The Hindu Business Line : Boom in Coimbatore realty; `correction soon'

Realty sector
Economic boom, intense construction activity have resulted in the growth.
Value of organised house construction stands about Rs 450-Rs 500 cr.

Coimbatore April 10 Coimbatore is riding the crest of a real estate boom, with Rs 1,500-crore worth of building activity in housing and commercial space currently on, but there are possibilities of a correction in prices, according to people associated with the construction industry.

The industry is also grappling with a host of adverse developments, including spiralling land prices, continuous increase in building material cost and acute shortage of labour, and the rising home loan rates could also have a negative impact on the sector, they said.

Boom time

Speaking to newsmen, Mr G. Ramamoorthi, outgoing Chairman of the Builders' Association of India (BAI), Coimbatore Centre, and its in-coming Chairman, Mr G. Srinivasan, said the general economic growth and intense construction activity being witnessed in the IT sector in the city have resulted in a boom in realty sector. Apart from the government-sponsored IT park, construction of seven or eight private sector IT parks was underway, with the minimum IT park area of 1 lakh sq ft and a maximum area of 6 lakh sq.ft.

They said construction of large number of apartments was going on in the city. With Coimbatore being a tier-II city, they felt that its potential was much more than some of the metros.

They were confident of the boom continuing in the near future with not only the IT but the general engineering industry that is the mainstay of Coimbatore, which is experiencing a resurgence in demand, contributing to it.

Prices scale upwards

Mr Ramamoorthi put the value of the organised house construction around Rs 450-Rs 500 crore and that of the IT parks at about Rs 900 crore to Rs 1,000 crore.

Asked whether the current property prices in Coimbatore were not discounting the expected future demand rather than the present demand since large-scale influx of IT professionals was yet to take place, he admitted that a large number of apartments were lying vacant and have not been rented out. The rental value, other than in the prime areas of the city, have not kept pace with the increase in property prices.

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