The IT ecosystem is yet to feel the pinch

The lay-off in the IT sector is yet to have an impact on the larger ecosystem that depends on it. The real estate market in Chennai has in fact seen its consumption growing, say industry players.

Chitty Babu, Founder, Akshaya Homes, said the real estate sector in the city has not seen any slump . Babu added that the city’s real estate sector didn’t depend much on the IT sector.

In Bengaluru too, Om Ahuja, CEO Residential, Brigade Group pointed out that so far none of the company’s properties has seen any kind of price pressure.

Those laid off form a minuscule per cent of the total strength of the IT sector, said A Shankar, National Director, Strategic Consulting, JLL. Moreover, Chennai’s real estate sector is not dependant just on the IT sector and has a sizeable diversified market including manufacturing and warehousing/logistics.

According to a JLL report, last year Chennai recorded highest absorption (rate at which available real estate is sold) of 6 mn sq ft. But this is likely to drop in 2017, due to low supply of new projects. Also, the proportion of IT employees in residential buyers has fallen, from 52 per cent in 2011, to 37 per cent in 2016.

Lay-off are happening in age group 30 years to 40 years, which constitutes less than 17 per cent of the total population. The proportion is the same in Bengaluru too, where the real estate companies fear a delay in the recovery of the sector. “We are bracing up for such an eventuality,” said the CEO of a listed real estate company who did not wish to be named.

In case of rentals, Shankar says the impact will not be much as the annual appreciation rate stood at 5-10 per cent.

Transport services plying in the IT corridors too are unaffected, say service providers. Muthukumar N, a cab driver, said he has seen no drop in pick ups from IT corridors. “Cab requests anywhere from Old Mahabalipuram Road to DLF (where most of the IT crowd in Chennai is located) have not reduced,” he said. Most of his evening rides, from 5 pm to 8 pm are from this area.

Ravikumar Kumarasamy, founder of car pooling app GreenPool, said the company has seen an increase in its customer base every week in the last few months. The company has over 9,000 users.

Kumarasamy said, “Over the last five months, we have seen a monthly increase of 30-40 per cent in average rides.”

According to him the spike in rides have more to do with company’s cost cutting measures than with actual lay-off. One of GreenPool partners, an IT company, in the last one year has reduced the number of buses that pick up its employees, and instead began to promote alternatives like GreenPool.

With inputs from Venkatesh Ganesh

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