Chennai plans metro stations that facilitate shopping, entertainment

Imagine getting down at a metro station on your way back from the office and being able to do your grocery shopping. Or, even better, getting down at a metro station to watch a movie, which means no dependence on private vehicles! Well, this would soon be a reality in Chennai.

The Chennai Metro Rail Ltd (CMRL) has planned to convert five of its upcoming elevated metro stations in to commercial hubs. These include stations at Alandur, Ekkattuthangal, Arumbakkam, CMBT and Ashok Nagar.

With the trial runs over for the Koyambedu-Alandur elevated line, the plan is to construct two to nine floor buildings to be given on rent to set up malls, retail stores etc. Plans are also ripe to set up movie theatres at some stations.

An official from CMRL on request of anonymity informed, “These locations have been identified as key areas and have roads wide enough to accommodate these developments. A consultant has already been identified to carry out feasibility studies. Work may start very soon.”

While CMRL stands to gain monetarily if these work well, residential values are also expected to be impacted in these locations. “Without ancillary utilisation of real estate in metro stations, the Metro cannot generate profits. Thus, it is a good model to adopt and is quite common abroad. However, this would also have a positive impact on the residential localities in the vicinity. We have innumerable examples of localities witnessing a rise in values due to a new metro station. In this case, it will be a double bonus for the residents – ease of transportation as well as added shopping facility,” says Maneesh Gupta, director, advisory and valuation, Colliers International.

The liveability quotient of these locations would definitely go up, provided these stations are operated and maintained well. CMRL could probably learn from the operations of Vashi Station in Mumbai which is a successful model of a transport system and commercial hub operating simultaneously.

While it is too early to predict the rise in values, residents of Alandur, Ekkattuthangal, Arumbakkam, CMBT and Ashok Nagar are in for a gala time if CMRL delivers what it has promised!

Source: Times of India /Sruthi Kailas, Magicbricks.com Bureau

Avoid sale agreement to set-off hike in registration cost in Chennai

Impact of hike in registration cost and guideline values have always been felt in the Chennai property market. Experts believe, since the 2012 rise in guideline values, imposition of 1 per cent additional TDS on properties worth over Rs 50 lakh by the Finance Minister has already raised the price bar in the city. Subsequently announced increase in registration cost, due to inclusion of additional 2 per cent of the construction cost, has further increased the transaction cost.

Earlier in Chennai, buyers had to pay 8 per cent of the cost of UDS (undivided share of property) as registration and stamp duty. Now, the government has made it mandatory to register construction agreement before or along with the registration of the sale deed of UDS, said B Alaguselvan, founder & CEO, Smart Choice Realty, RealtyBizz.com.

Alaguselvan explains with an example: If someone buys a new flat for Rs 1 crore and assuming the cost of UDS is Rs 40 lakh, the construction cost would be approximately Rs 60 lakh (which would exclude taxes such as service tax, VAT). Earlier, a buyer was paying Rs 3.20 lakh (8% of UDS i.e Rs 40 lakh). The buyer needs to shell out an additional Rs 1.20 lakh (2% of construction cost ie Rs 60 lakh), resulting in a total of Rs 4.40 lakh. Normally, the construction cost includes the cost of building the apartment, parking charges, clubhouse fees and charges towards electricity board and water and sewage connection, which in essence is the total consideration value minus the UDS price. These costs vary and are applicable depending upon the project and the developer.

P Sheshadari Puvvada, CEO, Gethomegetloan.com said, the additional 2 per cent charge is definitely a burden on the buyer and does not have an impact on the developers. He further explains that the additional charges are applicable to all type of properties, wherever UDS is applicable. However, when the over-all cost of a property is taken into account, it comes to 1 per cent of the total cost of the property.

He said that there is no possibility of saving these charges. But after imposition of these charges on the registration of the construction agreement by the government, developers have started avoiding sale agreement. Now they register only sale deed and construction agreement to avoid registration cost of the sale agreement. This saves the buyer an almost equivalent amount.

Alaguselvan says that imposition of new taxes has benefited property owners in another way as they now get a proper title deed for their properties, not only for the land share but also for the constructed portion.

Source: Times of India /Rishab Jain, Magicbricks.com Bureau

Chennai’s southern corridor drives growth in plots

Chennai’s southern corridor continues to drive demand and capital appreciation for investors in land development projects. This is because of improved connectivity, expanding city areas, growth of industries and infrastructure development, among others.

A survey on the price appreciation in the southern corridor areas like Singaperumal Koil, Maraimalainagar, Acharapakkam and East Coast Road (ECR) reveal that investment in plotted development has yielded capital appreciation ranging from 50-100 per cent in a span of just two years. Projects in the west and northern corridors have resulted in lesser capital appreciation of 25 per cent and above during the same period. Trivellore is the only exception, which has doubled during this period due to a combination of factors.

The southern corridor, Grand Southern Trunk (GST) Road, is the longest road and touches Theni in the same state. The Bangalore corridor extends upto 350 km to Karnataka and the northern corridor GNT reaches the neighbouring Andhra Pradesh state after Gummidipoondi. Moreover, GST Road has a parallel train track upto Tiruchy with Tambaram continuing to remain as the gateway to the Chennai city. The state government’s plan to build a Mofussil Bus Terminal in Vandalur has aggravated the demand for land in the vicinity.

According to land promoters in the city, the rate varies from Rs 500-1200 per sq ft for units located in a 50 km radius from the city centre and Rs 250-1,000 per sq ft in 50-100 km radius. Here again, prices vary depending on the developer, location, road width and proximity to landmark areas. If the project is well maintained and has a club house, a premium on the sale price is demanded by select developers.

In a related development, a few leading developers are planning to enter the land development projects with complete infrastructure development and offer it as premium to investors. This is expected to transform the way in which plotted development projects are being done at present, say property consultants.

There are certain ground realities which investors should be wary of  before plunging into investment. Investors should enter into plotted development projects only if their investment horizon is beyond five years. This is because 100 per cent price appreciation is possible in a 50 km radius in five years and in the 100 km radius, it might take 7-9 years to reach that level of appreciation, say land developers.

Source Times of India  /  Magicbricks.com Bureau

Builders skip big projects, go for budget housing in Chennai

Chennai

As apartments sales in the middle and high income segments are showing no signs of improvement, many builders are seriously scouting for small parcels of land to promote budget housing units in the sub – 20 lakh segment.

This is a segment which most builders have ignored, but those who have ventured into it say they have nothing to complain. “Identifying developable land at the right price in the right place is the key to success of a budget housing project,” said a builder looking for land for a new project.

All developers doing big projects in the suburbs are stuck owing to poor sales and they are looking at alternatives to sustain the business, said Rajesh Babu, partner, Recs Group, a Chennai-based realty firm.

Going by the experience of developers who promote budget housing projects, they are by and large cash-surplus projects as long as the promoter sticks to medium sized developments in the range of 2-3 acres. International realty consultant Jones Lang LaSalle MD Sarita Hunt said many new entrants may be getting attracted by this cash flow.

“You can raise funds from the market (customers) and do projects. As long as the budget housing segment is treated as a separate entity and the money collected for it is used for the same project, it will work. But if the money is diverted to service bad loans or to complete other stuck projects, then things will miserably go wrong,” she said.

Most builders have not shown interest in the affordable housing segment for years as margins are low in such projects. Hence, high volumes are required to make a significant profit, comparable with projects of higher capital values and larger unit sizes. Builders have gone wrong in the past by jacking up prices abnormally and keeping apartment sizes unwieldy, said Hunt.

Slow pace of employment generation in the IT sector and retrenchment of several thousand people in the manufacturing sector, especially in the Sriperumbudur belt, have badly affected Chennai realty. A city-based builder said, “Chennai was the first market to turn around after the 2008 fall. But the current slump may have a longer effect because the investment climate in the state is pretty bad.”

Source: The Times of India, Chennai

IIT-Madras shows the way in low-cost housing

With real estate prices and cost of construction on the rise, owning a house in cities remains a dream for the middle class. But it might soon be a thing of the past, courtesy IIT Madras and its efforts to popularize the cost-effective, rapid and eco-friendly method of construction using Glass Fiber Reinforced Gypsum (GFRG) panels.

After the successful construction of a two-storey building at the IIT campus in June this year using GFRG panels, experts from the civil engineering department of the institute are close to an agreement with Tata Housing Development Corporation Ltd to build a housing project at Boisar, a suburb in Mumbai, for low-income groups.

The GFRG building method essentially uses glass fibres and specially calcined gypsum plaster to make the regular panel stronger and water resistant.
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Why Chennai city stays away from 1BHK units?

At a time when home buyers in the north and west are opting for smaller formats that fit their pockets, Chennai has continued its aversion to 1BHK units. 

For Chennai home buyers, small is definitely not ‘in’. A close look at the demand and supply data of Chennai property market reveals that the market is not too keen on smaller housing units. As per the data with Magicbricks, demand for 1BHK units in the city has consistently remained below or up to 10 per cent in the last few years. Supply in the segment has also remained low.

So, are buyers in Chennai more pompous? Does buying a 1BHK hamper their pride? Or is it simple market logic to not buy 1BHK units. Well, the second option seems more likely.

“Chennai is largely an end-user market and thus witnesses higher demand for the more usable 2 and 3BHK units where the buyer can move in with his or her family. A typical Chennai buyer prefers to buy at least a 2BHK unit as it would take care of the growing family in future. However, with the advent of the IT and ITeS, there has been an influx of young population in the city. This might lead to a demand in this segment albeit it will take a long time as most youngsters prefer rental accommodations,” says Kanchana Krishnan, director, Knight Frank, Chennai.

The pricing also makes it more appealing to buy a larger unit. For instance, on OMR, which is probably one of the most supplied localities in Chennai, the difference between the price of a 1 and 2BHK unit is not much. As per data with Magicbricks, a 1BHK apartment can cost Rs 20-28 lakh, along the OMR, while a 2BHK would cost Rs 25-35 lakh. “Buyers do not mind paying a little extra for a larger unit. This is not the case in cities like Delhi and Mumbai where one would have to shell out a fortune to upgrade from a 1 to 2BHK unit,” says Maneesh Gupta.

As demand in the segment is low, developers have also stayed away from constructing these units. “Other than the 10 per cent mandatory norm of constructing EWS (Economically Weaker Section) units, developers in medium and large scale projects choose not to construct 1 BHK apartments mainly due to lack of robust demand for such homes,” adds Krishnan.

It is thus apparent, that 1BHK units would have to wait a little longer before being accepted by the Chennai realty market.

Source: Times of India Chennai / Sruthi Kailas, Magicbricks.com Bureau

Chennai’s biggest township to come up at Binny Mills Perambur

Dilapidated mill building will be demolished for the 71-acre project; work to begin in 2015

City-based Binny Ltd is venturing into the real estate space and will be setting up an Integrated Township through development agency model within the Binny Mills complex in Perambur, Chennai. The 71- acre-project will entail investments to the tune of Rs. 5,000- Rs. 6,000 crore. The existing dilapidated mill building, a prominent location in many Tamil films, will have to come down, sources said.

“Yes, we are coming out with a township. It would be a mix of both residential and commercial space. Work will commence by the second half of 2015,” M. Nandagopal, executive chairman, Binny Ltd, toldThe Hindu. “80 per cent of the township will be residential in nature and 20 per cent commercial. There will be retail activity too. A mall, hospital, and school are also on the cards,” he added. Read more