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Chennai IT residential sector witnessing slowdown

Real estate developers are worried as the residential sector on the IT corridor in Chennai is undergoing one of its worst crises ever. Builders had planned luxury apartment projects on Chennai’s IT corridor wanting to take advantage of the growing IT industry. Of the 40,000-odd residential apartments that are expected to come up in the outlying areas of the city over the next three years, 50% have been planned along the IT highway. Prominent developers – DLF, Hiranandani, Puravankara, True Value Homes, Arihant, Vijay Shanthi, Akshaya, SSPDL, L&T, Doshi, ETA Star and Mantri – all have their presence on this six lane road that is also home to IT giants that include TCS, Cognizant, Satyam and Infosys.

Builders here have not increased prices (average price Rs 4,000 per sq ft) since their projects were launched. “We bet our stocks on these projects as the city is already facing a shortage of 30,000 dwelling units. To add to the demand, eight million sq ft of IT space has been added in the Siruseri IT Park and another eight million sq ft IT space is being readied in the park over the next three years. Going by a conservative estimate of 100 sq ft per employee, it would have generated 1.6 lakh new jobs, and for us, selling 20,000 flats to IT professionals should have been a cakewalk,” said Prakash Challa, president of the Tamil Nadu unit of Confederation of Real Estate Developers ‘ Association of India. But their calculations have gone wrong. IT professionals are in no hurry to buy flats now.

“Against a monthly booking of 30 to 40 units last year, we’re down to three to four, and many try to negotiate the price. People are adopting a wait-and-watch approach. If interest rates go up further, the scenario will worsen,” said Suresh Kumar, managing director of Vijay Shanthi Builders. To add to the builders’ woes, the IT sector is going through a bad phase. Many companies that recruited students on campus this year have not yet taken the new employees on board. Some companies have even suspended civil works in Chennai. A leading IT company, which was developing a 50-acre plot of land in Sholinganallur and was expected to add 10,000 employees soon, has stopped construction halfway through, reliable sources said.

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