Chennai’s real estate market is finally coming into its own. A diverse industrial base, awareness of the potential locked up in land value and a stable demand are contributing to a healthy market, says T. Chitty Babu, Chairman and CEO, Akshaya Pvt Ltd.

That does not mean things are easy. But for someone with staying power and established track record, there is a huge opportunity.

There are concerns of a slowdown in the real estate market. How much of a worry is it?

Chennai has grown consistently in recent years. The real estate market in the city grew at a fast pace till 2008 when the Global Financial Crisis hit, but the market saw a drop of just about 5-7 per cent and was quick to recover, even ahead of other domestic markets.

Since then year-on-year growth resumed and new markets emerged in the suburbs including Oragadam and the GST Road.

Even in the heart of the city, over the last several months transactions worth about Rs 2,000 crore have taken place across various localities in Central and South Chennai.

With that kind of investments going in, real estate market is certainly thriving. Land prices have jumped significantly – in fact, they doubled from about Rs 3 crore a 2,400 sq.ft plot a couple of years ago to the currentlevels in prime locations.

All the top developers from Bangalore – over a dozen of them, and market leaders from Mumbai, Andhra Pradesh, Pune and Delhi have come into this market. Why do you think they are all in Chennai?

Not just the builders, the corporate sector? Not just the Tatas and Godrej, but other companies in the manufacturing sector have taken to real estate development or are calling for joint developments.

Tamil Nadu has a diversified industrial base including leather, textiles, information technology automobile sector. Infrastructure is growing in the city – airport expansion, new airports, outer ring road, desalination plants... these will drive the market.

But, the property registration, the National Housing Bank Residex... do indicate a slowdown in Chennai.

Developers with the capability and staying power, good brand and offering after-sales service will do well. Registrations are hit by the hike in guideline values last year. But this will pick up.

How about your own projects? How are the bookings? Have you achieved your targets?

I am quite happy with the bookings. Look at our residential project beyond Porur, Republic. We targeted bookings of all 609 apartments. We managed close to 300 bookings.

In the current market conditions we are ahead of most others. The pricing was not too aggressive. We average out overall numbers. We have always communicated these clearly and revised prices after the launch event. Republic was launched at Rs 4,250 a sq. ft and as announced, we hiked rates to Rs 4,500 four days later.

In the previous project, Today on the OMR, 2,134 apartments were launched. We sold over 1,021 units over the first four days just about 50 per cent and bookings are continuing.

How about the luxury projects – the tall tower on OMR and proposed project in Sterling Road?

Abov on OMR is a unique product. It is doing well. We are meeting cash flows. We are not pushing sales there. We wait for customers. It is a 38-floor tower with 31 apartments.I do not want to disclose the exact numbers. The buyers are brands in themselves, the who’s who of Chennai.

Sterling project will be even higher luxury

At prevailing land prices and construction costs, an individual house with the features like the one we plan to offer in that apartment project will cost over Rs 60 crore to build, not to speak of the hassles of maintaining such an establishment. We will be offering an apartment at about one-third that price.

But with the recent spate of transactions in the city, the talk is that there will be a huge supply and competition in the high end range…

Yes, there is a huge supply expected in this segment in the next couple of years. Only those with the brand, product, size and prize will prevail. Somebody with a clear track record for delivering on time – we do not see a competition for us in this segment.

What led to the high-end transactions in Chennai in recent months?

Land owners have become aware of the potential. Prime residential areas in Chennai are opening up. Large parcels of land of one acre and more are being sold.

>balaji.ar@thehindu.co.in

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