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The Plotline of Investment

December 3, 2012 Leave a comment

Invest in Plots Chennai

 

Many people are looking at plots in the peripheries of the city as a means of short and medium-term investment.Arjun Narayanan finds out more

Land is undoubtedly emerging as a much sought after asset for investments.While purchasing a plot by end users is common,there are many who look for plots as a short to medium term investment.Since availability of plots within the city limits seems beyond question,the obvious choice is the outskirts,where a lot of manufacturing companies have set up shop.
Buying a plot calls for lower finances and allures many investors for this very reason.”I personally feel that property requires more money and the appreciation that happens in case of an apartment is not as high as in case of a plot,”says Mahipat Bhandari,a city-based businessman,who has purchased a plot in Kayarambedu.
It is areas like these that are up for grabs on the investment map today.”The area towards GST,Oragadam,Sriperumbudur and the stretch along the ECR,after Muttukaadu,are attracting investors and developers today.The connectivity is improving in these areas and many educational institutions and hospitals are being proposed here.These aspects work like a trigger for developers and investors,who are looking for plots in the suburbs of the city.It works well as a long-term investment,”says Wilson Mathews,Director,Sales and Marketing,TVH.

With increased economic activities and growing income,space for residential property has become an issue in Chennai.Employees of multinationals and manufacturing enterprises (that are set up on the outskirts) are also planning for a permanent residence in these areas and as that happens,what was once a suburb has now become a part of the city.”Even a few years ago,Tambaram was seen as a suburb.But today,it has become a part of the city.There are many IT professionals residing in the area there and facilities are increasing there,”says Rakesh Jain,a city-based entrepreneur,who has invested in a plot near Guduvanchery and has plans not to sell the plot for at least the next three years.”After seeing some appreciation,I am planning to get into a joint development with a builder,”says Rakesh,who holds the plot jointly with another investor.
“Most real estate developments being proposed in recent times follow the joint development route.In such a case,a developer doesn’t invest money in land;both partners join hands to develop property,”says Wilson.Rakesh also sees a lot of merit in investing in a plot over a house.”Apartments require a lot of maintenance and that becomes cumbersome if you are living in another city.Besides,you can do a lot with a plot.Selling it becomes easier,”he says.

So how does a person clearly decide between investing in a plot and a house Wilson feels that one needs to prioritise his/her needs and keep the budget in mind,which means that the purpose of investment,the time in hand to remain invested,the source of funding and the desired cash flow are the key factors while making a decision.”Don’t bite off more than you can chew,”he says,with a note of caution.”If a person already has a house,then its ideal to invest in a plot in one of the locations in the suburbs.Growth is happening in the periphery of the city,”he says.A planned decision will then help a person invest in plots as a short term or medium term investment.

As published in Times of India, Times Property – December 2, 2012

Supply-demand gap in housing – chennai

November 30, 2010 Leave a comment
  
Listings posted with Magicbricks.com between July and September 2010 reveal that the top ten localities which posted maximum listings were T Nagar,Velacheri, Porur, Adyar, Ambathur, ECR, Kolathur, OMR Road, Besant Nagar and Virugambakkam. Requirements posted on MagicBricks.com reveal that 2 BHK multi-storey apartments are most in demand followed by 3 BHK and 1 BHK apartments. Overall,the supply was highest in the 2 BHK and 3 BHK categories with multi-storey apartments posting maximum listings comprising 52 per cent of the total supply.
  
However, on comparing the demand and supply data,a mismatch was observed in the number of available options as compared to the demand especially in the 1 BHK and 2 BHK segments where the demand outstrips the supply. The 1 BHK category, which caters to the affordable housing segment,is where the mismatch lies. The demand is robust but options are limited.
  
On the other hand,in the 3 BHK segment, there is a significant supply of multi-storey apartments with little demand to absorb the existing housing stock.When an investor looks at regular returns out of a residential real estate investment,this is a critical parameter to consider. The smaller units have more demand and are easier to lease out. The demand for bigger units is limited.
 
Localities such as Adyar,T Nagar and OMR posted 2 BHK and 3 BHK  apartments  within a higher price range ( 100 lakh and above), while localities such as Ambattur and Kolathur posted more affordable options ( 18-30 lakh). Residential projects comprised 23 per cent of the total supply and maximum listings were posted in the 3 BHK category.
 
However,requirements posted with Magicbricks.com indicated that the demand was highest in the 2 BHK category which is not being met adequately by the existing housing stock. In the 3 BHK category on the other hand,there is an over supply. The market demand has moved in the direction of apartments.The traditional fixation of standalone property is fast giving place to modern apartments with latest amenities and lifestyles.When one buys a property,the constraints of price are a big consideration.However,for the occupant,the rental options are as wide and scattered as he or she is willing to look for.
 
In the residential segment,there exists a significant demand for more premium options of 4 and 5 BHK categories which are adequately met by the existing housing stock as indicated by listings posted with MagicBricks.com. The premium segment is well catered to and even the rental market in this segment is mature and well-established.In the rental housing category catering to young and mobile professionals,furnished property fetches better values.Most lessees prefer to move into a new city into furnished accommodation. In cities such as Gurgaon, Delhi and Bangalore,where the workforce is very young,the escalation in rental values from furnished property can be as high as 35-50 per cent. 

 

Times of India epaper, 27 November 2010

 

Costs drive home dreams to Suburbs

 

Aspiring homeowners are now looking to relocate beyond the city suburbs, with private builders offering dream homes in affordable townships in these areas, complete with entertainment, schooling and hospital facilities.

With land becoming sparse and costlier within city limits, the only option for the builder is to amass at least 3,000 acres of land in rustic corridors off OMR, ECR or GST, says C. Devadasa Sundaram, chairman and MD, CeeDeeYes, whose upcoming township Chennai Pattinam, on OMR near Thiruporur has flats ranging from Rs 22 lakh to 45 lakh.

“A township is economically viable for both the builder and the consumer, only if we are planning to accommodate 3,000 families in comfortable two or three BHK homes, and provide schools for the kids, a mall, multiplex,” he says.

Even as private builders are catering to a large middle class segment that is ignored by government projects, they do seek participation from the state. “While we have taken care of other infrastructure like sewage, electricity and water, we have recently written to the government to improve the road facilities,” Mr Sundaram says.

Apart from smoothening unmotorable road tracts, the government must take a keen interest in reducing construction costs, says Nakshatra Roy, True Value Homes. “Material like doors, windows and tiles are much cheaper to import, but when faced with the levy of 30-40 per cent on such items, the builder will have no choice but to pass it on to the buyer, who is already burdened with EMIs,” explains Mr Roy.

Deccan Chronicle, 2 Aug 2010

Railway link to Puduchery to link OMR and ECR

August 2, 2010 1 comment

 

CHENNAI: The east-coast railway line from Chennai to Puducherry just got a little closer to realisation as Southern Railway has okayed the final location survey to identify land use and cost.

Part of an ambitious plan to connect Chennai to towns along the East Coast all the way up to Kanyakumari, railway board has given the go ahead to build the line from Chennai to Cuddalore at a cost of Rs 523 crore. This, however, may go up to Rs 600 crore. The board has approved the new line by including it in the supplementary budget of September 2007. The last railway budget had allocated Rs 25 crore for initiating the project.

The railway line between Old Mahabalipuram Road (OMR) and East Coast Road (ECR) will connect Sholinganallur, Kovalam, Tiruporur, Mamallapuram, Kalpakkam, Kuvathur, Cheyyur, Marakanam, Kunimedu, Kuiyilappalayam, Jipmer in Puducherry, Bahour, Varakalpattu, Tirupadipuliyur and Cuddalore Fort. The line will run close to the sea at Mamallapuram.

“We have awarded a contract to carry out a final location survey. It will also identify from where the line should take off – Perungudi or Chengelpet,” said Southern Railway chief administrative officer R Ramanathan.

According to initial plans, the 180-km line will take off from Perungudi MRTS station. But, there is also a view that the line should start from Chengelpet so that it can be used for freight transport. “If it starts from MRTS, we cannot operate freight trains,” he added.

Southern Railway would explain to the Board about the pros and cons of starting the line from Perungudi and Chengelpet. “The line can be linked to Perungudi and also Chengelpet,” he said. If it is linked to Chengelpet, the coastal line can be connected to the main railway network through the Chennai Egmore-Kanyakumari southern trunk line.

Meanwhile, a Perungudi-Cuddalore line will enable passengers to board an Electric Multiple Unit (EMU) to Mamallapuram and then switch to conventional trains to Puducherry or Cuddalore. Travellers will be able to reach Puducherry in two hours, as against the five hours via the current line through Chennai Egmore-Villupuram-Puducherry.

The survey, which is the final leg of procedures before a new line gets approval, will assess the land required and identify plots through which the line would pass. Surveys to identify passenger feasibility on the route have revealed that the line will be viable as more people travel? from Chennai to Puducherry and Cuddalore because of the recent developments along the OMR and ECR.

“After completing the final location survey, we will prepare an estimate and send it to the railway board for sanction of funds. The project may cost Rs 600 crore,” said Ramanathan.

Times of India, 2 August, 2010