The Hindu : Front Page : Demand for IT buildings plummets in Chennai

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Sunday, May 04, 2008
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Demand for IT buildings plummets in Chennai

A. Srivathsan

CHENNAI: About 40 lakh square feet of dedicated IT office space worth about Rs.1,600 crore remain unused in Chennai. Many dedicated IT parks are vacant.

Worried by the recent developments, builders who have invested in these buildings have approached the Electronic Corporation of Tamil Nadu Ltd (ELCOT) seeking relaxation in norms for IT buildings.

Industry sources say representations have been made for allowing non-IT commercial uses in dedicated IT parks.

Ramesh Nair, Managing Director, Chennai, Jones Lang Lasalle Meghraj, an international real estate money management and services firm, told The Hindu that vacancy in IT buildings would increase further and touch the 60-lakh square feet mark in a few months.

He attributes this to the mismatch between supply and demand. The demand for IT space in Chennai (2008 figure) is 7 to 8 million square feet whereas the supply is about 11 to 12 million square feet. He says IT companies now prefer to move to SEZs for tax benefits. Tamil Nadu offers many incentives to promote IT-related building activity. Many builders have availed of these incentives, and there are more than 190 privately owned dedicated IT buildings in and around Chennai.

The government has stipulated that IT/ITES units should occupy 80 per cent of the built-up area in IT parks that have availed of the incentives. Such buildings should be continuously used as IT parks for five years.

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