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The Hindu, 28th May,2006
Riding
the realty boom
R.Y. Narayanan
Billed as emerging IT hotspot, the city is bracing up for
rising demand
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Apart from engineering industry and IT, there was enormous
potential in healthcare and education and there was
substantial demand from the user services in these sectors.
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Coimbatore is in the grip of a construction fever. Whether
it is plush apartments or medium budget houses or
commercial/office complexes, the city has not witnessed such
a frenetic construction activity in the past as it is seeing
now.
According to conservative industry estimates, the number of
residential tenements under construction now should be
around 3,000 involving an investment of around Rs 500 crore.
This is only from the organised players in the city. If one
takes into consideration the value of homes/apartments being
built by small builders and homes by individuals, the value
of investment should be at least double of that figure, if
not more.
Building on core strength
Always billed as one of the most liveable cities in the
country, Coimbatore is finding that its core strength in the
manufacturing sector, particularly in engineering and
textiles, has given a new impetus to the real estate
industry. More importantly, it has given it greater
stability, as Coimbatore has also emerged as a global
outsourcing hub for the manufacturing sector. But what has
made the realty industry really hot is the fact that there
is an air of expectancy about the rush of IT majors to
Coimbatore.
The changing profile of the buyers has brought in its wake
change in their expectations from the builders.
There has been a significant increase in the demand for
luxury apartments and individual houses in the Rs 35-50 lakh
plus range and recently investors lapped up the opportunity
to buy apartments at a staggering price of up to Rs 1.50
crore in the posh Race Course area in the city.
Buyers have become more discerning and facilities that were
earlier perceived to be luxuries like swimming pool,
community hall, gym and R.O. plants have become necessities
now.
According to Mr R. Rajahram, Managing Director, Sri Renga
Group of Companies, Coimbatore, which is into textiles and
real estate development, the boom began even before there
was talk about the entry of IT sector into Coimbatore. He
was confident that it would last at least for the next 10
years, irrespective of IT majors' entry or not. His optimism
was reinforced by the fact that the actual time taken for
selling an entire project had come down from one year
earlier to just a few months now.
He said apart from engineering industry and IT, there was
enormous potential in healthcare and education and there was
substantial demand from the user services in these sectors.
Services like medical transcription have spawned huge demand
for land and in fact, the construction of such a facility in
Thondamuthur area on the outskirts of Coimbatore has sent
the land price soaring there.
Mr.V.Mohan, Managing Director, Mayflower Enterprises Private
Ltd, Coimbatore, said that unlike Bangalore or Mumbai, the
real estate market in Coimbatore was not driven by
speculation.
While there could be an element of investment buying, much
of the purchase was made by the end users.
The market that was dull after the 1998 serial bomb blasts
in the city recovered in 2002 and has been on a roll since
last year.
There was a noticeable interest from NRIs hailing from
nearby cities like Pollachi and Udhagamandalam in buying
properties in Coimbatore.
Flood of projects
Mr Mohan said the investment in housing now in Coimbatore is
the highest-ever witnessed. The demand in the high-end
segment constituted only about 15-20 per cent. The rest of
the apartments were of conventional type where the builders
also try to provide value-added services. The fact that
Avanashi road was a National Highway and most of the
educational institutions were located on that road and the
expectation that it would form the IT corridor have made
land very expensive on that road.
He said one mall would come up on the Brooke Bond road and
apart from the multiplex being put up by the Essel group
another was expected to come up within the city. Any
shopping mall would need 4-5 acres of land and some of the
potential investors were looking for ideal locations.
He said for reasons of safety and as the quality of living
is better, people have started preferring group housing
projects. Such a concept has got very good future but land
is not available within the city for promoting such schemes.
It is time to think of developing satellite townships.
Changing buyers' profile
Mr V. Subramanian, Executive Director, Ramani Realters Pvt
Ltd, Coimbatore, said the city was attracting people from
across the country and NRIs from abroad because of its
climate, the people's culture, the educational and health
care facilities available etc. The exposure of the people
here to the latest styles and facilities has made them
demand the best specifications in terms of flooring and wall
tiles, fittings and facilities like gym, swimming pool, R.O.
plants etc. The buyers want elegant elevations and large
rooms and cost was not a constraint to them.
He said in the 1990s, people were comfortable with the Rs
10-12 lakh price range for an apartment. But now the budget
has gone up to Rs 25-35 lakh as the disposable income has
gone up and the home loan rates have dived. The demand for
flats in the 1,000 sf.ft-1,500 sq.ft was only 30 per cent
while the larger flats have greater demand now. The age
profile of the buyers has come down to 25-35 years and they
want to put their parents in comfortable homes!
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