Ambattur emerges as real estate hot spot for IT companies

After searching for an office space in Rajiv Gandhi Salai, Alwarpet and T. Nagar, CSS Corp zeroed in on a premise at an IT Park in Ambattur where the lease rentals were half of that in the city. The global technology solution provider is one such example of companies which are looking to consolidate their city operations in Ambattur.

Proximity to residential neighbourhoods and the lower rentals are some of the factors attracting companies to set up offices in Ambattur. The lease rental for office space ranges between Rs.20 and Rs.28 per sq. ft. in Ambattur, whereas it is between Rs.65 and Rs.90 per sq. ft. in the city.

“The real estate price in Ambattur is less in comparison to other IT destinations in Chennai. That is one reason why the locality is preferred by many other sectors too,” says Balaji Meenakshisundaram, Director and Head of Facilities of CSS Corp.

Royal Bank of Scotland (RBS) has leased out 12 floors of Tower A in India Land and Properties Pvt. Ltd. Similarly, of the 22 facilities that HCL Technologies has in Chennai, six are in Ambattur.

According to A. Gopal Rathnam, Vice-President, iOPEX Technologies, BPO companies are seeing greater presence in Ambattur as they require middle-level employees, who often reside in the neighbouring localities. “Around Rajiv Gandhi Salai, there are not many middle-class residential localities. Also, you incur a lot of cost in transporting employees,” he adds.

Demand-supply gap

However, the demand for commercial space in Ambattur is not as robust as Rajiv Gandhi Salai and other popular locations for IT and ITeS firms. According to Jones Lang LaSalle Property Consultants, approximately 3.2 million sq. ft. of commercial space is vacant in Ambattur. The potential of the pocket is not yet being explored fully.

Rajiv Gandhi Salai has been having an edge over Ambattur as it has been an IT/ITeS destination since 2000-2001, it's marketed extensively by the government and companies prefer as it has a good density of IT firms. Ambattur has four to five IT parks, but pan-India developers such as RMZ Millennium, Ascendas, TRIL, SP have not announced any project in this pocket.

Sarita Hunt, Head – Markets, Jones Lang LaSalle Property Consultants, says while residential projects near a IT/ ITeS destination is important, they are not the primary reason for IT firms to choose a particular destination. Important parameters of some of the firms include proximity to other or related firms, better amenities for the employees, better connectivity, grade A office space facility and lesser travel time for their employees, she says.

“In fact, at least 20 per cent of work force from Ambattur travels to the IT corridor on work,” says Ms. Hunt. It makes more sense for companies to block space as these are grade A buildings, which are well-maintained buildings and in prime locations, she adds.

While IT and ITeS firm in Ambattur have brought in a new image to the industrial belt that has been known for its garment and auto-ancillary units, it has increased the land price. “A small-scale unit cannot think of investing in a land and starting a business in Ambattur,” says Dilip Kumbhat, Chairman, Chennai Auto Ancillary Industrial Infrastructure Upgradation Company.