Real estate in Chennai bucks overall trend

CHENNAI, APRIL 9:  

Chennai’s real estate sector appears to be swimming against the current of the industrial slowdown.

In the last couple of months a handful of deals estimated at over Rs 1,000 crore have been finalised within the city.

The sellers are either companies or high net worth individuals and the buyers, all of them, are Chennai-based developers who have concentrated till now on the city’s suburbs and the peripheral areas, which are 20-25 km away from the city.

Now they have bid for and bagged large land parcels in the heart of the city.

BIG DEALS

Some of the prominent deals in Chennai are Akshaya Ltd buying IFCI’s one-acre property in Nungambakkam for Rs 93.75 crore; Ceebros picking up the Atlantic Hotel property in Egmore, about 1.65 acres, for Rs 160 crore; and VGN bagging two properties — 1.5 acres from Tata Communications for Rs 195 crore, and a 10-acre parcel from HTL Communications for Rs 273 crore. One more deal, according to reports, has been finalised in Central Chennai on a similar scale.

The National Housing Bank’s residential property index gives an indication of Chennai overtaking other large cities in property pricing.

Pratish Devadoss, Managing Director, VGN, says in the city people in need of cash are selling land to take advantage of the buoyant prices.

Developers are on the look-out for prime locations within the city to meet the growing residential demand. “It is complementary,” he says.

T. Chitty Babu, Chairman and CEO, Akshaya, says the residential market has been showing steady growth in Chennai.

Within the city, rising land prices have induced companies to part with land.

Akshaya was primarily into joint development of property but from last year it has shifted focus and started acquiring land, he said.

SLOWDOWN EFFECT

Possibly, it is the slowdown in the industry that is pushing companies and individuals to sell land parcels that they have been holding on to for years.

The point is, according to a land dealer who did not want to be identified, until now, people did not choose to part with their land but with land prices soaring in the city, and in the backdrop of a lukewarm business environment, people are now willing to sell.

Some of these properties have been in the market for a few years now. Both for the buyers and sellers, the market situation is offering a way out, he said.