Latest Real Estate News on 'Chennai'

India office property market overview

Comments Off on India office property market overview   |  May 8, 2014

Mumbai: During 1Q 2014, the Mumbai office markets witnessed a further decline in office space absorption indicating cautious occupier sentiment. This lack of demand can be attributed to a low level of IT/ITeS sector participation in the overall absorption, which is currently the primary demand generating sector across the cities. This quarter only about 0.42 million sq ft of Grade A office space was leased with a few mid-sized deals concluded in Central and Western Suburbs, and Navi Mumbai.

Construction activities remained slow. No projects / phases of projects were completed this quarter. Developers also refrained from launching new projects due to low demand. More than 7.5 million sq ft of Grade A commercial office space was available for fit-out during the surveyed quarter of which, about 80% was concentrated in micro-markets like Andheri East, Lower Parel, BKC and Thane / LBS Road. Vacancy remained almost stable due to the limited addition of new supply. Rents and capital values for Grade A office space remained stable in all of the micro-markets.

VIEW: Sectors like BFSI and FMCG, have become cautious in office uptake. This coupled with reduced IT/ITeS absorption is likely to result in lower demand in 2014. Rents and capital values are thus expected to remain stable; however, micro-markets such as Andheri, BKC (Bandra-Kurla- Complex) and Lower Parel could see an upward movement in the range of 1 – 2% QoQ due to continued interest from the occupiers.


Delhi witnessed improved demand as office absorption nearly doubled this quarter amounting to approximately 0.3 million sq ft. Approximately 60% of this total absorption is contributed by large office space occupiers such as Moser Bear, Snapdeal and VFS Global. Remaining 40% of the leases were small office spaces (5,000 – 10,000 sq ft) occupied by the corporate offices of BFSI, airlines, real estate and media companies.

In the surveyed quarter, the city added 0.8 million sq ft of new, Grade A office supply. Projects contributing this supply were Hyatt Commercial Block by Asian Hotels in Bhikaji Cama Place; Ambience Tower by Ambience Developer in Rohini; and Prime Tower by DLF in Okhla Phase I. The total Grade A supply available for fitout this quarter was about 2.5 million sq ft, mainly concentrated in Jasola, Saket and Connaught Place. Average rent and capital values remained unaltered during 1Q 2014, however some new buildings demanding above-market prices due to their premium location and amenities offered.

VIEW: Occupiers will remain cost-conscious and prefer small Grade A properties for their corporate offices in the CBD area. The upcoming new supply in Aero City near the airport is expected to have an impact on the market dynamics with nearly 0.9 million sq ft forecasted to get operational in 2014. The location is expected to attract a significant number of occupiers due to its advantageous location and availability of Grade A buildings with state-of-the art amenities.


In Chenani, leasing transaction volumes continued to remain below average. Total absorption was 0.56 mn sq. ft. during the quarter. The majority of leases signed were for smaller, sub-25,000 sq ft office spaces. Micro-markets like Old Mahabali Puram Road and Guindy remained the standout performers this quarter. Having quality office space on offer combined with affordability has enabled these micro-markets to be preferred destinations for occupiers. A few projects / phases of projects were completed this quarter, including Ramaniyam ISHA by RamaniyamGroup at Thoraipakkam; KPR Towers at Nungambakkam; and VikramVikra at Vadapalani. All of these projects together add 0.09 million sq ft of Grade A office space to the city’s total inventory.

New project launches continued to remain limited. A phase of about 0.25 million sq ft in DLF IT SEZ-Block 2, located at Manapakkam, was launched by DLF Ltd this quarter and is expected to be completed by the end of 2015. The lack of major tenant moves and expansions by large occupiers has seen rents continue to remain steady in almost all micro-markets.

VIEW: The outlook for the leasing market across Chennai over the next 9 months is more positive than the previous two quarters. Improving sentiment and prospects for the global economy as well as rising business and consumer confidence should all combine to boost the sentiment of IT/ ITeS tenants who make up the bulk of tenants in Chennai.

Bengaluru (Bangalore):

Strong demand for Grade A office space witnessed during 1Q 2014 resulted in a 35% QoQ increase in absorption in the Bengaluru market. IT/ITeS remained the primary demand driver contributing approximately 80% in the total absorption of 3.8 million sq ft. This includes approximately 1.7 million sq ft pre-commitment deals from companies like IBM, Ericson and Hindustan Coca Cola Beverages for expansion purposes.

During the quarter, many large scaled projects / phases of projects were completed and added over 2.9 million sq ft of Grade A office space to the city’s total inventory. Enthused by this demand, a number of developers launched additional towers in their existing projects, including Divyasree Technopolis-Block D; Mantri Cornerstone-Block B; Pritech-Block 14 and RMZ ECO WORLD – Towers 4A, 4B and all of these projects together will add over 4.8 million sq ft office space to city’s inventory by the end of 2015. With demand and supply complementing each other, vacancy levels remain unaltered and about 11 million sq ft of Grade A stock was available for fit-out during the quarter. The capital and rental values also remained steady in almost all micromarkets in the city.

VIEW: The strong software export figures indicate increase in IT/ ITeS uptake in the coming quarters in the city. We anticipate modest increases in rents in micro-markets like Outer Ring Road and CBD due to occupier preference to other micro-markets like Whitefield and Electronic City.

Source: Colliers International, Money Control

Chennai in list of top 12 realty investment destinations

Comments Off on Chennai in list of top 12 realty investment destinations   |  May 4, 2014

CHENNAI: Strong English speaking skills and a wide mix of industries that promotes cross pollination of work culture has made Chennai one of the top 12 cities in the world for real estate investments. This is the first global recognition the city has received; it is also the lone Indian city on the list.

The Candy GPS Report, published on Friday, identifies 12 cities around the globe with the potential to show strong residential property price growth in the next few years. The report — produced by Candy & Candy, Savills World Research and Deutsche Asset & Wealth Management — said, “Prices in these rising cities are generally much lower than in the world cities, which make them more accessible and attractive to yield seeking real estate investors.” The list ranges from well established cities such as Melbourne, Australia, to centres in developing economies such as Jakarta and Chennai, that have a high number of ultra-high-net-worth residents, it said.

“While all of us acknowledge Chennai as an English speaking work zone, it is also a traditional banking domain speciality location driving inbound BFSI (banking financial services and insurance) businesses, which is a key differentiator to Bangalore and Hyderabad. Apart from these, Chennai has tremendous strengths in high quality healthcare and education systems, a key ingredient for future growth,” S Ramaswamy, chief consultant RECS Group, a real estate consultancy said.

Yolande Barnes, Director, Savills World Research, who conducted the analysis said: “As prime real estate in many premier cities has become more fully valued, emboldened investors are now spreading their wings and looking for high yielding secondary properties in those cities and (properties) in second-tier cities in countries with strengthening economies.”

For example, a two bedroom apartment in prime selling areas is priced at $1.60 lakh or Rs 96 lakh and in secondary ones they sell at $40,000 or nearly Rs 24 lakh.”This more adventurous approach is likely to not only provide higher income returns but also an opportunity for significant capital growth. Real estate values will grow as new cities all over the globe rise on fortune’s wheel. Property rents and values will rise in line with new and growing economic strength,” the report said.

Real estate developers in Chennai offer around 20% internal rate of return or IRR for equity investments in residential projects. While, commercial properties yield about 8-10% rental returns. Residential rental returns are 3 to 5% in the city.

“Chennai is typically an end user market which has a great mix of businesses. Its top tier medical facilities add zing to the city as an investment destination. More importantly, it is not seen as a luxury market like Mumbai, which means there exists tremendous scope for improvement of city skyline,” S Neelakantan, senior partner, CNGSN, a firm which has actively structured real estate investments said.

Source: TOI

Five-star hotel comes down to make room for apartments

Comments Off on Five-star hotel comes down to make room for apartments   |  March 13, 2014

CHENNAI: City builder Ceebros has started pulling down the unfinished JW Marriott Hotel in the city, which it had bought from Hyderabad-based Viceroy Hotels for 480 crore last year.

Viceroy group sold the property in MRC Nagar after completing the shell of the hotel because the hospitality sector in Chennai is going through a serious crisis with low occupancy in most five-star hotels. With more than half a dozen new star hotels being opened in the city in recent years, there is very high room inventory and hotels are struggling for business, say industry sources.

Ceebros is pulling down the unfinished J W Marriott structure to redevelop it into a residential complex. Earlier last year, Ceebros had bought Atlantic Hotel in Egmore for redeveloping it into an apartment complex. Publishing house Chand and Co, the previous owners of Atlantic, had spent crores of rupees refurbishing the hotel before it was put on the block. Ceebros bought it for 165 crore. Following this trend, Breeze Hotel on Poonamallee High Road was also put on the block.

A slow down in the economy, coupled with low demand for commercial space in the city, had prompted an IT park developer in Adyar also to convert it into a residential project two years ago.

Home buyers are eagerly awaiting the launches of these projects as the promoters have given indications of pricing them aggressively.

Indian Bank puts Gautham Menon’s property on the block

Comments Off on Indian Bank puts Gautham Menon’s property on the block   |  March 12, 2014

CHENNAI: The Kotturpuram branch of Indian Bank has invited tenders for auction of a property belonging to film producer and director Gautham Vasudev Menon in Adyar.

As per details on Tenders India (a government tender information system), the auction process for the property located on First Main Road in Indira Nagar, has begun with the tender value being quoted at 12.26 crore. The winning bidder, expected to put up 50 lakh as a deposit. The property is 7,091 sqft, and the market price of each ground (2,400 sqft) in the area is 4.5 crore to 5 crore.

“This particular account has been a non-performing asset (NPA) for some time and we are moving in as per the provisions of the Sarfaesi Act [Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002],” a senior official from Indian Bank said. As per the act, in cases of default in repayment of installments and non-compliance with the notice period of 60 days after the declaration of the loan as a non-performing asset, the lender can take action without intervention of court.

The e-auction of the property would be conducted by Matexnet. “Around eight buyers have evinced interest in the property,” said E Jagadish from Matexnet. The tender for auction was published on February 24 and the last date for offer submission is March 24.

Sources close to Menon said the producer owes the bank 60 lakh and he is looking to sort out the issue. “He has paid six installments and will not allow auction of the property,” a source said.

Indian Bank officials said they follow a case-by-case approach with respect to NPA recovery. “If the borrower comes forward to repay the dues even after putting up the notice as per the Sarfaesi Act, we are open to negotiations as our only aim is to recover our dues. There have been instances where the borrower has settled the matter after the notice for auction was put up,” a bank official said.

‘Difficult to give flawless property papers’

Comments Off on ‘Difficult to give flawless property papers’   |  March 5, 2014

CHENNAI: As if land grab bids and ‘double documents’ are not menace enough for property owners/buyers, the state registration department shocked the Madras high court on Monday, saying it is difficult to issue encumbrance certificates without any fault.

An encumbrance certificate (EC) is the basic document which reveals the current status of an immovable property. It is supposed to contain correct ownership details of a piece of property and inform the applicant whether it is encumbered or mortgaged in favour of a bank or any individual.

However, responding to an anticipatory bail petition of a landowner who ended up purchasing another person’s property as the EC did not reflect latest ownership, the inspector-general of registration said: “The ECs are prepared by making search based on survey numbers, boundaries, extent, period, etc. It is because of mismatch in present survey number and old survey number and boundaries, encumbrance certificates, at times, do not reflect all the encumbrances relating to a property . This has engaged the department in debate for quite some time.”

Justice S Nagamuthu, however, said he could not agree with the submission. Noting that there had been a phenomenal increase in the number of cases arising out of improper ECs issued by the registration department , the judge said: “In this modern computer world, I do not believe it would be impossible to evolve a comprehensive mechanism by which the ECs could be issued flawlessly, reflecting all encumbrances.”

Giving up

The TN registration dept told the court that an accurate EC was difficult because survey numbers are often mismatched But it said it would soon come up with a better system The admission came in a case where a landowner bought another person’s property due to a faulty EC. The HC said it was hard to believe that in a computerized world, the dept couldn’t come up with a faultless system.

Illegal buildings in Tamil Nadu face the axe

Comments Off on Illegal buildings in Tamil Nadu face the axe   |  February 15, 2014

CHENNAI: Thousands of unauthorised buildings in the state are facing demolition after the Madras high court on Monday quashed two government orders that proposed to legalise illegal structures built till July 1, 2007.

The first bench comprising Chief Justice R K Agrawal and Justice M Sathyanaryanan said: “But for the lackadaisical attitude on the part of the authorities, such an alarming and mushrooming growth of unauthorized and illegal constructions would not have come into place.” The bench was delivering verdict on two PILs against October 30, 2012 government orders extending amnesty schemes for illegal buildings constructed between 1999 and July 1, 2007.

“The state government and statutory authorities concerned are required to act diligently and prevent recurrence of such unlawful activities in future. They must deal with the violators with an iron hand. This court also hopes and trusts that no further extension of cut-off date will be granted in future by the state government,” the bench said in its 67-page judgment.

In 2000, the Supreme Court upheld the validity of Section 113 of the Town and Country Planning Act, and permitted the government to use the clause and regularise illegal buildings built till February 28, 1999 “as one-time measure”. However, successive governments used the same route to extend the cutoff date for structures built till 2000 and then till 2001.

In 2006 and 2007, the then government brought in two ordinances which later became Acts. All were struck down by the high court, prompting the government and other stakeholders to move the SC. After the appeals were sent back to the high court, the state government constituted Justice S Mohan committee, which recommended extension of the amnesty schemes for buildings constructed up to July 1, 2007. The government issued two orders on October 30, 2012 accepting the recommendations.

Quashing both the orders and pointing out that for the past 13 years the government had not done anything pragmatic to address the issue, the bench said: “Thirteen years had lapsed and the state government and authorities concerned have failed to take any effective and sincere steps to avoid such a kind of nuisance. They merely extended the cutoff date for regularization of unauthorized constructions, saying illegal constructions have come up in such a large scale that it is virtually impossible for them to resort to demolition and, instead, by collecting hefty regularization fee and fulfilment of other conditions, they will regularize unauthorized constructions.”

The bench reiterated the fact that the state government did have power to grant exemptions under Section 113 of the Town and Country Planning Act, and said the regularisation issue could be referred to the Justice Mohan Committee or a different committee. It said based on the recommendations given, the government can frame appropriate guidelines and rules for proper and effective implementation of Section 113-C of the Act.

Tata Housing’s subsidiary to invest Rs 300 crore near Chennai

Comments Off on Tata Housing’s subsidiary to invest Rs 300 crore near Chennai   |  February 11, 2014

Tata Value Homes Limited (TVHL), a 100% subsidiary of Tata Housing Development Company Limited, today strengthened its presence in South India by developing Spanish themed residential township at Sriperumbudur, near Chennai. The company plans to Invest around Rs 300 crore in setting up this township.

Inspired by Spanish living, Santorini is designed by architects F+A.

The township is spread across lush greenery at Sriperumbudur, one of the fastest growing corridors in Chennai.

Speaking on the project Brotin Banerjee, MD & CEO, Tata Housing Development Co. Ltd., said, with rapid urbanisation and influx of global lifestyle trends more and more affluent home buyers are looking for homes to reflect the financial and social standing.

“Launch of Santorini is in line with our strategy to cater today’s Indian buyers who come with global exposure and evolved tastes, we find ourselves constantly innovating to suit the sensibilities of our buyers,” he commented.

He further added Sriperumbudur has witnessed rapid industrial growth over the years, with major global players in the manufacturing segment venturing into the region. The township will offer residents an easy access to other cities like Bangalore.

Santorini is spread across 18 acres and has a total of over 1000 units which range from 1BHK (576 sq.ft.), 2BHK (855 sq. ft. and 1,008 sq. ft.) to 3BHK (1,386 sq. ft. and 1,539 sq. ft.) apartments.

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