1. I
n the past two decades, the
southern suburbs of Chennai
have transformed into one of
the most important residen-
tial and commercial destina-
tions, owning to the development of
IT sector in and around OMR. The
areas, which were marked farming
activities, lakes, marshlands and
open grounds have transformed
into prime developed localities,
with all the amenities. Kilkattalai, is
one such locality.
Jeya Prakash, a resident at the
Keelkattalai, says that the locality
seemed distant from the city many
years back but is now easily accessi-
ble with the development on the
200 feet radial road. "There has
been a good amount of change with
an increase in the growth of the
IT/ITES firms. Social infrastruc-
ture has also been changing here
with a rise in population, thanks to
several IT offices occupying space
around this region," she says.
The location is also a prominent
location for budget housing. G Se-
shasayee, chief - business develop-
ment, Navin's, says, "Kilkattalai has
already been a fairly popular locali-
ty owing to the presence of a large
bus terminus and is gaining promi-
nence for the budget housing proj-
ects here. in the last three to five
years, Keelkattalai has seen a rea-
sonable and sustained growth both
in the residential and commercial
space, which has been mainly driv-
en by the rapid commercialisation
of the Medavakkam Main Road,
popularly known as the Madi-
pakkam-Medavakkam Koot Road."
Adding to this, R Sivakumar,
CEO, Palace Homes says, "Madi-
pakkam Koot Road has changed
from being just another connecting
road to a busy retail corridor with
major banks, restaurants, food
joints and retail outlets opening
shop in a short span of time along
the stretch between Madipakkam
and Kilkattalai, which has been
boosting the realty growth here."
Connectivity has been playing a
major role in this growth. Satish
Chander Narayanan, associate di-
rector, investments, DTZ Interna-
tional Property Advisers Pvt Ltd,
says, "Keelkattalai has become a
very important hub in the southern
residential market by virtue of its
connectivity to Velachery, GST
Road, OMR and other key business
districts with the 200 Feet Radial
Road. Because of its internal road
width, most of the development
around this region is non-multi-
storeyed in nature."
Kilkattalai also offers a slightly
serene atmosphere in the middle of
all the humdrum of the city. From a
FASTFACT
THE WIDENING OF THE
MEDAVAKKAM MAIN ROAD IS A
CRUCIAL PROJECT THAT HAS
BEEN IN THE PIPELINE FOR A
LONG TIME AND IF IMPLEMENTED
QUICKLY, WILL GREATLY IMPROVE
THE QUALITY OF REAL ESTATE
DEVELOPMENT IN THE VICINITY.
THERE IS ALSO A GOOD DEMAND
FOR COMMERCIAL SPACE ALONG
THE CORRIDOR BETWEEN
MADIPAKKAM AND
KEELKATTALAI
AREAFOCUS
For further details & Site Visit
Contact -S. PREEJESH
Number -98847 95913
Email - preejeshaccordhousing@gmail.com
04 TIMESLOCALITIES
T I M E S P R O P E R T Y
THE OFFICE GOING SEGMENT AND THE
UPPER MIDDLE CLASS ARE INTERESTED IN
BUYING HOMES IN KILKATTALAI
INVESTING IN COMMERCIAL REAL ESTATE
PROVIDES YOU A SIGNIFICANT TAX
SHELTERA TIMES OF INDIA PRESENTATION
SATURDAY, OCTOBER 10, 2015
COMMERCIALANGLE
AFFORDABLE
INTHESOUTH
The commercial office space is an altogether different ball game.
There are many advantages of investing in this space
standpoint of pricing, the market is
slightly lower priced when com-
pared to the other neighbourhoods.
Sivakumar says that good connec-
tivity to other neighbourhoods,
presence of reputed schools and
educational institutions, availabili-
ty of good ground water and prox-
imity to various social amenities
have been attracting buyers here.
Seshasayee feels that Kilkattalai
is mainly preferred by home-buy-
ers who cannot afford the premium
pricing of homes in the nearby ar-
eas of Velachery and Nanganallur,
where land prices have skyrocket-
ed. "Kilkattalai is still affordable for
the middle class. The office-going
segment and the upper middle
class seem to be the segment inter-
ested in buying homes in Kilkatta-
lai," he says, as he dwells upon the
problems in this area. "However,
Kilkattalai also sees traffic conges-
tion, especially on the Me-
davakkam Main Road. During the
rush-hours and in the rainy season,
the traffic problem gets worse as
the road are not too broad and the
proposed road-widening project
has also not taken off till date due
to persisting issues with land ac-
quisition," says Seshasayee
There are lines of IT executives
who have shown interest in invest-
ing in smaller plots here, believes
Sathish. Homes at cheaper rentals
may also be found in the interior
lanes of Keelkattalai. "The average
price of an apartment in the locali-
ty would be in the range from
`4,500 per sq ft to `5,500 per sq ft,
depending on the proximity to the
main road, developer profile and
the amenities provided. The price
of plots ranges between `3500 to
`5000 per sq ft on a broad basis, de-
pending on the frontage, location
and size," he says.
- Saivinai Cheithanya R
With a changing skyline and improved connectivity to the OMR and GST ,
the IT professionals in the city are being drawn to this locality
NEWSDIGEST
CHENNAI OFFICE MART
The city has absorbed close to 2.5 million sqft of of-
fice space till third quarter of this year. While IT/ITES
sector constituted 70 per cent of the space, BFSI sec-
tor (Banking, Finance and Insurance sector) occupies
30 per cent of the share. Even SEZ supply level has
become a constraint particularly in the IT sector. The
dearth of office space is not only confined to CBD ar-
eas but to pre-toll OMR and post-toll OMR areas as
well upto Sholinganallur, according to Cushman &
Wakefield sources.
PE INVESTMENTS SURGE
Private equity investments in July-September surged
to a r e c o r d high of $5.89 billion, taking the deal
value for the first nine months of the year to $13 bil-
lion, according to Venture Intelligence. It is further
poised to cross the historical highs of 2007, when the
p r i v a t e equity investments was at $14.7 billion in
2015.
HOME LOANS SCENARIO
With the RBI reducing the repo rate by 0.50 basis
points, home loan lending rates have become cheap-
er. While SBI's retail prime lending rate is 9.55 per
cent now, HDFC and ICICI Bank's rate will be 9.65 per
cent. For women borrowers, additional concessional
rate reduction will be 0.5 per cent on the prescribed
rate.
FDI RULES TO BE EASED
The government is looking to simplify foreign direct
investment (FDI) rules, aimed at removing some of
the conditions that investors need to fulfill while in-
vesting in the country as it looks to further ease pro-
cedures to attract more investment, including do-
mestic, at a time when the RBI has cut rates too, ac-
cording to government sources.
IT IS EASY TO COMMUTE TO OTHER
PARTS OF CITY FROM HERE. WITH LAKES
IN THE LOCALITY, GETTING FRESH
GROUND WATER ISN'T A CONCERN. THIS
MAKES IT A VIABLE PLACE TO LIVE IN
W
hen the
state gov-
ernment
announced
the metro
rail project in 2007, the ar-
eas falling in the first
phase were monitored
closely by real estate ex-
perts. Alandur was one of
the important areas of the
project and therefore, de-
velopment was bound to
pick up rapidly in the
vicinity. The area, that was
considered to be placed on
the outskirts, was soon in-
cluded in the city limits
once the project kick-
started. And now that the
service has begun, it is no
surprise that the realty
prices shot up and more
residential projects are be-
ing planned here. P
Suresh, managing direc-
tor, Arun Excello, says that
Alandur owes its growth to
the metro rail service.
"The metro facility has re-
sulted in the rise of prop-
erty prices. About five
years ago, the locality was
a small village with a
handful of houses with a
few manufacturing units.
However, today, it has
completely changed and is
as developed as any high-
end residential area in the
city. There has been a rap-
id development in the past
two to three years," he
says.
Arun Kumar N, manag-
ing director, Casa Grande,
indicates that there are
three factors which have
led to the growth of the
area. "Firstly, it’s about
good transport facility,
predominantly, the metro.
Secondly, Alandur is pri-
marily a residential area.
There are no industries af-
fecting the peace of resi-
dents here. And thirdly, it
is only few kilometres
away from the national
highway, IT parks and
many other office spaces,
thus making it one of the
best locations for living as
well as investing.”
Chitra Sampath, who
moved to Alandur an year
ago, believes that investing
in a property in Alandur
has benefited her. “I
moved here an year back
as the locality is close to
my workplace. We bought
an apartment here when
the prices were less than
half of the current rate.
The locality acts as a gate-
way between the city and
the outskirts, giving easy
access to both,” Sampath
says. The property prices
range between `5000 to
`6000 per sqft in the area
and buyers prefer invest-
ing in apartments instead
of individual homes.
Talking about the fu-
ture, P Rajasekar, manager
of Vignesh Properties,
says, “While the area has
seen growth, there are a
few issues that need to be
addressed to make Alan-
dur better. There is need
for more transportation
services to make commute
easier. Alandur also needs
more shopping spaces and
market setups for resi-
dents.” Developers are ex-
pecting more residential
activity with new projects
coming up. “From a mar-
ket-segment perspective,
we are expecting that the
housing market will con-
tinue to grow further and a
lot of development will
come from the affordable
housing sector,” informs
Suresh.
- Divya Narayanan
TowardsRobustGrowth
AREAWATCH
Alandur has become the new junction point of the city connecting
commuters with Guindy, GST and Koyambedu through the highways and metro
T
his is by far one of the
topics which investors
need to get and focus
on for someone who
aims at creating value by in-
vesting into real estate assets.
In India, more than 80 per
cent of the real estate activity
that happens pertains to resi-
dential development.
Less than 20 per cent of
the realty activity that takes
place consists of commercial
development. Commercial de-
velopment can typically mean
➤ Retail buildings / malls
➤ Office buildings
➤ Warehouses
➤ Industrial buildings
➤ Healthcare
➤ Hospitality
➤ 'Mixed use' projects, where
the property has a mix of
retail or office and apart-
ments.
There are evident reasons
why retail investors do not
flock into commercial invest-
ment but there are other ad-
vantages which emerge out of
investing into commercial as-
sets. We will in this section try
and analyse only the advan-
tages of investing into a com-
mercial asset.
The key advantages are:
Higher yields: While invest-
ing into residential assets can
at best provide for a 3-4 per-
cent pa yield, investing into
commercial assets can provide
a return generally not lower
than 6 per cent, going by past
trends. On the high side, the
yields stretch to as high as 10-
11 per cent per annum.
Lesser maintenance spend:
Whilst in residential build-
ings, the spend on mainte-
nance and upkeep of the in-
side of the premises would
mean a significant shell out to
the landlord, on the commer-
cial asset side, the tenants
would volunteer and do an up-
keep as it is important for
them to keep the place to the
best standards in their own in-
terest. Typically it can be seen
as a feature in retail spaces
moreso than office buildings
where renovation is less fre-
quent than retail spaces. Re-
tail spaces would need greater
upkeep if they are to increase
footfalls over time.
Valuation: Due to the higher
yields and the nature of assets
perse, commercial invest-
ments have a fairly higher val-
uation guidance as compared
with residential buildings.
Longer leases: Commercial
rents typically have invest-
ments into interiors coming in
from the incumbent tenant
which would safeguard the in-
terest of the landlord to a
greater extent in terms of pre-
dictability of lease. Even in
cases where landlord invests
or owns the interior after hav-
ing purchased it from an earli-
er tenant, the lock in periods
being defined would safeguard
the interest of the landlord.
Leveraging: Leveraging on a
commercial asset is by far one
of the cheapest forms of lever-
age for a landlord and the end
use of the leverage isn't re-
stricted either giving more in-
dependence for deployment of
the funds.
Appreciation: Commercial
assets tend to appreciate multi-
fold than residential assets in a
long run of holding period. This
is typically by virtue of the
building being able to attract
many more investors given the
stability of the lease and the
quality of the tenant residing in
the premises.
Depreciation advantages: In-
vesting in and holding onto
commercial real estate pro-
vides you a significant tax shel-
ter through the depreciation of
the building and improvements
depending on the holding
structure of the asset.
Provides a Superior Hedge
Against Inflation: Commercial
rentals provide better hedge
against inflation as compared
to residential rentals. This
could be through the escala-
tions that come in along with
rentals while leases are signed
and also the possibility of a
deeper appreciation in rent
while seeking a replacement
tenant after a tenant has vacat-
ed the space.
Greater number of investors:
While one may be able to at-
tract multiple investors for res-
idential assets, it needs to be
noted that commercial rented
assets have the possibility of at-
tracting more number of in-
vestors easily, thereby increas-
ing the chances of a healthy dis-
posal process when the owner
of the space intends disposing
the commercial asset.
- Satish Chander Narayanan, is
associate director, investments,
Cushman and Wakefield
ALANDUR IS A RESIDENTIAL AREA. THERE ARE NO INDUSTRIES
AFFECTING THE PEACE OF RESIDENTS HERE. IT IS ONLY FEW
KILOMETRES AWAY FROM THE NATIONAL HIGHWAY, IT PARKS
AND MANY OTHER OFFICE SPACES, THUS MAKING IT ONE OF
THE BEST LOCATIONS FOR LIVING