailed project report (DPR) for the ring road proposed by the PMRDA will be ready by September and civil work will start by October-November. This eight-lane 128km ring road will connect places on the periphery of Pune and Pimpri Chinchwad


Bengaluru has always been an aspirational city for the average home-buyers. Now, with the boost of infrastructure projects, like the metro rail and Periheral Ring Road, this job magnet destination appears to be even more desirable.

The influx of global corporate occupiers, infrastructure deployment in the peripheral areas, rapidly improving connectivity and unleashing of large land parcels by the government for commercial and industrial growth, promises the emergence of newer nodes in the peripheral districts of Bengaluru.

Since land in these areas comes at a lower cost; the expat workforce that is employed in the numerous automotive, engineering and other industries located on the outskirts of Bengaluru, would continue to drive the property market.

Ashish Puravankara, managing director of Puravankara Ltd, finds reasons to suggest why Bengaluru is a huge investment magnet. The companies are also realising the cost of doing business here; the average rental cost of office space per sq feet in Bengaluru is about INR 45 and that works well for companies. Then look at the customers’ point of view. The average cost of housing in Bangalore is INR 5,500 and that works well for their workforce too.

“So, it is all supporting each other and it is not that only one factor alone is driving the market. If the prices have become unaffordable due to the high demand in the city, people would have started looking at other cities but Bengaluru continues to drive the major share of investment in the property market,” says Puravankara.

Advantage Bangalore

Bangalore 6th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

A Colliers report suggests Bangalore market maintained its top position across nine cities despite low vacancy and recorded an overwhelming share of 37% of total absorption

Bangalore is the only Indian city that has now scaled up to global level of consumption of office space per household, an impressive 65 sq feet as against the national average of 25 sq feet 


Chennai seems to have moved ahead from its flood disaster of 2015. Today, it is the biggest manufacturing hub in India. The city has more industries coming up and it is termed as the Detroit of Asia. Almost every manufacturer has a facility there. It has attracted more investments and has more industrial corridors in almost every nook and corner of the city.

The IT sector here is also booming and growing at a rapid pace. Top Indian IT majors have a considerable chunk of employees operating out of Chennai.

“The best part about Chennai is the price point that hovers in the range of Rs 2500-5500. Premium projects are located in Nungambakkam, Egmore, Anna Nagar, Nandanam, Mandaveli, RA Puram and locations in ECR such as Muttukadu, Uthandi and Injambakkam. Low and mid-segment projects are coming up at Perumbakkam, Ottiyambakkam, Thalambur, Mevalurkuppam, Avadi, Padappai, Mogappair, Thirumazhisai, Navalur, Manapakkam, Padur, Kelambakkam, Thaiyur and Velappanchavadi,” explains Ravikiran Donthamsetty, a local broker.

Advantage Chennai

Chennai 9th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Vision 2023 of State Government aims to boost infrastructure and industrial growth in the city

Expansion of Chennai airport, laying of Chennai peripheral ring road, widening of East Coast Road, and setting up of Chennai-Bangalore Industrial Corridor promises to alter the investment climate of the city


Parth Mehta, managing director, Paradigm Realty agrees that markets like Hyderabad have been outperforming their peers in larger metro cities. The city is improving currently with respect to the infrastructure and government policies for doing business.

“Also, due to the IT and e-commerce boom, there would be a lot of start-ups that would prefer to operate from low cost office spaces at these locations,” says Mehta.

Probably, no other city looks as promising as Hyderabad from a medium-to-long-term perspective. The continuous growth of the IT sector in the city has had a cascading effect on the housing market in corresponding hubs as well. The residential activity in north Hyderabad is now driven by the presence of industries such as pharmaceutical, bio-tech, electronics, etc.

“In 2016, Hyderabad witnessed strong office leasing, registering a 109 per cent y-o-y growth during the year. In the January to March 2017 quarter, the city witnessed an uptake of more than 1.3 mn sq ft of office space. This growth in office leasing activity, coupled with robust infrastructure development and competitive pricing, positions Hyderabad as one of the most affordable residential markets for buyers in the region,” says Rami Shetty, a local property agent.

Most of the homebuyers in the city also agree that the metro connectivity and transit hubs will fuel further demand in the housing segment in the near future. Due to the lowest office rentals across top markets in southern India, corporates are increasingly looking at Hyderabad while planning their expansion strategies in the region. With the demand going up for office space, the city is experiencing a demand-supply gap at present and its organic effect on the housing market is a logical conclusion.

Advantage Hyderabad

Hyderabad tops the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

With political stability the city is high on the wish list of corporates due to low cost of doing business

The upcoming metro connectivity & transit hubs fuelling investment climate in the city

In Conclusion

In a slow moving housing market at present, these cities are displaying exemplary resilience to suggest that the medium-to-long-term outlook is pretty bright. The best part is that the home-buyers and other investors are ready to believe the long term growth stories of these cities.

Affordable homebuyers must know their wants & needs

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Bottom Line: Affordable homebuyers must understand their wants and needs to not get duped by the fancy marketing jargon of builders.

- india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinha“Let’s face it! We all have unrealistic expectations when buying a house. We often forget about our budget and end up stretching it to fall into debt trap. It happens because we want the best of everything even though we are in the property market to buy a budget home or affordable home. I am not sure to what extent it is human tendency or to what extent we fall into the fancy trap of developers. But today when I look back I think I should have been more realistic when buying my house. There is no point paying almost all the salary in the EMI now,” says a repentant homebuyer in Mumbai.

Well, not many would like to admit it as openly as this homebuyer but the fact remains that the buyers of affordable homes often forget their wants and needs when they enter the property market. The temptation to have one’s home is palpable and many of the first time homebuyers make the mistake of stretching beyond the financial limits.

How many affordable homebuyers who leave to work early morning and come back late night actually need amenities like free Wi-Fi, amphitheatre, club, tennis court, swimming pool etc? Are many buyers in the average salaried class in a position to avail these facilities even though the developer has created e everything within the project? How long such fancy amenities are maintained once the project is over and the monthly maintenance charges are a huge issue?

The critics of this theory might question as to why not the buyers of affordable property be given these amenities. The reasons are many – ranging from the increase in loading percentage vis-à-vis the usable carpet area to cost of maintenance of these amenities every month. In a housing market like Mumbai where the majority of the homebuyers in the affordable segment are expat professionals having both time and budget constraints it simply defies logic to expect fancy amenities.

With the reasonable expectation of a roof over the head not very long ago, the real estate boom in this part of the world has scaled up the liberty of choice for the average homebuyers. While the aspirations of even the middle and lower middle income with moderate budget have gone up, there are very many residential projects launched in recent times that seem to fill the gap with the promise of hi-tech amenities, luxurious lifestyle, lush green surroundings.

Analysts therefore recommend that the average homebuyers must know their budget and needs to avoid the additional financial load. What you may want does not necessarily fit into your budget segment and the quest to have something more is endless. The smart builders do understand this temptation of gullible homebuyers and in the absence of homebuyers’ education in this part of the world their temptation is what sells the fancy marketing offerings of the developers.

Developers, on their part are conscious of this homebuyers’ temptation. The point out that the developers are just catering to what the market is looking for. Harjith.D.Bubber, M.D & C.E.O, Rivali Park agrees that nowadays a homebuyer expects gated community as a part of affordable housing. “External amenities like club house, swimming pool, open areas for children to play, minimum one car parking is the basic expectation of the homebuyer today even in budget housing.”

Parth Mehta, Managing Director, Paradigm Realty, on the other hand, suggests caution when he says that when a person is buying an affordable housing with budget constraints one should keep in mind some basic things. His suggested checklist is more about basic sanctions and clearances than amenities to ensure the timely delivery of the project.

“To invest in a property where developer has complete approval like IOD, CC is more important for someone who is spending his lifetime savings. The title of the property should be clear and marketable. One must also check the credentials and standing of the developer in the market,” says Mehta.

Some of the developers try to find a method in the expectations of affordable homebuyers. They feel it is more to do with how the developers define the demand of affordable housing. Affordable homebuyers too should be given liberty of choice as far as upgrading the lifestyle is concerned.

Nikhil Hawelia, Managing Director of Hawelia Group says there is nothing wrong for a low-ticket buyer to expect the quality experience. According to him, instead of compromising on the quality of amenities that the modern homebuyers want (and often also need) the budget segment should be determined by the distance from the main city and the work place. If one is ready to travel an hour or so for getting a luxurious feel at home, the market should be ready to respond to this set of buyers as well.

“I believe in today’s market place where most of the young buyers are aspirational, even when they have budget constraints, their budget should be a criterion only for location and the size of the apartment. They should not be devoid of modern amenities and that is how a new emerging segment of affordable luxury can meet the market expectations as well during the slowdown. This is how urbanization has evolved the across the world,” says Hawelia.

Analysts for quite sometime are pointing out to mismatch between homebuyers’ preference and the ground realities. While value addition is something that drives homebuyers across the segment of housing, in affordable housing this value addition has an altogether different connotation. More usable spaces, since most of the affordable housing units are smaller in size, is a better value addition than lowering the usable carpet area for the sake of badminton court or amphitheatre kind of fancy offerings. 

As a thumb rule, if the budget is just for the affordable home and the homebuyer is moving from a rented flat to his own, one should first of all look at the location and distance from the work place. Since most of such projects are on the periphery of the city, one must also look for the infrastructure within the project. Usable carpet area is next and the fancy offerings & amenities are definitely the last in the checklist of affordable housing. 

By: Ravi Sinha

Nahar Tower of Adyar gets A Rating

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News Point: Track2Realty Investment Magnet Report 2015 picks up 100 best housing projects across India.

Noah Group, Tower of Adyar, Chennai real estate, Chennai property market, Super luxury housing in Chennai, NRI investment, India real estate news, Indian property news, Track2RealtyLocation: Lattice Bridge Road, Adyar, Chennai

Project type: 4 BHK Condominiums

Price: Rs. 4 Crore

Project execution lifecycle: March 2015-December 2018

Nahar Group has proven expertise in destination development and with their flagship project ‘Nahar Amrit Shakti’ at Chandivalli in Mumbai they have created luxurious villaments also. Yet, with this small project of 56 units they seem to have redefined their own architectural craftsmanship and in the process promises to set a new benchmark of luxury that very few thought in Chennai.

These luxurious sea-facing 4BHK ultra-modern global apartments with traditional pooja room are crafted to perfection and provide a feeling of openness without compromising on privacy.

Tower of Adyar promises to offer the residents a unique experience of exclusive rooftop amenities starting from café to amphi theatre to state of art, and gym to spa. Interior living areas are elegantly integrated with scenic greens and the stunning ocean view, thus symbolising perfect harmony.

Tower of Adyar, nestled within Adyar’s finest neighborhood is just a stone’s throw away from city landmarks and is well linked with connectivity hubs such as rail, metro and airport.

Located on L.B.Road in Adyar, one of the prime area situated by the southern banks of the Adyar River, the property is closely connected with the IT hubs, educational institutions, hospitals and main markets.

In terms of competitive advantage, it cannot only challenge some of the most prized luxury properties of Chennai, but across India as well.

Track2Realty Rating: A

  • Location & Aspiration: 8/10
  • Physical Infrastructure: 8/10
  • Social Infrastructure: 7/10
  • Appreciation Potential: 6/10
  • Competitive Advantage: 8/10
  • Rental Potential: 5/10
  • Launch2Sales Ratio: 5/10
  • Construction Quality/Timelines: 7/10
  • Livability Index: 9/10
  • ROI Cycle: 5/10

Embassy Residency gets B in Track2Realty Investment Magnet Report 2015

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Track2Realty picks up 100 best housing projects in 2015 across India.

Embassy Residency, Chennai real estate, Top 100 projects in India, Track2Realty Investment Magnet Report 2015, Top housing project in India, India real estate news, NRI investmentLocation: Perumbakkam, Sholinganalur, Chennai

Project type: 2 & 3 BHK Apartments

Price: Rs. 32-79 Lakh

Project execution lifecycle: September 2010-March 2016

Embassy Residency is a project that has weathered many challenges since inception – right from legal issues to the perception issue of being a low lying area – and yet it is shaping up quite decent. It is in South Chennai and primarily meant for the people employed in IT corridor.

Located at Perumbakkam on Sholinganalur- Medavakkam Road, near Sholinganallur Junction, it is the first integrated township closest to Chennai City.

Spread across 25 acres the builder has tried best to address the waterlogging problem in the low-lying area where it is a challenge in the rainy season. Moreover, the additional and hidden cost with Embassy Residency seems to be minimal when compared to other township projects.

It is serving well to IT employees looking for a decent housing project that is close to the workplace. The project is opposite to ELCOT SEZ near the proposed Financial City, is 12 kms from the TIDEL Park and 10 kms from Velachery.

In terms of the social infrastructure, it is next to world class Health City with reputed school is there within the complex. One of the strong USPs of the project is its price point, keeping in mind the high earning IT audience being the major demand driver.

Track2Realty Rating: B

  • Location & Aspiration: 6/10
  • Physical Infrastructure: 6/10
  • Social Infrastructure: 6/10
  • Appreciation Potential: 7/10
  • Competitive Advantage: 4/10
  • Rental Potential:5/10
  • Launch2Sales Ratio: 6/10
  • Construction Quality/Timelines: 6/10
  • Livability Index: 6/10
  • ROI Cycle: 5/10

SPR & RG Constructions launch Osian Chlorophyll in Chennai

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Osian Chlorophyll, Chennai real estate, Green Project, Indian real estate news, India property market, property consultancy, track2Media Research, Track2RealtyTrack2Realty: SPR & RG Constructions have launched their flagship green-community project at Porur, adjacent to Sri Ramachandra Medical College. The project is conceptualised as a platform for all green lovers to congregate and live together as a community, in harmony with nature. Osian Chlorophyll claims to be a landmark residential project for Chennai, even as it raises the bar on green-consciousness and becomes a torchbearer for other builders to engage in a richer dialogue with our environment.

Nestled in the 9.44 acres of lush green foliage and a plethora of never-before amenities, Osian Chlorophyll has all that a nature lover could ask for. From the fresh air that is generated by the vast expanse of natural vegetation, to 42 eco-gardens, a 10,000 sq ft organic farming zone and private terrace gardens for a select few.

To create and foster a sense of community, residents are encouraged to participate in  gardening and kitchen farming, to supply to the community’s own Chloro Store, a retail outlet that will sell the produce at subsidised rates to the residents.

While sharing his thoughts on the project, Hitesh P. Kawad, Managing Director, Osian Chlorophyll, shared, “Given the depletion of resources on our planet earth today and the alarming pollution levels that have ravaged the environment, adoption of greenery is a promising way to mitigate the environmental damage. With this landmark project, we look forward to adopting ‘Green’ as a way of life and making a huge difference to the community at large. Out of the 9.44 acres of land, 30% will be utilised for construction and the rest will be allocated for active gardening and farming. We believe that Osian Chlorophyll is not just a single project, but the prototype for an alternate way of living, and look forward to delivering more such projects that subscribe to the highest international standards on design, efficient construction techniques, amenities and, customer satisfaction, even as we stay as the green conscience of the city”

In an initiative to inculcate the idea of green living among its own employees and customers, Osian Chlorophyll conducts various interactive workshops on horticulture at their project site by inviting specialists to share their insights on creating private green patches incorporating native herbs and shrubs.

Casa Grande launches ‘Cherry Pick’

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Casa Grande Cherry Pick, Villa in Chennai, Chennai real estate, Indian real estate news, Indian realty news, India property market, Track2Media Research Pvt Ltd, Track2RealtyTrack2Realty: Casa Grande, Chennai-based villa developer has launched Casa Grande ‘Cherry Pick’. Offering lifestyle apartments with more than 40 amenities the property is located at Perumbakkam, 10 minutes from Sholinganalur.

Casa Grande Cherry pick is attractively priced at Rs.3390 per sft significantly lower by more than Rs.500 per sft compared to other projects in the vicinity giving customers a saving and advantage of 7 – 10 Lakhs. The apartment price starts from Rs.22 Lakhs onwards.

Speaking at the project launch, Arun Kumar, Managing Director, Casa Grande said, “Casa Grande Cherry pick will be a fantastic buy for customers. The primary reason for anyone to buy this project would be the price which we believe is the most attractive in the market. This would also be a great community to live-in with abundant landscape and amenities as a feature.”

The project encompasses 420 apartments over an expanse of 7.2 acres. The project constitutes a wide choice of apartments starting from 1bhk to 3.5bhk from 650 sft to 1850 sft. The lifestyle amenities include Club house, Swimming pool, Gym and 40 other amenities with lush landscaping across all streets.

West Bengal offers big sops to real estate projects

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Kolkata real estate, Chennai real estateTrack2Realty-Agencies: In a boost to realty-related investment in the state, West Bengal Government has decided to grant an exemption under section 14Y of the West Bengal Land Reforms Act for township projects enabling them to acquire land more than the ceiling limit of 24 acres.

West Bengal Land Reforms (Amendment) Bill 2014, which has been cleared by the state assembly, has offered this relaxation to infrastructure projects like transportation or terminal, township, logistics hub.

The government had earlier sought suggestions from pertinent ministries and industry bodies on amending Section 14Y of the West Bengal Land and Land Reforms Act, 1955, which grants exemption from the land ceiling to certain categories of industry.

Before this amendment the exemption iswas confined to “tea gardens, mills, factories, workshops, livestock breeding firms” with no room for modern ventures like information technology.

Besides, the amendment would allow the developers to take five years’ time from acquisition of land to complete the project, compared to three years earlier.

“This is a pro-industry move. With this amendment, industrial projects would get a major boost,” West Bengal education minister Partha Chatterjee said.

The Opposition however slammed the move. “As the government has failed to bring industry in the state, it has now started promoting only real estate business in the state,” CPI(M) leader Surjya Kant Mishra said.

Kolkata’s office market witnesses low demand in Q1 2014; transactions likely to improve in the medium term

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By: Anshuman Magazine, CMD, CBRE South Asia

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Kolkata real estate, Chennai real estateTrack2Realty: Demand for investment-grade office space across leading cities in India slowed down in the first quarter of 2014, with around 6.3 million sq. ft. of Grade A office space getting absorbed The market saw slow transaction activity and a low level of new completions in the first quarter; and leading cities continued to experience caution from corporate occupiers in the first three months of the year.

While the Kolkata commercial real estate market attracted reduced demand for office space during the first quarter, enquiry levels from prospective corporate occupiers indicate that office transaction activity is likely to pick up in the coming months.

On the supply front, the peripheral locations of the city are likely to witness significant supply addition by the end of 2014; and office space rental values are expected to remain stagnant across most micro-markets of Kolkata in the coming months.

During the first quarter of 2014, Kolkata’s Central Business District (CBD) of Chowringhee, B.B.D Bagh, Park Street and Camac Sreet witnessed a low level of commercial leasing activity in the first quarter. On the supply front, around 30,000 sq. ft. of office space was added to the existing stock; resulting into a marginal increase in vacancy levels. Rental values remained largely stable in this micro-market.

The secondary micro-markets of EM Bypass, Kasba–Gariahat, Topsia and Sarat Bose Road saw sluggish transaction activity during the quarter. There was no addition to the office stock in this micro-market; and vacancy levels remained largely stable over the previous quarter.

The peripheral micro-markets of Salt Lake and Rajarhat observed a decrease in demand for office space, with office space absorption recorded at 37,000 sq. ft. in the first quarter of 2014, as compared to 55,000 sq. ft. recorded in the previous quarter. There were no significant project completions in this micro-market during Q1 2014. Vacancy levels remained high, and were estimated in the range of 18–20%.

Bengal passes Bill to prevent use of excess land for real estate

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Kolkata real estate, Chennai real estateTrack2Realty-Agencies: The West Bengal Assembly on Friday, Nov 30, passed the Land Reforms (Amendment) Bill, 2013 which would prevent use of land, earmarked for township development, in excess of the prescribed ceiling for real estate purpose.

The Bill was passed in the absence of opposition Left Front and Congress.

Moving the bill in the House, Minister of State for Land and Land Reforms Department Swapan Debnath said that the amendment of Section 14Z of the Act would exclude the provision for retention of land in excess of the prescribed ceiling for township development from the purview of the section.

The minister said during the erstwhile Left Front regime, excess land holding was used for building real estate.

Now any surplus land could be used for poultry or dairy farming for the benefit of rural people and boost rural economy, Debnath said.

Section 50 of the Act has also been amended for introducing digital signature in accordance with the provision for Section 3 of the Information Technology Act, 2000 to ensure a more scientific authentication of all ‘Records of Rights’, the Minister said.

Extending full support to the bill, the lone SUCI member in the House, Tarun Kanti Naskar, lauded the state government for its initiative to prevent misuse of surplus land.

PEs lapping up IT parks, SEZs for assured returns

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Chennai Real estate, CREDAI Chennai, IT Parks Tamil Nadu, Tamil Nadu Real EstateReal estate-focused Private Equity Funds are looking at investing in pre-leased commercial projects, including IT Parks and Special Economic Zones (SEZs), as they look for assured returns from their investments.

“Some PE funds with a real estate orientation are investing in pre-leased commercial projects pre-dominantly in IT Parks and SEZs in addition to residential projects. Though these developments yield lower returns than residential assets, they give some assurance of steady annual returns,” Jones Lang LaSalle India Managing Director for Corporate Finance Ambar Maheshwari told PTI in Mumbai.

Such investments can provide a buffer for funds, which do not produce the expected returns, he added. “These investments are happening selectively, because a lot of investors have burnt their fingers by investing in underdeveloped commercial properties. There is oversupply in this space and it is very difficult to ascertain if a project will be commercially viable or not. Investing in pre-leased commercial projects is a relatively low-risk route, which also provides a reasonable assurance on returns,” Maheshwari pointed out.

Taking this opportunity, international private equity funds like Blackstone, Baring Private Equity Partners and Xander have already invested in pre-leased assets such as IT parks and SEZs. While US-based firm Blackstone has invested in two properties each in Pune and Bangalore, Xander has bought stake in an IT park in Chennai, while Baring Private Equity Partners has invested RMZ Corp, which is the largest office space builder in the South.

Echoing similar views, DTZ CEO Anshul Jain said, “Though residential projects continue to be a lucrative market for PEs, the guarantee of assured returns on their capital deployed in pre-leased projects is attracting Pes to invest in such properties.”

According to statistics, the return on equity deployed in retail and commercial properties last year was USD 0.7 and USD 0.8 respectively per USD 1 investment. On the other hand, the return per dollar in residential properties was USD 1.3. However, in land deals the valuation received per dollar was around USD 5. Speaking about this growing trend, a senior official from Tata Realty and Infrastructure, who did not wished to be named, said, “Due to delay in project approvals, high land and construction costs, the risks involved in investing in residential and other development projects is high, as they may fail to yield the average expected return of 25 percent. “Therefore, PE funds are now looking at commercial and retail properties for investment though the returns are low.”

Although these projects churn out returns which are a tad lower than the conventional residential projects, they essentially provide annuity incomes for investors, he added.

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