Real estate developers turn to neighbouring countries for cement

With no end in sight to increasing cement prices, real estate developers in Chennai have began importing cement from neighboring countries like Pakistan and Bangladesh. A group of builders have already begun importing cement from Pakistan via Kochi port.The steep price hike has even led to many developers holding their projects.

The real estate developers in Tamil Nadu have began importing cement from neighboring countries like Pakistan and Bangladesh as it works out much cheaper. A group of builders have already begun importing cement from Pakistan via Kochi port. The cost of an imported 50 kg cement bag worked out to Rs 190 (in Kerala), compared to Rs 295 in Tamil Nadu.

Economic Times

Chennai Corporation to revise property tax

Property tax is the main source of income for the corporation, contributing Rs 365 crore in the last fiscal out of the total income of Rs 489 crore. Over 70 tax assessors of the Chennai Corporation have embarked on an exercise to identify commercial use of residential space and revise property tax, if required. If the corporation has its way, it could well be richer by a few tens of crores at the end of the drive. The drive follows large-scale complaints that people are conducting commercial activities from properties designated to be residential, and are paying only the low residential property tax.

More than 70 tax assessors have fanned out across the Kilpauk zone comprising Anna Nagar, Shenoy Nagar, Purasawalkam, Kilpauk, Aminjikarai, parts of Koyambedu, Virugambakkam, Nungambakkam and Villivakkam. There are 21,000 listed commercial properties in the Kilpauk zone and several hundreds more that are not accounted for, sources said. The mixed residential zone has been invariably exploited, with individual bungalows being transformed into malls and restaurants, especially in Shanthi Colony, Purasawalkam and Anna Nagar.

“We’ve taken up the survey in the Kilpauk zone, and it will be extended to other zones, including T Nagar and Saidapet, in the coming weeks,” said corporation revenue officer B Ramanathan.If the corporation has its way, for instance, a landlord in Anna Nagar East who owns a twofloor building with a built-up area of 1,000 sqft each, will now have to shell out Rs 8,100 towards commercial use of the ground floor. He can no longer pay just Rs 1,687.50 for each floor under the residential slab. The basic rate of property tax in Anna Nagar East is Rs 1.25 per sqft for residential and Rs 6 for commercial properties.

Sources said many property owners were misusing the rebate of 25% guaranteed by the Chennai City Municipal Corporation Act, 1919, for owner-occupied buildings. Tax assessors are made to believe that the tenants are relatives and the dwelling units are not rented out. Lack of assessors in the city municipal limits is, meanwhile, hampering assessment.

Oragadam is growing rapidly

Oragadam is a town and industrial area located on the outskirts of Chennai, India.The town is known for its various industries and workshops pertaining to the automobile sector. Oragadam, centrally located between Grand Southern Trunk and NH4, has been touted as Chennai’s largest and most developed industrial belt. The State Industries Promotion Corporation of Tamil Nadu (SIPCOT) is spread over 347 acres in Oragadam and houses a number of industrial units and intends to expand in order to accommodate more industries and residential complexes.

Real estate development in the city has been witness to several transformations over the past four to five years. While in certain areas residential development was a defining factor for industrial growth, in others, commercial and industrial growth have paved the way for improved infrastructure and connectivity. Oragadam has been touted as Chennai’s largest and most developed industrial belt. With over 22 Fortune 500 companies (of which six are global car manufacturers), the Sriperumbudur-Oragadam belt has seen tremendous industrial growth, in less than four years. The area is well-connected via road and rail and according to industrial experts, the presence of automobile giants like Renault-Nissan and Ford has triggered growth in and around Oragadam. In addition, JCBL Ltd, Essar Steel, BPCL, Delphi TVS Diesel Systems Ltd, GE Bayer and Silicons (India) Pvt Ltd have set up offices at SIPCOT Industrial Park.

MRJ Premnath, General Manager, SIPCOT, says, “We have more than 10,000 employees, most of who commute to and from their homes in the city by company buses. It is high time that there are apartments or villas built in Oragadam, so that people do not have to spend two hours traveling.”

Devendar Singh, Deputy Manager, Motherson Group of Companies, GST Road, is quick to agree. “For me,” he says, “traveling from GST Road to the city is a nightmare. I recently bought an apartment in Oragadam (in Temple Green, an Arun Excello project). In fact, nearly half the project is occupied by employees from my company. Living so close to work will cut down on travel time and reduce additional expenditure incurred by companies when providing transportation. We want more such projects in this part of the city, as it will benefit thousands of employees working in and around Oragadam.”

Kiran Chandan, Deputy Manager, Renault-Nissan, says, “Despite working at Renault-Nissan, whose offices are in the Oragadam area, my wife and I moved from Tambaram to Kodambakkam. We did so, largely, because my wife works in Nungambakkam and commuting, for her, would have been difficult.” Kiran adds that commuting, for him, is quite a problem now. He continues, “We have been looking, for some time, for an opportunity to move closer to Oragadam. Our budget, currently, is about Rs35 lakhs. So far, we haven’t really found anything.”

Oragadam, the industrial hub on the outskirts, is growing rapidly. Oragadam used to be a sleepy little village even about three years ago. However, when SIPCOT was set up in 2007, the area underwent a sea change. The resultant flood of working professionals and their family, complete with residential and shopping demands had, and still has, the potential to wake the sleeping giant of urban development in the area.

Courtesy: Time Property Chennai

Hirco completed first phase of township

Hirco Developments, the project management company, announced completion of first phase in its Hiranandani Palace Gardens Township. Kollywood actors Simbu and Shriya Saran handed over the apartment keys to the apartment owners. This is among Chennai’s largest township projects which will have 10,000 apartment units and over 50,000 residents with the needed physical and social infrastructure to make it a self-contained town. By March next year 160 apartments in the low rise buildings are to be handed over and a 15-storey tower with 60 apartments is also to be completed.

“We are proud of achieving this important milestone. Palace Gardens is designed to offer superior quality residential spaces for our valued customers,” said Mr. Firdose Vandrevala, Chairman and Managing Director, Hirco Developments Pvt. Ltd. Suresh, Principal Executive Officer, Hirco, said the township, set on 369 acres, would have 10,000 apartment units with the accompanying physical and social infrastructure.

As part of the first phase, 928 apartments was under construction across two towers of 15 floors; six towers of 27 floors and 11 low rise buildings. Mr. Suresh said that out of 2.9 million sq. ft. the company had already sold 2.14 million sq. ft. in the Chennai township. The prices per sq.ft. ranged from Rs. 2,400 to Rs. 3,600. Hirco is also developing another master planned township ‘Palace Gardens’ set on 583 acres in Panvel, in the Mumbai

Kathipara Flyover hot destination for Residential Properties

The Kathipara Junction, the gateway to South Chennai, was a traffic bottleneck two years ago. In 2008, grade separator came up connects important areas in the city. The six-lane clovershaped Kathipara Grade Separator connects important areas in the city like the Airport, Guindy, GST Road, Vadapalani and Poonamallee. Kathipara Flyover came as a boon to commuters as the travel time reduced drastically.

The Kathipara flyover Guindy-Chennai, reduced the travel time drastically, enabling free movement of traffic across the junction. In turn, the connectivity in these areas and even beyond, like Porur, all the way upto Sriperumbudur has improved, making it the next hot destination for the middle-income group to buy apartments. This infrastructural growth in turn, triggered the real estate market, as with the arrival of the grade separator, land value of residential properties went up by 10% (approximately).

Ramesh Nair, Managing Director, Jones Lang LaSalle Meghraj – Chennai, points out, “The city-centre has been gradually shifting. While at one point, areas like Nungambakkam, Anna Flyover and Adyar were the central areas in the city, Kathipara has now become the city-centre. In 2008, because of the economic downturn, real estate was at an all-time low in these areas and the demand reduced by 20%. But now the demand has increased and areas like GST Road, Porur and Nanganallur, are considered as potential hubs for housing by real estate developers.”  Ajit Chordia, Managing Director, Olympia Tech Park, Guindy, says, “The Kathipara grade separator was a result of the growth and expansion of the city. Several hotels and IT Parks including the Olympia Tech Park were developed in and around the Kathipara Junction between 2005 and 2008 which resulted in traffic bottlenecks. To sustain an enormous development like this, a well-defined infrastructure like the flyover was the need of the hour.”

Commercial project in the area such as Vishranthi has an IT Park, Jayanth Techpark, spread over 3,25,000 sq ft at Porur. Yet another commercial project in the area is DLF’s IT Park, a 7.6 million sq ft project at Manapakkam (Mount Poonamallee Road). With over 40 companies, it is touted be the biggest IT Park in the country.With more and more IT companies coming up in this side of town, the demand for housing is also growing by the day.

While Porur and Nanganallur have become residential hubs, other parts of Kathipara like Ekaduthangal and Guindy are playing host to many star hotels like the Hilton, ITC Grand Chola, Grand Hyatt, etc. With the flyover, the demand for residential property has doubled and the cost of land has also gone up by 15% to 20% in surrounding areas like Guindy and Ashok Nagar. Since there is a smooth flow of traffic around the flyover, people don’t mind buying houses here as they can commute to any part of the city in less than 30 minutes.

Infrastructure development is the key driver of economic growth in India. Whether real estate development precedes infrastructure growth or infrastructure defines property development in an area is still debatable. But Kathipara Flyover is a boon to commuters as the travel time reduced drastically. Since there is a smooth flow of traffic and commuting to any part of the city is easy, the demand for residential property has doubled.

Mixed reaction from the real estate sector to the Budget

The Finance Minister Pranab Mukherjee presented the 2010 Budget. The best part of the budget has been that the income tax slabs have been raised which will increase disposable income in the hands of the middle class. Although at the macro level it is a growth oriented budget, the reaction from the real estate sector has been mixed.

Tax holiday on profits under Section 80 IB has been extended up to March 2013 with developers getting an extension of a year for completion of projects. Service tax will be now applicable on sale of residential units during the construction period. This will increase total purchase price to the end consumer by around 3.3%.The Budget did not mention relaxing FDI into the real estate sector or REITs and REMFs.

Many of the pre-budget expectations from the developer community such extending 80 ID tax holiday for hotels, reduction of works contract tax and VAT, single window clearance system for integrated townships etc were not addressed. Many of these would have also indirectly helped the consumer.

The increase in excise duty on cement will push up construction costs increasing the burden on the home buyer. The developers were expecting the re-introduction of section 80 IB (10) tax benefit scheme.  If this was reintroduced, the developers would have shared part of their profits with buyers and also increase the supply of smaller homes making homes more affordable.The overall reaction has been positive and the reaction from the real estate sector has been mixed. It is a growth oriented budget and growth in the economy always leads to growth in the real estate sector.

Source: The Hindu