New buildings will come under scanner

New multi-storeyed constructions in the city will come under the scanner of an inter-departmental team before they get electricity and water connections. The team, consisting of officials from Chennai Metropolitan Development Authority (CMDA), Metrowater, Tamil Nadu Electricity Board and other departments, would inspect such buildings to ensure that they adhered to a set of norms recently finalised by a High Court-appointed monitoring committee. Completion certificates would be issued only if there were no violations. The certificates are necessary to obtain water and electricity connections, as per the court order. Builders have been claiming that their work has been hit ever since the court order. Builders' Association of India vice-chairman and Chozha Foundation promoter M.K. Sundaram said that not a single completion certificate had been issued by the CMDA since October, 2006. "At least, 20 applicants are waiting for the certificates. The rest have not applied ... they are waiting for the CMDA to come up with norms so that their applications will not be rejected and they will not be termed as violators," he said. The norms should be "practical and viable", allowing for minor variations from the approved plan, he added. According to sources, the norms would allow for some amount of variations. But the inter-departmental team would ensure that the construction of the building was complete. It would also make sure that there was adequate space for parking and setback before issuing completion certificates. Already the team, which was constituted to speed up the process of issuing the certificates, found serious violations by 40 commercial and special buildings, pointed out CMDA vice-chairman R. Santhanam. He is slated to meet the builders soon regarding the norms.

India's real estate market pegged at $14 billion

India's domestic real estate market is worth about $14 billion, experts observed at a conference in Chennai. Amid the whopping growth in the sector, the experts also suggested that a regulatory authority be in place to enhance transparency in the real estate business in India. 'Currently growing at 30 percent per annum, the domestic real estate market is estimated to be of the order of $14 billion,' said Manoj Vaish, president and CEO, Dun & Bradstreet, India, which provides global business information. 'Last year it was sort of a gold rush for the Indian real estate sector. A massive influx of FDI was witnessed into this sector,' he added. As a part of its ongoing efforts to educate and update market participants in India, Dun & Bradstreet this week hosted an interaction on the 'Dynamics of the Real Estate Market: The Investment Perspective'. Speaking at the conference, S. Sridhar, Chairperson and Managing Director, National Housing Bank said, 'There is a huge funding gap for infrastructure development in special economic zone's (SEZ) commercial and domestic space.' 'The financial solutions providers, especially the domestic capital markets, should look into filling this void,' he suggested. Sridhar said the real estate community should think out of the box and needs to offer wide range of products, which suits the pockets of even people in the low-income group. According to former Planning Commission advisor Tarun Das, housing is an important asset in the Indian economy with strong backward and forward linkages. 'The high volatility in the housing market requires that the price movement is adequately tracked for smooth functioning of the economy,' he said. 'For a house price index to be meaningful, it must compare prices of equivalent houses from one period to the next. This is difficult, as no two houses are identical,' he added, stressing the need for a system of measurement that allows for differences in the sample houses traded. 'The real estate market is not a bubble and thus I don't expect it to burst. I expect the market to grow for the next 20 years. We need to enhance transparency and build trust,' said M. Murali, chairperson and managing director of Shriram Properties Ltd.

CMDA asks builders to fall in line

Chennai Metropolitan Development Authority (CMDA) has directed 77 commercial multi-storeyed building owners in the city to restore the structures to the approved plan. It also issued demolition notices to 23 applicants, who had sought to regularise such buildings under the 1999 regularisation scheme. CMDA vice-chairman R. Santhanam said the high court-appointed monitoring committee, which met here on Friday, reviewed the action taken by the Authority regarding the regularisation applications and passed orders. "Demolition notices have been issued in cases of buildings that have been constructed without any approved plan or in case of serious violations," he said. The applicants would be given a 45-day notice to demolish the unauthorised portions or structures. "The committee decided that if the applicant does not take any corrective action within the notice period, the water and electricity connection would be cut." He said in most of the cases the notice period would expire by next month-end. CMDA also informed the committee that it has sought additional particulars from 12 applicants in the same category, who had applied under the 1999 scheme. The officials informed the committee that individual rejection letters were sent to applicants, who had applied under the 2002 regularisation scheme, which had been struck down by the Madras High Court. "We have already sent individual rejection letters to 3,267 applicants out of 6,522 cases. The committee asked CMDA to speed up the process and send letters to all the applicants under the regularisation schemes of 2000 and 2001, which have also been struck down by the High court." At the next meeting, the committee would take up development control rule violations by those in the `special building' category. A sub-committee, Mr. Santhanam pointed out, had already been formed to finalise guidelines in view of the court directive to adopt "less stringent measures" towards residential buildings. The committee also finalised norms to be followed while issuing completion certificates for new buildings as per directions given by the court in its August 2006-judgement.

Bid for Kanchi Trust land

Leading property developer Shriram Properties has bid Rs 220 crore for 45.88 acres belonging to the Kanchi Trust, including a medical institute and a hospital, on the IT corridor on the outskirts of this city. Shriram Properties, which made the offer for the land and the Sri Jayendra Saraswathi Institute of Medical Sciences and Sri Kanchi Kamakoti Sankara Hospital, informed the Madras High Court that it would furnish 10 per cent of the amount within 24 hours of its bid being confirmed and the balance within three months. In an affidavit, the firm's chief operating officer R Murugesan undertook to "develop and run a state-of-the-art hospital in collaboration with a reputed medical institution". The offer will be heard by the High Court today. In July last year, a Division Bench had permitted Sri Kanchi Kamakoti Petam Charitable Trust to sell the institute and hospital and fixed the price at Rs 185 crore. Earlier, a Single Judge had rejected the plea by the trust to sell the property. According to the trust, it had decided to sell the property as it had suffered heavy losses due to non-issuance of essentiality certificate. Stating that it had invested Rs 80 crore for establishing the medical college and borrowed another Rs 75 crore from banks, the Trust had decided to sell the property to clear its liabilities and had sought permission from the Court for this. The Single Judge had, however, turned down the plea, against which the Trust filed an appeal, which was allowed by the Division Bench

Tier II, III cities becoming viable investment options

The Tamil Nadu Government's proactive investment policy has led to the emergence of Tier II and Tier III cities as attractive investment destinations with more companies opening businesses there in the past few months, according to an analysis by the Confederation of Indian Industry-Southern Region. Companies operating out of Tier II cities such as Coimbatore, Madurai and Tiruchi and Tier III cities such as Virudhunagar, Tuticorin, Karur, Sivagangai and Tirunelveli have doubled, or even tripled, their turnover in just two years, Sanjay Jayavarthanavelu, chairman, CII Tamil Nadu State Council, told reporters at the inauguration of Innovision 2007, a symposium on innovation in industries, on Thursday. With Tamil Nadu in general and Chennai in particular becoming one of the most favoured investment destinations, the CII, together with the Government, was promoting Tier II and III cities as hubs for IT and manufacturing industries. For example, a city like Tiruchi had witnessed a buoyant growth with many companies touching the Rs.100-crore mark and some even exceeding Rs. 1,500 crore. Boilers, energy and fabrication units catered both to the export and import markets. The cut-flowers industry in Virudhunagar had several units doing business above the Rs. 200-crore mark annually. Many IT majors were now looking towards Tier II cities. About 40 companies had come up in Tiruchi in the past few months. There were immense possibilities for industrial units to foster innovation in process development and services delivery, said Ajai Chowdhry, chairman and CEO, HCL Infosystems. However, the lack of an enabling research and development atmosphere in academic institutions was a major hurdle in creating innovations in industries. Only an industry-academia link could solve this.

Building demolition halted

The Kancheepuram district administration, which began demolishing buildings on a piece of land classified as `tank poromboke' land in Chromepet on Monday, stopped the drive on Tuesday following protests. Revenue officials came to Kulakkarai Street, Lakshmipuram near Chromepet on Tuesday morning along with policemen to continue with the demolition. However, the work, after the demolition of a compound wall, had to be stopped following protests from occupants of the building and from elected representatives. Located near Chromepet, the area falls under the jurisdiction of Tiruneermalai Town Panchayat. According to the officials, they were acting on orders of the Madras High Court following a petition from V. Vedachalam, hereditary trustee of Arulmighu Mukkalathamman Temple. According to Mr. Vedachalam, a couple of buildings had come up on `tank poromboke' land situated next to the temple. They had appealed to the Kancheepuram Collector as early as in 2002 to demolish them, and though Revenue Officials of Tambaram Taluk were instructed to inspect the site and remove the encroachments, it was not done. The two buildings in the land are the Thanthai Periyar Library and a Sanmarga Sangam being run by the Senior Citizens Welfare Association. Members of the association said the Sangam was run purely on a voluntary basis providing free tuitions and food to school students of poor families for more than 25 years. No donation was collected and expenses were managed with contributions of the association's members alone. Members of the Thanthai Periyar Arignar Anna Welfare Association, running the library, said the building served as a reading centre for poor students. Alandur MLA and Labour Welfare Minister T.M. Anbarasan inaugurated the building in November 2006. Members of the two associations said it would be unfair to demolish buildings that were performing a useful job. They said the Tiruneermalai Town Panchayat had given its consent to hand over the land to the two associations. However temple devotees said no local body had the powers to allot to others land that were classified as `poromboke' in revenue records. Officials said they had stopped the demolition drive for the time being and would wait for orders from their higher-ups.

Beware of Real Estate price rises : IT Minister

Burgeoning real estate prices would hamper the growth of the IT sector in Tamil Nadu, Union Minister for IT and Communications Dayanidhi Maran said. Launching India's first web-based cross-cultural educational portal of Global Adjustments here, he said the government was not responsible for the increase in the real estate prices, which was a cause for concern for IT companies, planning to invest in Tamil Nadu, especially in Chennai. "It (the rapid increase in real estate price) was due to investment in real estate by Indians working abroad," he added. Stating that the phenomenal increase in the real estate prices would affect IT companies from investing in India, Mr Maran appealed to those in real estate not to increase the land prices. "If you increase the land prices, then the IT companies will run away from Chennai," he said and pointed out that the land prices in tier-II cities like Coimbatore, where the Tamil Nadu government had decided to set up IT parks to attract investments, had in fact gone up steeply and was almost double the prices prevailing in Chennai. Earlier, launching the e-learning portal on cross-cultural education in the presence of US Consul General David T Hopper, Cognizant Technology Vice-chairman Lakshmi Narayanan and Global Adjustments Private Ltd CEO Ranjini Manian, the Minister said India was growing at a tremendous pace with more and more MNCs were looking up to set up their base in India. "Such services have become very essential and Global Indian will surely address the growing need of professionals travelling abroad". Ms Ranjini said Global Adjustments focuses on providing solutions to ensure that every Indian had access to the training required to work in multi-cultural environment.

Chennai is on the radar of foreign real estate funds

Chennai is on the radar of foreign real estate funds and large developers after the southern city recently witnessed two big-ticket property deals. AIG Real Estate Fund along with the Bangalore-based real estate firm RMZ Corporation has purchased an 11-acre plot at Guindy belonging to Hindustan Teleprinters (HTL), a subsidary of telecom equipment maker HFCL, for Rs 298.10 crore. In another deal, Shyam Kothari, brother-in-law of Mukesh Ambani, has bought IDBI’s 2.5 acres Boat Club property in Chennai for Rs 175 crore. These deals have taken the commercial property price in Chennai to a new high. International property consultants Jones Lang Lasalle was the advisor to both the deals. The HTL-AIG deal has pushed land price in Chennai to a record Rs 27.1 crore per acre from the earlier Rs 15-18 crore per acre. The price of premium properties in Chennai has increased significantly over the last 12 months, driven by high demand, and limited supply. Guindy, traditionally an industrial centre, has in recent years emerged as a centre for IT companies and has seen development of commercial space. Software companies and technology parks have come up within the Guindy Industrial Estate adjacent to the property. A major IT project, the Olympia Tech Park, with about a million sq ft of commercial space is coming up nearby. HTL, a subsidiary of Himachal Futuristic Communications (HFCL), is under the purview of BIFR. Himachal Futuristic took a 74% stake in the firm in 2001, when the government divested its holding. HTL has another 50 acres on the arterial Mount Road, which is now expected to be auctioned shortly.

Record deal property sale in Chennai !!!

HTL has sold over 11 acres of land at Guindy for a record price of Rs 297 crore. According to sources in the industry, the HTL property on GST road, which was put on the block through e-auction, was bagged by a real estate developer for Rs 27 crore an acre. International real estate consultancy firm, Jones Lang LaSalle, the exclusive marketer for the property, was the sale manager. The name of the buyer was not disclosed. According to sources in the real estate business, the size of the deal sets a new record for a property sale in Chennai. The price works out to about Rs 6,198 a sq ft. For HTL, this is a 50 per cent increase over the price it got in 2005-06 when the National Highways Authority acquired 1.64 acres for Rs 29.06 crore - Rs 4,067 a sq ft. Guindy, till recently an industrial centre, has in recent year emerged a centre for IT companies and commercial space. Guindy Industrial Estate, adjacent to the property, a home to small-scale enterprises, is now know more for the IT space and commercial built-up space. Location advantage The advantage the location offers is that it is at the junction of Mount Road and Mount-Poonamallee Road. A real estate developer with a million square feet of developed space commands Rs 60 a sq ft as lease in the vicinity. Subsidiary HTL (formerly Hindustan Teleprinters Ltd), a subsidiary of Himachal Futuristic Communications Ltd, a telecommunications equipment manufacturer, is under the purview of the BIFR. Himachal Futuristic took a 74 per cent stake in 2001 when Government of India disinvested its holding.

Chennai real estate market peaks

The real estate market in Chennai is passing through a phase that it has never witnessed in the past. The residential properties are getting much costlier than office properties in the city. The sale price of residential apartments, both in the primary as well as secondary markets, has almost doubled over the past 12-15 months in the city. On the other hand , the sale price of office space has increased just 20% - 30% on an average, during the same period. The flare-up in residential prices is mostly attributed to the demand outsmarting the supply, besides the increasing cost of land acquisition. The increased demand is mostly driven by the growth in the IT/ITES sector in the city, which has also been attracting large investments in the manufacturing sector. According to industry sources, the current capital value for office space ranges between Rs 4,500 per sq ft and Rs 7,000 per sq ft in the CBD (central business district), Rs 3,500 - Rs 5,000 per sq ft on OMR (IT Corridor) and Guindy, and between Rs 2,500 - Rs 3,000 per sq ft in suburban Ambattur. On the other, the capital value of residential apartments ranges between Rs 4,500 per sq ft at the low-end areas and goes up to Rs 12,000 per sq ft. It even goes more in places like Poes Garden, where the prices had never crossed Rs 5,000-mark. “While acquisition of commercial space is driven by average rate of return (ARR) on investments, the buying of residential units is mostly driven by aspiration. If someone is keen on buying a residential apartment in a certain area, he buys. In such cases, the logic takes a back seat,” says Sanjay Chugh, vice president – Transaction Management Services. In the case of the emerging OMR, the prices range between Rs 2,800 and Rs 4,000 per sq ft for newly-launched residential units. The price ranges between Rs 2,500 - Rs 4,000 per sq ft in suburban areas like Perambur and Ambattur. “Today, the affordability of home buyers has gone up. Also the supply coming into the market is much less than the demand. Hence, builders are getting premium price and are also able to afford premium quality buildings," V Jagannathan, managing director, Ramaniyam Real Estate, a leading property developer said. T Chitty Babu, MD, Akshaya Homes, termed this as a cyclical phenomenon. "An emerging market will first witness demand for 'work space', and the higher earning executives then drive the demand for residential units, which in turn will catalyse the demand for retail, food and entertainment spaces," he said. "Chennai is now in the residential segment of the cycle. And I am sure, 6-9 months down the road, there will be increased demand for commercial space catering to the requirement of retail, entertainment and food categories," Mr Chitty Babu added.