Tag Archives: Tamil Nadu Real Estate

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.

Chennai realty recovered faster than any other market after slowdown

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Vibrant cities for vibrant economy-VI

By: Track2Media Intellisearch

Track2Media Rank-5

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 During the economic downturn of 2008, while the other neighbouring and glamorous property market of Bangalore and Hyderabad fell by 24-29 per cent, the Chennai market fell only 8.3 per cent. Limited supply of land and pent-up demand is how NHB’s Residex defines Chennai property market. However, what actually has made Chennai market stand out is that first of all property market is driven by the end users, and then the city has seen most of the property transactions within the Central Business District areas only. That speaks volumes about the growth potential of the city as well.

If the National Housing Bank’s property price index ‘NHB Residex‘ is a fair indicator, property value in Chennai has doubled from the downturn price of 2008, best appreciation than any other part of the country. What has helped the Chennai market beat the more glamorous Mumbai, New Delhi and even Bangalore in price appreciation? Chennai, for long, had the least supply of land available for building property among the metros. It was also a plot-oriented market and multi-apartment models are the new fancy thus attracting a premium.

Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis Asia, believes the real-estate activity in Chennai is significantly driven by end-users compared with other markets, and this is one reason why prices are not too volatile and are holding up well.

Real estate in Chennai has been undergoing a shift in its trends recently. Chennai property prices have been on rise since long, especially the commercial property rates. The rates of commercial properties are very high in areas like IT, T.Nagar, Anna Nagar, and Adyar. As these localities have reached saturation and new industries & software companies are coming up at NH4, GST Road, and OMR. These new developments are coming in affordable limits and larger areas.

The booming commercial segment and growing influx of IT professionals have pushed the residential demand and prices to a new high in Chennai over the last few years. The Chennai office market has witnessed remarkable growth which is due to the offices built for the IT industry (as IT Parks or IT Special Economic Zones), which constitute 86 per cent of the operational office stock in Chennai.

According to a report by Real Estate Intelligence Service of Jones Lang LaSalle India, 2011 had ushered in renewed interest in non-IT office space in Chennai – especially from firms wishing to relocate their offices to better grade buildings. The expected fresh supply of non-IT office space should witness active absorption at the right rentals. There will be greater demand for investment grade office spaces within the city, since there is a severe dearth of high quality office buildings in the central areas, the report said.

Chennai’s high streets continue to remain a favourite location for retailers as conversion rates in high streets are higher compared with those in malls. The neighbourhood of premium residential catchments, ample space for a hassle-free car park and proximity to the city centre are the key demand drivers for high-end high streets. The high streets of Khadar Nawaz Khan Road (KNK Road) and Wallace Garden Road have emerged as important retail destinations for global luxury, fashion and premium brands, the report added.

While, the commercial properties of Chennai have reached a point when it is very difficult to purchase a property in prominent locations, the residential property preferences are also changing. Apartment flats in Chennai are gaining popularity day by day due to the increase in population and lack of space. Many prominent builders in Chennai are building projects comprising of luxurious apartments, providing ultra modern facilities. With young professionals going in more for rented units, the lifestyle apartments are attracting huge investments from NRIs.

With the announcement of the monorail project in Chennai, the land value in Chennai is going to see another dramatic change. A crisscrossing network of four monorail corridors, running to a total length of 111 km is expected to add to the beautification of the city and make Chennai by and large traffic free. Chennai infrastructure is looking forward to match to the international standards.

Unlike other metro cities land prices in suburbs are yet to reach the peak and the concept of satellite town yet to catch fancy even after Jayalalitha Government is keen to develop more satellite towns. In most parts of Old Mahabalipuram Road, GST Road and the Chennai-Bangalore Highway, realtors say, land transactions are very few. Surprisingly, many new residential projects were launched along these corridors over the past two years and even received good patronage from buyers. But that has not translated into an increase in land prices along these stretches, says Kevin William Albert, Associate Director of Jones Lang LaSalle.

“This indicates the potential of Chennai’s suburbs to emerge as an attractive retail destination. Bigger residential catchments in the suburban areas combined with more reasonable rentals compared to those in the prime city are expected to act as key driving forces for retailers to increase their presence in the suburban precincts of Chennai in the long term,” the JLLI report added.

Advantage Chennai

  • Limited supply of land & pent-up demand
  • Booming commercial segment
  • Non-IT sector also gaining ground
  • Monorail project
  • Appreciation potential of suburbs

CREDAI Tamil Nadu blames govt agencies for realty crisis

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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 EstateConfederation of Real Estate Developers’ Association of India (CREDAI), Tamil Nadu has blamed the two state government agencies of holding up residential and commercial projects worth Rs.7,500 crore by delaying approvals.

CREDAI Tamil Nadu chapter President T Chitty Babu said at a press meet on Thursday, August 25, that the two regulatory agencies, the Chennai Metropolitan Development Authority (CMDA) and the Directorate of Town and Country Planning (DTCP), were sitting on applications seeking clearances for projects.

The piling up of roughly 700 files started three months before the assembly elections and there has been no respite even after the polls, he said. The resultant loss to the exchequer in the form of infrastructure and amenity charges, scrutiny fee, development charges, property tax, stamp duty and value added tax was approximately Rs.1,750 crore, said Babu.

“On an average, projects take 18 to 24 months for CMDA and DTCP approvals. But now, it has overstretched by six more months and there is no sign of any relief,” he said.

In all, about 43.5 million sq ft of projects are awaiting approvals before the two regulatory agencies. Close to 450 of those files are with the CMDA. About 80 per cent of them are residential projects. Any delay in their approvals would only add to housing shortage in the state, which stands at a staggering 2.8 million units, said former Vice President of CREDAI, Prakash Challa. Also, it may result in about three lakh people in the construction sector going jobless, he said.

The procedural delays, increase in home loan interest rates and the mounting input cost – prices of sand, bricks, cement and labour – are forcing builders to increase the selling price of projects by Rs.200 per sq ft, said N Nandakumar, secretary, CREDAI Tamil Nadu.

Some CREDAI members also spoke about hidden costs involved in project approvals. One of the members said files of even approved projects were being reopened by officials.