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Chennai Realty

June 2011 www.chennairealty.biz

weekly Newsletter on Real Estate in Chennai

Editor’s Note

Last week saw the RBI increasing the base rate for the 10th time since March 2010 to 7.5 percent. The rationale behind this move was to control high inflation which stood at 8.37 percent. There seems to be a short term myopic view trying to control the expense side of things rather than addressing production and supply side issues. Banks are likely to increase their lending rates for their home, auto and personal loans correspondingly which would result in the customer shelving more out of their pockets in the next few months. Housing prices may rise by 5-10 percent in the next 3-6 months as the cost of funds for developers is expected to increase. This will also slow down the demand for housing as customers are likely to postpone their purchases.

Vol. 1 : Issue 7

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TN ranks second in housing shortage having the highest number of

2.7 lakh houses for the EWS. Government

In this week’s newsletter, we take a look at the state of housing affairs in Tamil Nadu with the state being ranked second in the country for shortage of housing. While this could be interpreted as an opportunity for the real estate promoters, it must be kept in mind that most of the demand is for low budget housing within a budget of Rs.20-25 lakhs. The new Tamil Nadu government’s willingness to focus on the core area of infrastructure is a welcome change as compared to their previous two terms. Large scale investments would serve to generate jobs and create wealth resulting in overall growth of the state and its citizens. Take a look at our coverage on the status of PE investment in India across various sectors in the first half of the year followed by our regular round up of interesting news from the real estate sector.

homeless, about 7.3% of the

needs to look at public-private partnership

total homeless population in

for fulfilling this demand. The government

the country. Chennai has

should unlock its land parcels for housing

75% of them, according to

development and engage private builders,”

a study conducted by the

said T Chitty Babu, president, Tamil Nadu

NGO, Indian Community

chapter of the CREDAI.

Keep an eye for our forthcoming edition of Chennai Realty, wherein we plan to cover key topics like Property Joint Ventures, Service Tax, Vaasthu for kitchen, City’s Top Project update and City real estate pricing sum up. Do give us your feedback and suggestions which will help us improve our standards both in terms of quality and content.

and Wall Tax Road.

Happy Reading! Kishore Kumar Editor Chennai Realty.biz

INSIDE

 PE Investment Tracker  Wealth Monitor  TN to Attract Huge Investments  Real Estate News  New Project Launch  City Price Index

Welfare

Organisation.

The numbers are higher in

places

like

Parrys,

Royapuram, Basin Bridge As

India Housing Shortage (in million units) All India

24.71

Maharashtra

3.72

Tamil Nadu

2.82

Uttar Pradesh

2.38

West Bengal

2.04

amil Nadu is among the worst states

T

per the housing ministry’s

when it comes to housing, a study

figures, about 88.14% (21.78 million) of the

by the Union housing ministry has

housing demand is among the economically

found. About 11% of total housing shortage

weaker sections (EWS), 11.7% (28.89

in the country is in Tamil Nadu, which is only

million) among the low income groups and

a notch below Maharashtra when it comes

the balance 0.16% (0.4 million) among the

Gujarat

1.66

to low housing stock.

middle and high income groups.

Karnataka

1.63

The shortage is expected to touch 29.53

In Tamil Nadu the state government has set

Madhya

1.29

million by 2012 and to fulfill this demand the

an agenda of providing pucca houses to all in

government needs to spend Rs 3,61,318

the next five years. “But this is hardly anything

Delhi

1.13

crore, about 39% of India’s estimated total tax

compared to the total housing demand in

Rajasthan

1

receipts for the current financial year. Tamil

cities here. Chennai alone needs about

Kerala

0.76

Andhra Pradesh 1.95

Nadu also has the dubious distinction of

New Tamil Nadu Government to focus on infrastructure

G

iving a thrust to investment in the

Ms Jayalalithaa has also requested that the

core infrastructure sector, the new

Centre expedite the process of getting Japan

Tamil Nadu Government under the

International Cooperation Agency assistance for

Chief Ministership of Ms. J Jayalalithaa has

the Rs 1,075-crore second stage of the Chennai

urged the Central Government’s support to

Outer Ring Road project. The first phase of Rs

implement several urban and road sector

1,081 crore is now under implementation.

infrastructure projects in Tamil Nadu.

To strengthen urban infrastructure, the State

Foremost among them is the implementation of an ambitious monorail project at an investment of Rs 16,650-crore. In the first phase, the monorail will cover 111 km and is to be completed in the next two years at a rough cost Rs 150 crore/km. It is a capital intensive but environment friendly project, which the Centre could support under the National Urban Transport Policy. This will be extended in stages to 300 km and integrated with the existing transportation systems.

needs over Rs 20,000 crore over the next five years to cover water supply, drainage, waste disposal and road infrastructure. The State Government estimates that Rs 9,500 crore will be needed to revamp and augment waste water supply in the urban local bodies; Rs 5,700 crore to renovate about 18,000 km of the 39,500 km urban roads; Rs 3,000 crore for solid waste management with scientific landfills; Rs 1,100 crore for sewer networks; and Rs 700 crore for new Urban Health Centres.


Chennai Realty

Weekly Wealth Monitor

Events Calendar

Crude (per Brl in US$)

Market Update

140

125.58 109

120

Composites India Expo 2011

100

Date : 17 - 19 June 2011 Chennai Trade Centre, Chennai

80 60

Crude (per Brl in US$)

40 20 0 Last week

-20

This week

-40

Up / Down -16.58

Interior Exterior Expo 2011

June 23-26, 2011 Chennai Trade Centre, Chennai

Gold (10Gold gms(10 ingms Rs.)in Rs.)

16.7

RETAIL

15.2

INFoTECH

20000

15000

15000

Last Year

5000

REALTy

-20

0

20

22600

Luxury Homes 2011

Gold (10 gms Rs.) Gold (10ingms in Rs.)

7 - 9 July 2011 Chennai Trade Center, Chennai

5000

Last week -5000

21870 22533

10000

0

-15.73 CoNSTRuCTIoN -40

20000

Last week

-41.21

-60

25000 22140

10000 27.54

bANKING

25000

0

67

Thisweek week Last

-270 / Down Up / Down ThisUp week

40

Tamil Nadu set to lure Rs.1,00,000 Cr Investment Central panel clears mega petrochemical hub in TN

A

n inter-ministerial group headed by cabinet secretary KM Chandrasekhar has cleared a Tamil Nadu government proposal to set up a petroleum, chemicals and petrochemicals investment region (PCPIR) to attract Rs 1,00,000 crore in investment. The centre has directed the state government to come up with phased investment on support infrastructure, including rail, air and sea connectivity shortly. Tamil Nadu will set up the region over 25,683 hectares across Cuddalore and Nagapattinam districts in the state. Of this, 40 per cent of the land would be for processing and the remaining would be earmarked for non-processing activities, said a senior government official privy to the development. Nagarjuna Oil Corporation (NOCL) is the anchor investor for the region. NOCL is a joint venture between Tamil Nadu Industrial Development Corporation (TIDCO) and Nagarjuna Fertilisers and Chemicals (NFCL). The joint venture is setting up a refinery project in the region with a capacity of six million tonnes a year. NOCL has invested Rs 4,500 crore and has projected an additional investment

India’s first Urban Affairs University set up in Bangalore The Indian Institute of Human Settlements (IIHS) exclusively dedicated to urban and civic affairs will be set up in Bangalore at a cost of Rs 250 crore. According to Mr. Aromar Revi, a development consultant, researcher and academic, “The main campus will come up at Kengeri and will occupy 58 acres with a built-up area of roughly 0.5 million square feet. Work on planning the first phase of the campus has started. The campus is expected to set global standards for efficient, economic and sustainable design, operations and maintenance. It will aggregate and demonstrate the talents of India’s best designers, construction agencies and artisans”. IIHS is the creation of a group of leading entrepreneurs, intellectuals and professionals including Nandan Nilekani, Shirish Patel, Rakesh Mohan, Deepak Parekh, Vijay Kelkar, Jamshyd Godrej, Deepak Satwalekar, Xerxes Desai, Nasser Munjee, Renana Jhabvala, Kishore Mariwala, Rahul Mehrotra, Pradeep Saxena and Revi.

Commercial rentals inching up According to real estate consultancy firm Jones Lang LaSalle, the net absorption of space in 2010 was 30.5 million sq ft, up 35 percent from 19.6 million sq ft in 2009.

of Rs 5,000 crore in the region by February 2012. It has plans to invest Rs 12,500 crore in expanding the refinery project to 15 million tonnes by 2015. The second anchor investor in the region will be Chennai Petroleum Corporation (CPCL), which plans to establish an integrated 15 million tonnes per annum refinery and petrochemical complex. The oil ministry pointed out at the high-powered committee meeting that CPCL has been offered land by TIDCO in Raman¬athapuram, which falls outside the proposed PCPIR. The centre has agreed to provide budgetary support of Rs 4,285 crore for st¬rengthening NH45A, up-grading state highways and doubling and electrification of the Viluppuram-Mayiladuthurai railway line. In addition, the region will be eligible to receive Rs 660 crore through viability gap funding for a desalination and common effluent treatment plant. Meanwhile, the government has also decided to allow existing special economic zones in the region to be governed by the SEZs Act. In effect, these projects will continue to get fiscal incentives and tax concessions under the act. This is expected to jump to about 36.9 million sq ft this year. Rentals have started to inch up in a few locations. Consultancy firm Cushman & Wakefield says that in the office hub of Gurgaon, for instance, rentals have grown by 5-10 percent. In Bangalore, it is up 10-15 percent, Chennai by 4-9 percent, Kolkata by 10-19 percent and Mumbai by 10-13 percent, depending on the location.

Infrastructure tops PE chart in May

IInfrastructure tops PE chart in May

n another month that saw more than $1 billion (around R4,500 crore) in private equity/venture capital (PE/VC) investments, May accounted for $1.14 billion of investments in Indian companies across 39 deals; around 180% increase over $408 million across 17 deals in the same period last year.

The average dealthat size from $29.1 million $33.6 million.capital 2011 hasinvestments, so far attracted investments In another month saw increased more than $1 billion (around R4,500 crore) into private equity/venture (PE/VC) May accounted for

$1.14 billion of investments in Indian companies across 39 deals; around 180% increase over $408 million across 17 deals in the same period last year. worth $5.42 billion, compared with $3.53 billion in the first five months last year. The infrastructure (including The average deal size increased from $29.1 miliion to $33.6 million. 2011 has so far attracted investments worth $5.42 billion, compared with $3.53 billion the first five months last The infrastructure (including power) sectorfor topped the investment accounting for 59%, with 12million. deals worthThe power)in sector topped theyear. investment chart, accounting 59%, with 12chart, deals worth $676.4 $676.4 million. The banking, financial services and insurance (BFSI) sector grabbed the second slot with five deals worth

banking, financial$168.5 services and insurance (BFSI) sector(IT/ITeS) grabbed the investments second slot million. Information technology/IT enabled services aggregated worth with $101.2 five million.deals worth $168.5 Mint, in association with Four-S Services, presents a snapshot of the PE landscape in India. million. Information technology/IT enabled services (IT/ITeS) aggregated investments worth $101.2 million. The charts cover PE activity for the last month, and till date this year. PE activity till date (year-on-year) The first five months of 2011 have attracted investments worth $5.42 billion, compared with $3.53 billion in the same period last year.

Month-wise PE activity

Chennai-based retail textiles major, The Chennai Silks, along with its sister company, SCM group has made a foray into construction sector by forming a new venture, Teemage Precast, and setting up a factory to manufacture precast concrete products. The plant has come up at Kangeyam near Erode and equipment has been imported from Germany and Belgium. Commercial production will begin from June, according to N. K. Nandagopal, Managing Director, Teemage Precast.

3,531.6

PE investments ($ mn)

Jan-May 2010

24

28

Graphics by Ahmed Raza Khan/Mint

5,417.1 Jan-May 2011

37

36

39

1,111.1

583.8

1,524.2

1,055.2

1,142.8

January 2011

February

March

April

May

Value ($ mn)

Sector-wise allocation

Sector-wise investment The infrastructure (including power) sector topped the chart in May, accounting for 59% of investments. The BFSI and IT/ITeS sectors took the second and third spots, respectively.

4.2% Real estate

3.6% Manufacturing

(% share)

4.4%

Others

Major investors

The infrastructure sector accounted for 12 deals worth $676.4 million in May, with four of the top five transactions being in the sector. Investment ($ mn)

No. of deals

Infrastructure 676.4

12

168.5

5

101.2

8

57.3

4

47.9

2

41.5

2

BFSI IT/ITeS

5%

Food

Agriculture and food

8.9%

Chennai Silks enters construction sector

No. of deals

May witnessed PE investments worth $1.14 billion in Indian companies across 39 deals.

No. of deals

164 130

IT/ITeS

59.2%

Infrastructure

14.7%

Real estate

BFSI

Manufacturing Others

50.0

6

The top five transactions accounted for around 59% of total PE investments in May. In the largest deal, GMR Airports raised $200 million from Standard Chartered PE, Jacob Ballas and Old Lane Capital. Investor(s) Target

Stake (%)

Sector Stage

Amount ($ mn)

Standard Chartered PE, Jacob Ballas and Old Lane Capital

na

200

Airports Late

Morgan Stanley Infrastructure Partners

50

200

Roads SPV*

Warburg Pincus

na

150

Power Growth

19.6

64

BFSI Late

na

57

Power Growth

GMR Airports

Road projects joint venture with Isolux Corsán Concesiones

Diligent Power

Mount Kellet Capital, Wolfensohn Capital Partners, Customers Bancorp, Multiples Dhanlaxmi Bank

IFCI Venture Capital

Gayatri Energy Ventures

na: not available

*SPV: Special purpose vehicle

Fund-raising

PE vs other modes of funding

Liquidity events

Two India-dedicated funds were raised in May. Renuka Ramnath-led Multiples closed its fund at $375 million, adding $125 million to the first close of $250 million in 2010.

PE outperformed the QIP and IPO markets in May. Five public issues fetched $1.06 billion. There were no QIP issues.

May saw four PE exits. Strategic exits (mergers and acquisitions, buy-back and secondary sales to other PE firms) accounted for 97.4% of total exits.

($ mn)

No. of events

% share

No. of events

PE

IPOs

($ mn)

IPO exits nil

1,061.7

1,142.8

Multiples Alternate Asset Management

125 39

Total 2,204.5

5

97.4% (529.2)

Strategic sale

($ mn)

2

Avendus PE

50

2.6% (14)

Open market 2

QIP: Qualified institutional placement IPO: Initial public offering

2011 has so far attracted investments worth $5.42 billion, compared with $3.53 billion in the first five months last year


Chennai Realty Silent Valley by Vijay Shanthi Builders The company has chosen British architecture, which requires lot of manual skills to build the residential units. “While this architecture helps in saving electricity consumption by at least 20 per cent, we will use high-end Jaguar fittings in bathrooms, besides marble floorings to make it truly high-end,” said Suresh Jain, Managing Director, Jain Housing.

V

ijay Shanthi Builders, one of leading Chennai-based property developers, has launched a residential project, Silent Valley featuring a mix of apartments and villas, at Tambaram, a southwestern suburb of Chennai.

A

Silent Valley, will come up on 27 grounds, off Mudichur Road, an emerging residential suburb close to Tambaram. It will offer 70 flats, co¬mprising 1BHK, 2BHK and 3BHK units and 10 duplex villas. While the

apartments are priced at Rs 3,500 per sq ft, the villas come with a price tag of Rs 4,000 per sq ft and each villa has two car parks. Construction is underway and delivery will take place by Dec 2012.

The project also offers a clubhouse, a gym, party hall and a swimming pool, besides children’s play area. It will also have a mini-theatre, yoga hall and a place for indoor games. Each block will have a stilt plus two floors and a total of 19 blocks are being developed to accommodate the residential units as well as common amenities.

Lotus Manor

cchuthan Builders has launched Lotus Manor, a high end apartment project at South Avenue, Thiruvanmiyur. Lotus Manor will offer sixty premium 3-BHK apartments ranging from 1585 – 1695 sq.ft in three blocks. The unique feature of this project is that each apartment feels like an independent house with no common walls and also Vaasthu compliant. Prices start from Rs.1.5 crore*. Amenities include power back up, indoor gym, indoor games facilities, multipurpose hall, water treatment plant and more......


Chennai Realty Chennai Property Trends

residential

Capital Value 2 BHK ( ` / sft)

Locations

Rental Value 2 BHK of 1000 sft ( ` / Month )

Capital Value 1 Ground of 2400 Sft ( ` Lacs )

BUDGET

PREMIUM

BUDGET

PREMIUM

AVERAGE

8000 7000 9000

17000 10000 16000

16000 10000 16000

26000 15000 28000

250 - 350 250 - 275 500 - 600

7500 8000 4000

10000 14000 5500

12000 16000 7000

18000 25000 15000

120 - 150 220 - 280 80 - 100

5000 7500 3800

6500 12500 4700

6500 9000 7500

9000 18000 16000

90 - 110 140 - 180 80 - 100

6000 6500 4500 3700

7000 7500 5400 4200

8000 8000 6500 5000

17000 17000 15000 8000

180 - 225 180 - 225 70 - 80 55 - 60

2700 2100 2000

3200 2400 2500

7000 5000 4500

15000 7000 6000

25 to 35 12 to 15 15 to 20

CENTRAL Adyar Egmore R A Puram

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Chennai Realty Monthly Real Estate Magazine

North Anna Nagar West Extn Kilpauk Mogappair West South Adambakkam Ashok Nagar Chromepet West Arumbakkam Choolaimedu Maduravoyal Porur Outer Padur Sriperumbudur Singaperumal Koil Commercial Average Rent in May 2010 ( ` / sft per month)

Sub Markets

Average Rent in jUne 2010 ( ` / sft per month)

CBD (Anna Salai, Nungambakkam, RK Salai, T Nagar, Egmore, Alwarpet) Grade A

70 - 90

70 - 100

Grade B

55 - 65

55 - 70

Grade A

50 - 65

55 - 65

Grade B

42 - 47

45 - 50

Grade A

35 - 45

40 - 50

Grade B

30 - 40

30 - 40

Grade A

35 - 40

30 - 40

Grade B

25 - 35

25 - 35

Off CBD (Guindy, Kiplauk, Taramani, Adyar, Anna Nagar)

Suburban Business District (Velachery, Perungudi, Mount Poonamallee Road)

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Peripheral Business District (Perungalathur, Sholinganallur, Siruseri, Ambattur, GST Road)

Construction Material Price Index *

* Courtesy : Bai, Chennai

Commodity

Unit Measure

Previous Week

Current Week

Rs. 295/-

Rs. 290/-

CEMENT

Per 50 KG BAG

STEEL

Non ISI 6MM / Ton

Rs. 40, 000/-

Rs. 40, 100/-

STEEL

TMT 8MM dia / Ton

Rs. 42, 250/-

Rs. 42, 350/-

STEEL

10-25 MM dia / Ton

Rs. 41,100/-

Rs. 41,000/-

STEEL

RMS / Ton

Rs. 44, 500/-

Rs. 44, 500/-

STEEL

STIRRUPS / Ton

Rs. 46, 500/-

Rs. 46, 500/-

STEEL

VSP/SAIL 10mm dia / Ton

Rs. 46, 800/-

Rs. 47, 300/-

BRICKS

1 No.

Rs. 5.6/-

Rs. 6/-

RIVER SAND

Cubic Feet

Rs. 50/-

Rs. 55/-

FLY ASH

Per Ton (Ennore)

Rs.120/-

Rs.120/-

BLUE METAL

20MM / Cubic Feet

Rs. 26/- to Rs. 28/-

Rs. 26/- to Rs. 29/-

BLUE METAL

40MM / Cubic Feet

Rs. 24/-

Rs. 24/-

QUARRY DUST

0 – 2 MM / Cubic Feet

Rs. 20/-

Rs. 22/-

BITUMEN

GRADE 80/100

Rs. 37,100/-

Rs. 39,400/-

BITUMEN

GRADE 60/7O

Rs. 37, 675/-

Rs. 38, 590/-

Albert Einsten

“Wisdom is not a product of schooling but of the lifelong attempt to acquire it”


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