Tamil Nadu is among the worst states

when it comes to housing, a study

by the Union housing ministry has

found. About 11% of total housing shortage

in the country is in Tamil Nadu, which is only

a notch below Maharashtra when it comes

to low housing stock.

The shortage is expected to touch 29.53

million by 2012 and to fulfill this demand the

government needs to spend Rs 3,61,318

crore, about 39% of India’s estimated total tax

receipts for the current financial year. Tamil

Nadu also has the dubious distinction of

having the highest number of

homeless, about 7.3% of the

total homeless population in

the country. Chennai has

75% of them, according to

a study conducted by the

NGO, Indian Community

Welfare Organisation.

The numbers are higher

in places like Parrys,

Royapuram, Basin Bridge

and Wall Tax Road. As

per the housing ministry’s

figures, about 88.14% (21.78 million) of the

housing demand is among the economically

weaker sections (EWS), 11.7% (28.89

million) among the low income groups and

the balance 0.16% (0.4 million) among the

middle and high income groups.

In Tamil Nadu the state government has set

an agenda of providing pucca houses to all in

the next five years. “But this is hardly anything

compared to the total housing demand in

cities here. Chennai alone needs about

2.7 lakh houses for the EWS. Government

needs to look at public-private partnership

for fulfilling this demand. The government

should unlock its land parcels for housing

development and engage private builders,”

said T Chitty Babu, president, Tamil Nadu

chapter of the CREDAI.

weekly Newsletter on Real Estate in ChennaiChennai Realty June 2011

www.chennairealty.bizVol. 1 : Issue 7

Now in Stands - ` 30/- Chennai’s Exclusive Real Estate Magazine

TN ranks second in housing shortage

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Giving a thrust to investment in the

core infrastructure sector, the new

Tamil Nadu Government under the

Chief Ministership of Ms. J Jayalalithaa has

urged the Central Government’s support to

implement several urban and road sector

infrastructure projects in Tamil Nadu.

Foremost among them is the implementation of

an ambitious monorail project at an investment of

Rs 16,650-crore. In the first phase, the monorail

will cover 111 km and is to be completed in the

next two years at a rough cost Rs 150 crore/km.

It is a capital intensive but environment friendly

project, which the Centre could support under

the National Urban Transport Policy. This will

be extended in stages to 300 km and integrated

with the existing transportation systems.

Ms Jayalalithaa has also requested that the

Centre expedite the process of getting Japan

International Cooperation Agency assistance for

the Rs 1,075-crore second stage of the Chennai

Outer Ring Road project. The first phase of Rs

1,081 crore is now under implementation.

To strengthen urban infrastructure, the State

needs over Rs 20,000 crore over the next five

years to cover water supply, drainage, waste

disposal and road infrastructure. The State

Government estimates that Rs 9,500 crore will

be needed to revamp and augment waste water

supply in the urban local bodies; Rs 5,700 crore

to renovate about 18,000 km of the 39,500 km

urban roads; Rs 3,000 crore for solid waste

management with scientific landfills; Rs 1,100

crore for sewer networks; and Rs 700 crore for

new Urban Health Centres.

New Tamil Nadu Government to focus on infrastructure

Editor’s NoteLast week saw the RBI increasing the base rate for the 10th time since March 2010 to 7.5 percent. The rationale behind this move was to control high inflation which stood at 8.37 percent. There seems to be a short term myopic view trying to control the expense side of things rather than addressing production and supply side issues. Banks are likely to increase their lending rates for their home, auto and personal loans correspondingly which would result in the customer shelving more out of their pockets in the next few months. Housing prices may rise by 5-10 percent in the next 3-6 months as the cost of funds for developers is expected to increase. This will also slow down the demand for housing as customers are likely to postpone their purchases.

In this week’s newsletter, we take a look at the state of housing affairs in Tamil Nadu with the state being ranked second in the country for shortage of housing. While this could be interpreted as an opportunity for the real estate promoters, it must be kept in mind that most of the demand is for low budget housing within a budget of Rs.20-25 lakhs. The new Tamil Nadu government’s willingness to focus on the core area of infrastructure is a welcome change as compared to their previous two terms. Large scale investments would serve to generate jobs and create wealth resulting in overall growth of the state and its citizens. Take a look at our coverage on the status of PE investment in India across various sectors in the first half of the year followed by our regular round up of interesting news from the real estate sector.

Keep an eye for our forthcoming edition of Chennai Realty, wherein we plan to cover key topics like Property Joint Ventures, Service Tax, Vaasthu for kitchen, City’s Top Project update and City real estate pricing sum up. Do give us your feedback and suggestions which will help us improve our standards both in terms of quality and content.

Happy Reading!Kishore KumarEditorChennai Realty.biz

India Housing Shortage (in million units)

All India 24.71

Maharashtra 3.72

Tamil Nadu 2.82

Uttar Pradesh 2.38

West Bengal 2.04

Andhra Pradesh 1.95

Gujarat 1.66

Karnataka 1.63

Madhya 1.29

Delhi 1.13

Rajasthan 1

Kerala 0.76

Market Update

Weekly Wealth Monitor

Chennai Realty

Events Calendar

Composites India Expo 2011 Date : 17 - 19 June 2011

Chennai Trade Centre, Chennai

Luxury Homes 20117 - 9 July 2011

Chennai Trade Center, Chennai

Interior Exterior Expo 2011June 23-26, 2011

Chennai Trade Centre, Chennai

-15.73

-41.21

27.54

15.2

16.7

-60 -40 -20 0 20 40

CoNSTRuCTIoN

REALTy

bANKING

INFoTECH

RETAIL

Last Year

Last week

An inter-ministerial group headed by cabinet secretary KM Chandrasekhar has cleared a Tamil Nadu government

proposal to set up a petroleum, chemicals and petrochemicals investment region (PCPIR) to attract Rs 1,00,000 crore in investment. The centre has directed the state government to come up with phased investment on support infrastructure, including rail, air and sea connectivity shortly. Tamil Nadu will set up the region over 25,683 hectares across Cuddalore and Nagapattinam districts in the state. Of this, 40 per cent of the land would be for processing and the remaining would be earmarked for non-processing activities, said a senior government official privy to the development.

Nagarjuna Oil Corporation (NOCL) is the anchor investor for the region. NOCL is a joint venture between Tamil Nadu Industrial Development Corporation (TIDCO) and Nagarjuna Fertilisers and Chemicals (NFCL). The joint venture is setting up a refinery project in the region with a capacity of six million tonnes a year. NOCL has invested Rs 4,500 crore and has projected an additional investment

of Rs 5,000 crore in the region by February 2012. It has plans to invest Rs 12,500 crore in expanding the refinery project to 15 million tonnes by 2015.

The second anchor investor in the region will be Chennai Petroleum Corporation (CPCL), which plans to establish an integrated 15 million tonnes per annum refinery and petrochemical complex. The oil ministry pointed out at the high-powered committee meeting that CPCL has been offered land by TIDCO in Raman¬athapuram, which falls outside the proposed PCPIR.

The centre has agreed to provide budgetary support of Rs 4,285 crore for st¬rengthening NH-45A, up-grading state highways and doubling and electrification of the Viluppuram-Mayiladuthurai railway line. In addition, the region will be eligible to receive Rs 660 crore through viability gap funding for a desalination and common effluent treatment plant. Meanwhile, the government has also decided to allow existing special economic zones in the region to be governed by the SEZs Act. In effect, these projects will continue to get fiscal incentives and tax concessions under the act.

The Indian Institute of Human Settlements (IIHS) - exclusively dedicated to urban and civic affairs will be set up in Bangalore at a cost of Rs 250 crore. According to Mr. Aromar Revi, a development consultant, researcher and academic, “The main campus will come up at Kengeri and will occupy 58 acres with a built-up area of roughly 0.5 million square feet. Work on planning the first phase of the campus has started. The campus is expected to set global standards for efficient, economic and sustainable design, operations and maintenance. It will aggregate and demonstrate the talents of India’s best designers, construction agencies and artisans”.

IIHS is the creation of a group of leading entrepreneurs, intellectuals and professionals including Nandan Nilekani, Shirish Patel, Rakesh Mohan, Deepak Parekh, Vijay Kelkar, Jamshyd Godrej, Deepak Satwalekar, Xerxes Desai, Nasser Munjee, Renana Jhabvala, Kishore Mariwala, Rahul Mehrotra, Pradeep Saxena and Revi.

This is expected to jump to about 36.9 million sq ft this year. Rentals have started to inch up in a few locations. Consultancy firm Cushman & Wakefield says that in the office hub of Gurgaon, for instance, rentals have grown by 5-10 percent. In Bangalore, it is up 10-15 percent, Chennai by 4-9 percent, Kolkata by 10-19 percent and Mumbai by 10-13 percent, depending on the location.

According to real estate consultancy firm Jones Lang LaSalle, the net absorption of space in 2010 was 30.5 million sq ft, up 35 percent from 19.6 million sq ft in 2009.

Tamil Nadu set to lure Rs.1,00,000 Cr InvestmentCentral panel clears mega petrochemical hub in TN

Infrastructure tops PE chart in May

22140 21870

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Last week This week Up / Down

Gold (10 gms in Rs.)

Gold (10 gms in Rs.)

22533 22600

670

5000

10000

15000

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Last week This week Up / Down

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20

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Crude (per Brl in US$)

Crude (per Brl in US$)

India’s first Urban Affairs University set up in Bangalore

Commercial rentals inching up

Chennai Silks enters construction sector

Chennai-based retail textiles major, The Chennai Silks, along with its sister company, SCM group has made a foray into construction sector by forming a new venture, Teemage Precast, and setting up a factory to manufacture precast concrete products. The plant has come up at Kangeyam near Erode and equipment has been imported from Germany and Belgium. Commercial production will begin from June, according to N. K. Nandagopal, Managing Director, Teemage Precast.

5

2

2

39

Infrastructure tops PE chart in MayIn another month that saw more than $1 billion (around R4,500 crore) in private equity/venture capital (PE/VC) investments, May accounted for

$1.14 billion of investments in Indian companies across 39 deals; around 180% increase over $408 million across 17 deals in the same period last year. The average deal size increased from $29.1 miliion to $33.6 million. 2011 has so far attracted investments worth $5.42 billion, compared with $3.53 billion

in the first five months last year. The infrastructure (including power) sector topped the investment chart, accounting for 59%, with 12 deals worth $676.4 million. The banking, financial services and insurance (BFSI) sector grabbed the second slot with five deals worth

$168.5 million. Information technology/IT enabled services (IT/ITeS) aggregated investments worth $101.2 million. Mint, in association with Four-S Services, presents a snapshot of the PE landscape in India.

The charts cover PE activity for the last month, and till date this year.

Fund-raising PE vs other modes of fundingPE outperformed the QIP and IPO markets in May. Five public issues fetched $1.06 billion. There were no QIP issues.

Two India-dedicated funds were raised in May. Renuka Ramnath-led Multiples closed its fund at $375 million, adding $125 million to the first close of $250 million in 2010.

Liquidity eventsMay saw four PE exits. Strategic exits (mergers and acquisitions, buy-back and secondary sales to other PE firms) accounted for 97.4% of total exits.

Month-wise PE activityMay witnessed PE investments worth $1.14 billion in Indian companies across 39 deals.

No. of deals

Graphics by Ahmed Raza Khan/Mint

($ mn) % share($ mn)

No. of events

Value($ mn)

IPO exits

Strategic sale

Open market

nil

IPOs PE

Sector-wise investment

The infrastructure (including power) sector topped the chart in May, accounting for 59% of investments. The BFSI and IT/ITeS sectors took the second and third spots, respectively.

Investor(s)Target

(% share)

Standard Chartered PE, Jacob Ballas and Old Lane Capital GMR Airports

Morgan Stanley Infrastructure PartnersRoad projects joint venture with Isolux Corsán Concesiones

Warburg PincusDiligent Power

Mount Kellet Capital, Wolfensohn Capital Partners, Customers Bancorp, MultiplesDhanlaxmi Bank

IFCI Venture CapitalGayatri Energy Ventures

Airports

Roads

Power

BFSI

Power

Late

SPV*

Growth

Late

Growth

Amount ($ mn)Stake (%)

*SPV: Special purpose vehiclena: not available

QIP: Qualified institutional placementIPO: Initial public offering

SectorStage

Sector-wise allocation The infrastructure sector accounted for 12 deals worth $676.4 million in May, with four of the top five transactions being in the sector.

Infrastructure

BFSI

IT/ITeS

Agriculture and food

Real estate

Manufacturing

Others

1,061.71,142.8

Total2,204.5

($ mn)

No. of events

97.4%(529.2)

PE activity till date (year-on-year)

Jan-May 2010 Jan-May 2011

The first five months of 2011 have attracted investments worth $5.42 billion, compared with $3.53 billion in the same period last year.

PE investments ($ mn)

No. of deals

Investment ($ mn) No. of deals

Major investorsThe top five transactions accounted for around 59% of total PE investments in May. In the largest deal, GMR Airports raised $200 million from Standard Chartered PE, Jacob Ballas and Old Lane Capital.

59.2%

3.6%

Infrastructure

Manufacturing

Food

4.4%

5%

BFSI14.7%

Others

3,531.6 5,417.1

130

164

1,111.1 583.8

January 2011 February March April May

1,524.2 1,055.2 1,142.8

2.6%(14)

200

200

150

64

57

na

50

na

19.6

na

12

5

8

4

2

2

6

4.2%Real estate

28 24 37 36 39

676.4

168.5

101.2

57.3

47.9

41.5

50.0

8.9%IT/ITeS

125

Multiples Alternate Asset Management

Avendus PE

50

In another month that saw more than $1 billion (around R4,500 crore) in private equity/venture capital (PE/VC) investments, May accounted for $1.14 billion of investments in Indian companies across 39 deals; around 180% increase over $408 million across 17 deals in the same period last year.

The average deal size increased from $29.1 million to $33.6 million. 2011 has so far attracted investments worth $5.42 billion, compared with $3.53 billion in the first five months last year. The infrastructure (including power) sector topped the investment chart, accounting for 59%, with 12 deals worth $676.4 million. The banking, financial services and insurance (BFSI) sector grabbed the second slot with five deals worth $168.5 million. Information technology/IT enabled services (IT/ITeS) aggregated investments worth $101.2 million.

2011 has so far attracted investments worth $5.42 billion, compared with $3.53 billion in the first five months last year

Chennai Realty

LoTuS MANoR

Acchuthan Builders has launched Lotus Manor, a high end apartment project at South Avenue, Thiruvanmiyur. Lotus Manor will offer sixty premium 3-BHK apartments ranging from 1585 – 1695 sq.ft in three blocks. The unique feature of this project is that each apartment feels like an independent house with no common

walls and also Vaasthu compliant. Prices start from Rs.1.5 crore*. Amenities include power back up, indoor gym, indoor games facilities, multipurpose hall, water treatment plant and more......

Vijay Shanthi Builders, one of leading Chennai-based property developers, has

launched a residential project, Silent Valley featuring a mix of apartments and villas, at Tambaram, a south-western suburb of Chennai.

Silent Valley, will come up on 27 grounds, off Mudichur Road, an emerging residential suburb close to Tambaram. It will offer 70 flats, co¬mprising 1BHK, 2BHK and 3BHK units and 10 duplex villas. While the

apartments are priced at Rs 3,500 per sq ft, the villas come with a price tag of Rs 4,000 per sq ft and each villa has two car parks. Construction is underway and delivery will take place by Dec 2012.

SILENT VALLEy by VIJAy SHANTHI buILDERSThe company has chosen British architecture, which requires lot of manual skills to build the residential units. “While this architecture helps in saving electricity consumption by at least 20 per cent, we will use high-end Jaguar fittings in bathrooms, besides marble floorings to make it truly high-end,” said Suresh Jain, Managing Director, Jain Housing. The project also offers a clubhouse, a gym, party hall and a swimming pool, besides children’s play area. It will also have a mini-theatre, yoga hall and a place for indoor games. Each block will have a stilt plus two floors and a total of 19 blocks are being developed to accommodate the residential units as well as common amenities.

Chennai Realty

Chennai ProPerty trends

Sub MarketS average rent in May 2010( ` / sft per month)

average rent in june 2010( ` / sft per month)

CBD (Anna Salai, Nungambakkam, RK Salai,

T Nagar, Egmore, Alwarpet)

Grade A 70 - 90 70 - 100

Grade B 55 - 65 55 - 70

Off CBD (Guindy, Kiplauk, Taramani, Adyar, Anna Nagar)

Grade A 50 - 65 55 - 65

Grade B 42 - 47 45 - 50

Suburban Business District(Velachery, Perungudi, Mount Poonamallee Road)

Grade A 35 - 45 40 - 50

Grade B 30 - 40 30 - 40

Peripheral Business District (Perungalathur, Sholinganallur, Siruseri, Ambattur, GST Road)

Grade A 35 - 40 30 - 40

Grade B 25 - 35 25 - 35

CommerCial

LocationS capitaL vaLue 2 bHk ( ` / sft)

rentaL vaLue 2 bHk of 1000 sft ( ` / Month )

capitaL vaLue 1 ground of 2400 Sft ( ` Lacs )

budget preMiuM budget preMiuM average

centraL

AdyarEgmoreR A Puram

800070009000

170001000016000

160001000016000

260001500028000

250 - 350250 - 275500 - 600

nortH

Anna Nagar West ExtnKilpaukMogappair West

750080004000

10000140005500

12000160007000

180002500015000

120 - 150220 - 28080 - 100

SoutH

AdambakkamAshok NagarChromepet

500075003800

6500125004700

650090007500

90001800016000

90 - 110140 - 18080 - 100

WeSt

ArumbakkamChoolaimeduMaduravoyalPorur

6000650045003700

7000750054004200

8000800065005000

1700017000150008000

180 - 225180 - 22570 - 8055 - 60

outer

PadurSriperumbudurSingaperumal Koil

270021002000

320024002500

70005000 4500

1500070006000

25 to 3512 to 1515 to 20

residenTial

ConsTruCTion maTerial PriCe index *coMModity unit MeaSure previouS Week current Week

CEMENT Per 50 KG BAG Rs. 295/- Rs. 290/-

STEEL Non ISI 6MM / Ton Rs. 40, 000/- Rs. 40, 100/-

STEEL TMT 8MM dia / Ton Rs. 42, 250/- Rs. 42, 350/-

STEEL 10-25 MM dia / Ton Rs. 41,100/- Rs. 41,000/-

STEEL RMS / Ton Rs. 44, 500/- Rs. 44, 500/-

STEEL STIRRUPS / Ton Rs. 46, 500/- Rs. 46, 500/-

STEEL VSP/SAIL 10mm dia / Ton Rs. 46, 800/- Rs. 47, 300/-

BRICKS 1 No. Rs. 5.6/- Rs. 6/-

RIVER SAND Cubic Feet Rs. 50/- Rs. 55/-

FLY ASH Per Ton (Ennore) Rs.120/- Rs.120/-

BLUE METAL 20MM / Cubic Feet Rs. 26/- to Rs. 28/- Rs. 26/- to Rs. 29/-

BLUE METAL 40MM / Cubic Feet Rs. 24/- Rs. 24/-

QUARRY DUST 0 – 2 MM / Cubic Feet Rs. 20/- Rs. 22/-

BITUMEN GRADE 80/100 Rs. 37,100/- Rs. 39,400/-

BITUMEN GRADE 60/7O Rs. 37, 675/- Rs. 38, 590/-

* C

ourte

sy :

BA

I, C

henn

ai “Wisdom is not a product of schooling but of the

lifelong attempt to acquire it”

Albert Einsten

Knowledge is

Power

TerM Pricing6 MonThs(6 issues)

rs. 150/-

1 Year(12 issues)

rs. 275/-

2 Years(24 issues)

rs. 500/-

3 Years(36 issues)

rs. 700/-

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