A four-line advertisement in a financial newspaper announces a four-ground plot for sale in Chennai’s top residential locality. A phone call to the seller, out of curiosity to get an idea of the owner’s price expectation, elicits the following response – “You tell me.”

To a hesitant estimate of “Rs 50-60 crore… may be…” the owner says dismissively: “You are way off the mark, I have an offer for Rs 75 crore and I am waiting for more.”

That sort of sums up the situation on land prices in Chennai. You can wait for more. It will pay off. This also means houses anywhere in the city are going to cost a lot, to put it mildly.

A spate of land deals in prime areas of the city in the last few months is set to drive up supply of high-end homes. The deals in Nungambakkam, Egmore, Alwarpet and Guindy have been large deals that indicate the confidence developers have in the market. The deals have been finalised by Chennai-based developers who have been aggressive in building up land parcels within the city.

These transactions, totalling nearly Rs 1,000 crore and involving large parcels of land, will contribute to the supply of luxury houses.

Some of these deals are: Akshaya Ltd’s buying IFCI’s one-acre property in Nungambakkam for Rs 93.75 crore; Ceebros picking up the Atlantic Hotel property in Egmore (about 1.65 acres for Rs 160 crore); and VGN acquiring two properties, one from Tata Communications – a 1.5-acre property for Rs 195 crore on Nungambakkam High Road – and another from HTL Communications (10-acre parcel for Rs 273 crore in Guindy). One more deal, according to news reports, has been finalised in Central Chennai, on a similar scale.

Pratish Devadoss, Managing Director, VGN, points out that the diverse industrial base is pushing the demand for quality residential development.

In Chennai, the corporate sector, which is in need of money, is selling land to take advantage of the buoyant pricing. Someone buying a house in VGN’s Nungambakkam High Road property can be expected to shell out well over Rs 10 crore, and the developer is planning 70 such units. At the Guindy development, a buyer’s budget will be around Rs 2 crore and 1,000 apartments will come up there, he says.

“Marketing either of these projects will not be difficult,” given the current demand, says Pratish confidently.

The Nungambakkam deal has given the developer a national visibility and it has tied up with an internationally know German architect to design what is to be an iconic building. Enquiries are coming in even now, and at least a dozen buyers are keen on making a firm booking, he says.

Steady growth

T. Chitty Babu of Akshaya, which picked up a one-acre property on Sterling Road in Nungambakkam, says the Chennai market has been registering a steady growth. Whether in the suburbs, where new markets are emerging, or closer to the city, where there is a keen demand, location is key. With the increase in land prices owners are now willing to part with their property. Akshaya, which was concentrating on joint ventures till last year, has changed its strategy and is looking at buying land to exploit the emerging trend.

Also, the developer, which had moved to the suburbs in recent years to tap the markets there, is looking at prime locations in the city where more properties are on offer.

At the Sterling Road development, the company is looking at an “ultra luxury” residential development, he says. Subba Reddy of Ceebros, a premium developer in Chennai, which picked up a one-and-half-acre property in Egmore, says there are not many opportunities for large parcels of land in the heart of the city. Developers are seeing the demand for large, quality residential projects and there is keen competition. This project will have over a 100 apartments but the positioning and pricing are yet to be decided, he says.

There is a demand for big budget houses with modern amenities.

There is a shortage of those compared with the demand, says Reddy.

Whatever the pricing, buyers can be sure that these are projects that will set a new average for house prices in prime areas of the city, says a consultant.

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