Big players eye Tier-2 cities in TN
Real estate developers are increasingly exploring Tier II cities where there is a potential demand for quality built-up space. Leading players based in Chennai and national players have announced projects in smaller cities in Tamil Nadu, including Tiruchi, Madurai and Coimbatore.
These are cities that either have a strong industrial base or are tourist hubs attracting regular visitors as there is employment generation and infrastructure growth.
Developments are happening across market segments from the middle income segment to high-end luxury segments, say developers. Coimbatore, particularly with its traditional industrial base, is a focus market for many.
Not a marked trend yet
However, according to a representative of a leading housing finance institution this is yet to emerge a marked trend, but at best what is happening is developers with established and consolidated presence in Chennai are entering new markets. The market response is mixed and projects are primarily in small packages. Home loan offtake does not reflect a remarkable growth in the residential markets in these cities.
Among the developers exploring such markets are Appaswamy Real Estates, TVH, Puravankara, Akshaya Homes and Ceebros which have launched or have plans to launch residential projects in the central areas in the smaller cities. Most of them have projects in Coimbatore, while some such as Akshaya and Puravankara Housing and its budget homes division, Provident Housing, are looking at Tiruchi, Salem, Erode and Madurai also.
Mr Jackbastian Nazareth, Chief Executive Officer, Puravankara Projects, has launched a 19-acre first phase of a residential project in Coimbatore with over 1,118 units. This is one of the largest projects in the city and sales have been good, with units priced at about Rs 3,099 a square feet.
The company is also looking at land acquisition in Tiruchi and other cities.
Interest in Coimbatore
Coimbatore has a growing investor base with buyers in neighbouring Palakkad, Tirupur and other towns looking at investing , he says.
According to Mr T. Chitty Babu, Managing Director, Akshaya Homes, the company is planning projects in the luxury segments in these cities with units priced around a couple of crore rupees. The apartment concept is catching on in these cities, but quality supply is yet to meet market demand.
Akshaya is looking at the equivalent of what would be about Rs 12,500-15,000 a sq. ft. in a market like Chennai in prime residential areas such as Adyar or Kilpauk. Projects offering facilities such as club house, swimming pool and other modern amenities are needed.
Based on land prices, this would mean supply of products priced over Rs 7,500 a sq. ft where typically built-up space is on offer at about half that cost.
Affluent buyers in industry, professionals, people moving into these cities driven by employment generation from new investments and regular visitors form the market for such projects, he says. Akshaya is also looking at such projects in Tiruchi, he said.
Appaswamy Constructions has a 164- unit project also in Coimbatore, with sizes ranging from about 1,100 sq.ft to about 2,000 sq.ft. Its Chief Operating Officer, Mr T.S.S. Krishnan, says developers are exploiting the land banks accumulated in the city. There is a ‘fair amount' of built-up space coming into the market and the scale of development is unmatched when compared with other small cities. However, the growth is driving up land prices which could prove a concern in the price-sensitive market.
Other developers with large projects in Coimbatore include TVH which has launched the Ekanta with over 300 units, one of the largest projects of its kind in smaller cities. The company has launched the units beginning at about Rs 40 lakh with apartments ranging between 1,100 and 2,200 sq. ft.
Jain Housing has also announced projects in Coimbatore and Tirupur