Velachery-GST Road link project kick starts

Work on extending the southern arm of Inner Ring Road, linking Velachery with Grand Southern Trunk (GST) Road through some of the fastest developing localities in south Chennai, has begun. The State Highways Department, which is implementing the project, commenced the work a few days ago on the west of Pallikaranai swamp. It is scheduled for completion within two years. Embankments An official of the Department said with the swamp being a low-level area and prone to flooding, sand embankments were being built before starting work on the multi-lane road project. The embankments, 10-feet each, are coming up on both sides of the tracks of Mass Rapid Transit System (MRTS). Simultaneously, the department has started work on the other side to provide connectivity with the Thillai Ganga Nagar subway. The five-kilometre project involves laying a couple of four-lane roads on either side of the MRTS, which after some distance would converge to become a single four-lane corridor. According to the official, ample space would be provided on the stretch for construction of piers for the MRTS phase II extension from Velachery to St. Thomas Mount. This is required since the extension would be on elevated tracks. Space would also be provided for constructing a canal to drain the rainwater from Veerangal Odai to the Pallikaranai swamp. Residents of Velachery attribute the flooding of their area during monsoon to the absence of such a link canal. The department official said the Inner Ring Road project will cost around Rs.100 crore, of which nearly three-fourth is towards the land acquisition. The remaining amount would be on the road work. He added that the land acquisition has been completed.

Indiabulls Real Estate acquires two housing projects

Indiabulls Real Estate Ltd has announced that the Company through its wholly owned subsidiaries, has acquired two housing projects in Chennai. Selene Estate Pvt Ltd, a wholly owned subsidiary of the Company has entered into an agreement to acquire 50 acres of land to develop a residential project at Jalladianpet, a suburb of Chennai located next to IT Corridor at Old Mahabalipuram Road (OMR). 16 acres of land have already been acquired and registered. Fama Land Development Pvt Ltd, a wholly owned subsidiary of the Company, has entered into an agreement to acquire 241 acres of land to develop a residential and commercial project located near National Highway 5 ("NH 5"), an alternate industrial corridor being promoted by the Tamil Nadu State Government. 198 acres of land have already been acquired and registered. The Company, through its wholly owned subsidiaries, has acquired 396 acres of land in Panvel, near Mumbai, to develop large scale residential projects. With respect to the formal approval to Indiabulls Industrial Infrastructure Ltd (IIIL), (a wholly owned subsidiary of the Company), for development of a multi product SEZ at Nasik, the company is in discussions with MIDC to finalize MIDC’s stake in the Joint Venture. As per the MOU signed earlier between MIDC and the Company, the stake of MIDC would be upto a maximum of 26% in IIIL, the Joint Venture company developing the multi product SEZ at Nasik. The Company has received Rs 264.49 crore from Ariston Investment Sub A Ltd and Rs 172.89 crore from Ariston Investment Sub B Ltd towards the sale of equity stakes of 7.95%, each in Indiabulls Properties Pvt Ltd and Indiabulls Real Estate Company Pvt Ltd. Further, the Company is in the process of completing both these transactions.

Building violations may not see stern actions

Confusion prevails over the terms of reference of the Justice S.Mohan Committee constituted to review the Town and County Planning Act. This committee was constituted through a government order issued on June 1 2007. The order broadly states that the committee will review the Town and Country Planning Act and recommend amendments to it. However, statements made by the Government indicate that the committee will review the regularisation schemes, in particular the High Court order passed to that effect. The Government order is silent on this and carries no specific terms of reference for the committee. The Government sources inform that the opinion of a retired Supreme Court judge has been obtained on the High Court order that upheld the building regularisation scheme of 1999 and rejected subsequent schemes brought in 20 00, 2001 and 2002. The legal opinion so received favours the Government filing a review petition, the sources say. A note on Section 113 of the Town and Country Planning Act, which empowers government to regularise or exempt any building from any rules of the Act, has also been circulated to committee. The amendment to section 113 is under active consideration. The opinion that is gaining ground in the Government is that it has the powers to amend the Town and Country Planning Act and regularize building violations. Attempts are made to go soft on demolition, instead levy a compounding fee. In 1998, the Citizen consumer and civic Action Group (CAG) filed a case in the Supreme Court challenging the existence and amendment of the section 113a of the Town and Country Planning Act. The Supreme Court ruled in 2000 that the government has the powers to amend sec 113 but the manner in which it was made and the frequent changes to the Act were found detrimental to the city. It allowed the regularisation scheme brought through section 113a of the Act as a one-time measure.

Higher FSI for multi-storied buildings

The Floor Space Index (FSI) of multi-storied buildings across Tamil Nadu is to be increased and brought on par with the Chennai city. At present, the multi-storeyed commercial buildings in Tamil Nadu has an FSI of 1.6 with about 40 percent of ground coverage (the ground coverage is the extent of area the building footprint occupies on ground). It is to be raised up to 2.75 depending on the size of the footprint of the building. The government order to this effect is to be passed shortly. This standalone amendment comes at a time when the new building rules are on the anvil.

Citadines Chennai OMR Gateway

The Ascott Group, the serviced residence arm of CapitaLand Ltd, one of the largest listed real estate companies in Asia, has signed a joint venture agreement with The Rattha Group to acquire its fourth and largest property in India. Ascott said the property will be developed into a serviced residence. "This is part of Ascott's master development agreement (MDA) signed with Rattha in August 2006. The MDA aims to acquire and develop seven serviced residences in India by 2010," the company said in a statement. Ascott will acquire a 40 per cent equity stake in the property to be named Citadines Chennai OMR Gateway while Rattha will hold the remaining majority stake. Ascott will also manage the property for 10 years with an option to renew the management contract for another 10 years. Cameron Ong, Ascott's managing director and chief executive officer, described India as a key growth market for Ascott. India, however, lacks the supply of quality accommodation to meet the increasing demand from inter-city business travellers and expatriates, he said. "Ascott is the first international serviced residence company to enter Chennai. With the addition of Citadines Chennai OMR Gateway, Ascott has close to 1,000 units under development, and we are on track with our expansion target to achieve 2,000 units in India by 2010," he added. Ascott has three other properties in India - Somerset Whitefield in Bangalore, Somerset Greenways, Chennai and Citadines Chennai Boulevard - all of which are slated to open next year.

Chennai's land prices costlier than London

With real estate prices turning unaffordable to the common man, a city-based firm has come out with the offer of much cheaper properties in London, Dubai and even New Zealand. Real estate promoters Ace International has put up for sale of 200 plots, some 20-25 kms off Central London and 12 kms from Heathrow airport. The 2,600-4000 sq ft plots cost Rs 15-20 lakh, half of what it costs in the Chennai suburbs. "This is perhaps for the first time that promoters are taking up the marketing of plots in some other country," V Santhanraman, Director of the firm, said. The firm has taken up marketing of the plots offered by some prominent developers in London, including UK Land Investments and Marc Properties. The firm, which has been into the marketing of hotels in countries like China, Malaysia and Singapore and that of buildings for educational and other purposes and plantations, was approached by the London developers, said Santhanraman. "The outside world has come to know about the buying capacity of Indians and the globalised economy has facilitated the free purchase and sale of land anywhere across the globe," he said. The firm also claims to help the customer in completing all government and legal formalities regarding the purchase, resale and construction of houses in the plots. Santhanaraman said his firm would offer site visits to the customer after collecting 20 per cent of the total cost of the plot as advance. The firm would arrange the visiting visa, accommodation and air ticket of the customer.

New Challenges for real estate in south india

The lack of quality real estate for retail operations in the southern states has slowed down retail expansion in the region, denting the region’s reputation as a hotbed for retail and its potential for growth. The slow development of retail real estate in the region has led to the South accounting for just 22% of the total retail market in the country at a value of Rs2,62,930 crore and a fifth of the 50 million people employed in this sector, according to a study released by research firm Images F&R in partnership with property consultant Cushman and Wakefield. According to the study, in 2007-08, an estimated 100 million sq. ft of quality shopping space will come up across the country. But, only about 16 million sq. ft of this new development will be in the South. The northern region will see an addition of 41 million sq. ft. While in western India, around 35 million sq. ft of new retail development is estimated to come up by the end of 2007. Much of the retail expansion in the South is expected to come from rapidly expanding tier-II cities such as Kochi, Coimbatore, Vishakapatnam, Mysore and Mangalore. “The new hub of retail will be the tier-II cities with population less than two million,” says Anurag Mathur, deputy managing director, Cushman & Wakefield. It was southern-India-based retailers who pioneered organized retail concepts in the country. The country’s first supermarket, the Nilgiris chain, was set up in Bangalore in 1904 and Spencer’s Plaza in Chennai lays claim to being the first mall in the country. Speciality coffee chain, Cafe Coffee Day, which will have a network of 500 cafes by the end of September 2007, set up its first café with Internet access thrown in at Bangalore’s upmarket Brigade Road in 1998. But now, the lack of quality real estate space is emerging as a key concern for these retailers. “You don’t see the intensity of malls in Bangalore as there is in Delhi and Mumbai,” says Bhaskar Bhat, managing director, Titan Industries Ltd. “The South has a way to go in being able to create retail space to cater to the aspirations of a growing customer base.” Retail space has suffered partly because property developers concentrated on building the office complexes that house technology companies across the southern region; meanwhile, retail realty development lagged. “We are definitely late in the retail layout construction segment,” says Mahesh Khaitan, director of real estate firm Salarpuria Developers. “The same skills that we used to build and sell office and residential space will not work for retail realty, we need to reskill ourselves in mall management.” That’s despite a consumer base that is well salaried, and hungry for goods. By the age of 27, the average IT worker in Bangalore earns Rs6 lakh a year and can expect a sixfold increase by the time he or she is 40 when earnings top Rs35 lakh. Average spend on eating out by India’s IT employees tops Rs4,500 crore according to CLSA Asia-Pacific Markets, a research firm that tracked the lifestyle pattern of 3.25 lakh IT professionals across the top eight IT firms in the country. South India-based consumer durables chain Vivek’s took 30 years until it clocked Rs100 crore in revenues from its launch in 1965. The spurt of growth began from 1996 when it added 47 new showrooms, largely in Tamil Nadu and ­Karnataka, and in Chennai and Bangalore within these two states. “But in 2006, we posted Rs100 crore of sales in just 105 days” says Kodandarama Setty, chairman and managing director, Vivek’s. Vivek’s had sales of Rs360 crore at the end of March 2007 with a chain of 54 stores. By the end of 2010, the group aims to add another 100 stores in the region. Developers such as Salarpuria are rushing to meet the demand for quality retail space in South India. Salarpuria is building a 1.4 million sq. ft Market City, a retail space within Hyderabad’s technology hub, the Hitech City. In Bangalore the developer will build two malls in the city’s western and northern suburbs at an average size of 0.65 million sq. ft.