The Hindu Business Line : `Coimbatore real estate boom sustainable'

THE current real estate boom in Coimbatore, where land prices have shot up by 50-100 per cent in the past one year, looks sustainable in the near term since it is fuelled more by genuine demand rather than by speculation, according to a senior executive of Sundaram Home Finance Ltd (SHFL).

The favourable investment climate has seen the average size of housing loan for individuals given by his company increase by 20 per cent in Coimbatore, aided by other factors such as the IT sops, lower EMIs and higher disposable income.

Speaking to Business Line, Mr S. Jaishankar, Area Manager-Tamil Nadu (South), SHFL, Coimbatore, said there has been a 25-30 per cent growth in the quantum of home loans disbursed by his company in the first nine months of the current year compared with the corresponding period in the previous fiscal and he expected to maintain the growth in the coming year too.

He said land price in Coimbatore has moved up by 50 per cent to 100 per cent in the last one year and in some areas, the increase was more than 100 per cent.

He said areas such as Race Course, R.S. Puram, Peelamedu, Vadavalli and areas in close proximity to Tiruchi Road had witnessed a substantial spurt in land price.

The apartment prices also have recorded a 25-30 per cent jump in the past year. The on going rates per sq. ft. in select areas in the city are Rs 2,000-2,200 in Race Course and R.S. Puram; Rs 1,600 in Saibaba Colony; Rs 1,400-1,500 in Peelamedu and Rs 1,200-1,300 in Singanallur, though this might vary depending on specifications and location.

Mr Jaishankar said the average size of individual loans given by SHFL has also recorded increase this year compared to the earlier year.

For apartments, the loan size was in the Rs 10 lakh-12 lakh range whereas for houses, it was in Rs 8 lakh-10 lakh range. The highest loan sanctioned by his company in the city was Rs 1 crore for an individual house and Rs 50 lakh for an apartment.

He said the average loan size for individuals has gone up because of the higher investment required and EMIs have become more affordable as the interest rates have come down and the loan tenure has become longer. Another trend noticed in the city was the development of group housing projects by developers offering apartments, row houses and individual homes in the same location. These were preferred for the safety they provided to the residents and some developers offered a range of value-added services to attract customers.

He felt that the real estate boom witnessed in Coimbatore was sustainable at least for another five years since it was propelled by a genuine demand rather than by speculative purchases.

Referring to the financial performance of SHFL in his region covering Coimbatore, Salem, Madurai and Tiruchi branches, Mr Jaishankar said during 2003-04, the loan sanctioned in the area was Rs 166 crore and the amount disbursed was Rs 129 crore. This represented a 25-30 per cent growth compared with the previous fiscal and during the current year, the company has been maintaining the growth percentage.

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