The Hindu : Tamil Nadu / Coimbatore News : An insight into real estate trends

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Sunday, Jul 05, 2009
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Tamil Nadu

Tamil Nadu - Coimbatore

An insight into real estate trends

Ramesh Nair

In the last six years, the real estate sector has gone through a curve across the country, irrespective of the asset classes. The market movement has had its impact on all stake-holders. And, Tamil Nadu is no exception. During a recent visit to the city, Ramesh Nair, Managing Director of Jones Lang LaSalle Meghraj’s (a real estate services firm with footprint in 10 cities in the country) Chennai and Hyderabad regions and Warehousing and Logistics Solutions vertical, spoke to M. Soundariya Preetha on the trends in the sector.

Real estate markets peaked in the summer of 2007 and sort of flattened out till the end of 2007. From then on, it had been a period of correction, he says. Irrespective of the asset class, market went up by about 250 per cent between 2003 and 2007. The average correction that has happened is 20 to 30 per cent, though it varies.

Tamil Nadu had not seen the high that cities such as Gurgaon witnessed when the markets peaked. Hence, the correction is also not much. In Tamil Nadu, developers are reducing the size of the units, thinking of value engineering to bring down costs and taking a cut on profit margins.

India’s economic growth will be widely spread and not restricted to a few pockets. Pro-active governments will invest in infrastructure and education to attract investments.

On the warehouses and logistics, Mr. Nair says the annual demand for warehouses in the country is 20 million to 25 million sq.ft. While the developers ask for occupiers before venturing into a project, occupiers say they want to see the building. The major challenge for the growth of warehouses is access to land bank. The area of warehouses ranges from one acre to 200 acres.

Real estate is still with local players and “Returns are there for those who want to take the risk,” he says. Currently, the country hardly has any pan India or even regional players in warehouses.

Huge demand for warehouses is coming from third party logistics and retailers. Four to five years ago office space used to be graded as A, B or C. Now, warehouses are graded on similar lines. But, the trend is towards high-end specifications in ceiling height, structure and floor loading capacity as the need for quality warehouses grows. Also, there is a need for integrated logistics services. Developers need to give different options and look at growth in these sectors, he says.

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