Net absorption totalled 1.8 million sq.ft in the first two quarters of 2010. This is a growth of over 38 per cent compared to the first two quarters of 2009 which saw an absorption of only 1.3 million sq.ft. This increase is primarily due to the demand arising from companies expanding and upgrading to better quality premises. Grade A office rentals levelled out for two consecutive quarters, suggesting that the market is at the bottom of the cycle. The first two quarters of 2010 saw increased market activity, although due to high vacancy levels, rentals remained stable.

The sluggish leasing, uncertainty and falling rentals seen in 2009 have been replaced by a more stable office market. Many buildings with significant vacancies recorded improved occupancy rates. The office vacancy rate increased to 28 per cent marking nine consecutive quarters of increased vacancy. Total stock in the market stands currently at 38 million sq.ft., with 11 million sq.ft. of vacant space.

Major transactions included TCS e-serve, Igate, CTS and IBM expanding in DLF IT SEZ, Tata Teleservices buying space in Prince Infocity 2, Reliance Communications leasing space in India Land Tech Park, Nokia Siemens Network leasing space in Pacifica Tech Park, Neptune and Force 10 leasing space in Olympia Tech Park, Franklin Templeton leasing space in RMZ Millenia, Iopex leasing space in Ambit IT Park and Hapag Lloyd and Amazon leasing space in S P Infocity.

The self-correction phase has started with developers slowing down construction and changing usage of their office projects. IT Park developers who offered aggressive terms such as lower deposits and more rent free periods were able to attract prospective tenants. With rentals having corrected by 20 per cent to 30 per cent in most micromarkets from the peak seen in first quarter 2008, many corporates and IT/ITES companies are using this opportunity to

consolidate or relocate to better quality buildings at lower rentals or sale values. This window of opportunity for corporate occupiers is likely to be extended till end of 2010.

The yield levels stabilized at 10.5 per cent to 11.5 per cent.

The overall outlook is positive for the next two quarters and should see rentals further stabilising across micromarkets.

A continuing improvement in the economy suggests that demand for office space will increase in the next 12 months, but the huge vacancy will keep prices in check. Leasing is expected to see an upward trend in the next two quarters with both enquiry levels and transaction velocity picking up. The absorption for office space in Chennai in 2010 is expected to be around 3.5 million sq.ft.

Demand for SEZs

The stability in rents and low operating costs should help Chennai regain its position as one of the most preferred IT destinations in India. The demand for SEZs is expected to go up considerably in the next three quarters given the uncertainties arising out of the implementation of the Direct Tax Code. Major IT SEZs such as DLF IT SEZ and Tata Realty’s Ramanujam IT SEZ in

Taramani are expected to see significant interest from occupiers.

The cost of project finance has increased dramatically, so there won’t be much speculative office development happening in the near future. Until the gap between buyer and seller expectations is narrowed, sales is not expected to pick up. Prominent new buildings due to be completed in the next six months include ASV Chandilya (500,000 sq. ft), TVH Agnitio Park (600,000 sq.ft.), Ascendas Phase 3 (740,000 sq.ft.) and Prince Infocity 2 (770,000 sq.ft.).

The State government needs to send out positive signals by marketing Chennai more aggressively across the world as a low cost outsourcing and manufacturing destination.

Although it is still early to say if the market is seeing a full fledged rebound, it definitely looks like a market recovery in terms of demand as developers and real estate consultants get busier. However, the basic problems such as high vacancy, low rent and low liquidity continue.

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A few restrictions on constructions of buildings close to roads have been relaxed indicating that builders will revive some of their stalled projects as well as launch new ones in the city. The revisions have been in the access width for high-rise buildings, which normally is more than 15 metres from the ground (or over four floors).

The required access width of roads to multi-storey buildings, both residential and commercial, in the past was only five metres. But it was amended based on number of the units — a building with 25 flats should have a minimum access width of seven metres; 50 flats, nine metres; 75 flats, 12 metres; and 100 units or more, 15 metres.

Now the access width has been reduced on all categories and the total space of the buildings, whether small, medium or industrial, will also be considered.

The parking areas have also been reduced considerably by 15-30 per cent. “The revised rules are quite reasonable enabling the builders to go ahead with projects,” says M.A Mehaboob, secretary, Confederation of Real Estate Developers Associations of India (CREDAI), Kozhikode chapter.

A parking lot for two flats each below 100 sq.m and one for each unit above 100 sq.m is acceptable. Earlier, the rule insisted on having two parking lots, one for guest parking, for any single unit in an apartment.

Another is concerning the digging of ground for construction of basements. The amended rule maintained that a builder should obtain a no-objection certificate (NOC) from the neighbour if the depth is 1.5 metres or more or the measurement exceeds the length from the boundary wall.

Mr. Mehaboob says the rule of getting an NOC for digging purpose has been dropped and instead a committee constituted by the Corporation or civic body will look into complaints, if any.

However, a new provision has been brought in regarding the construction of a dedicated road inside the premises of high-rise apartments for fire tenders. The rule, applicable for commercial and housing buildings, has to be enforced even if a public road exists. Besides at least five metres should be left vacant on all sides of the high-rise buildings.

FAR

The Floor Area Ratio (FAR) has been left unchanged (If the floor area of a house is 2,000 sq.ft and land area is 3,000 sq.ft, FAR is 0.66).

The new rule says that builders can increase the FAR only up to 2.75, after remitting an additional fee. It will be Rs.500 per square metre for FAR between 1.5 and 2, and Rs.1,000 per square metre for between 2 and 2.75. Earlier, FAR for residential buildings was 3, giving property developers a wide option in planning buildings.

The coverage of high-rise apartments has also been considerably reduced.

Only 60 per cent of the land available should be covered by buildings having six to 50 units. Only 55 per cent of the land can be used for building having units between 51 and 100; 50 per cent for buildings having 101 and 200 units. The construction should be restricted to 45 per cent for apartments having 200 units and above.

Builders say that overall the new rules will support the construction industry but only to a limited extent as the amended FAR has been left untouched.

Several new projects in the city and the suburbs have been put on hold following the new rules. “The concept of affordable housing will only remain on paper if the government does not further revise the FAR rules, ” Mr. Mehaboob says.

Already builders are thinking of increasing the rates by Rs.250-500 per square foot from the existing rates. The new rule will increase expenditure for builders.

Even so builders can rejoice as the government has reduced the stamp duty. The effective rate of stamp duty, surcharge and registration fee in Corporation areas is now 11 per cent; in municipality, township and cantonment areas to 10 per cent; and in grama panchayat areas to 9 per cent.

A further reduction in stamp duty has been provided for environment-friendly housing projects.
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He says that according to reports, the population in cities will grow by 60 per cent by 2030.

In five States, the urban population will be larger than in rural areas. By 2030, an estimated 70 per cent of the country’s GDP will come from cities. In such a scenario, infrastructure is hugely important and if it is not addressed, there would be a gridlock. Hence, “greater focus is needed on infrastructure.”

In India, unlike in developed countries, real estate is not part of infrastructure development, which includes roads, power and water.

Affordable housing, play areas and institutions were also real estate-related infrastructure.

Typically, in Indian cities, infrastructure comes after development and thus pushes the prices up in those areas. Those who are unable to afford the cost, had to look to areas with less infrastructure where prices were lower.

In States such as Maharashtra and Rajasthan, developers are encouraged to go in for townships that include infrastructure. On demand in the real estate sector, Mr. Gera says there was a slowdown about a year ago. Real estate came to a standstill in terms of sales and prices did come down by 10 per cent to 40 per cent. Prices had not returned to the earlier levels yet. They have started moving up. Demand for residential units is buoyant in most places.

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The firms have been told to submit expressions of interest, along with the technical and the commercial bids. The project, together with those in Thiruvananthapuaram and other locations, is expected to take the board’s growth into a new direction.

A. Rahmatulla, Chairman of the board, told The Hindu that the valuation of the bids would be completed in about a fortnight’s time. The project would come up on 17.9 acres (one acre = 0.4 hectare) of land under a joint venture or a public-private partnership through a special purpose vehicle.

Feasibility study

The consultant will prepare a techno-commercial feasibility study for the development and the commercial exploitation of the property. The board expects an upfront fee of at least Rs.260 crore and a minimum investment of Rs.1,000 crore.

The consultant is expected to do a market study and a demand assessment, prepare a conceptual design conforming to the rules and regulations, form the special purpose vehicle and select development partners through an international competitive bidding.

Mr. Rahmatulla denied the allegation that the project would harm the environs of the Mangalavanam bird sanctuary, saying the property is further away from the sanctuary than many other high-rise buildings that had come up in its proximity.

The board, he said, has made it amply clear in the call for expression of interest that the developer should consider the ecological aspects of the project as a priority.

The invitation for expression of interest said: “The development shall be with utmost consideration for the ecology of the Mangalavanam Bird Sanctuary.”

The board has said that there are several high-rise buildings, many with more than 10 storeys, in the vicinity of Mangalavanam and objecting to the board’s project alone sounds harsh.

Mr. Rahmatulla said the work on the project would begin only after the mandatory clearances were obtained.

M.K. Prasad, environmentalist and former president of the Kerala Sastra Sahitya Parishad, has said that the project will be detrimental to Mangalavanam, considered the lungs of Kochi.

The combine of trade unions at the board has said that the board is aware of the concerns expressed in the media and the ecological aspects of the project will be considered.

In a press statement, the trade union leaders alleged that vested interests might be behind spreading unfounded concerns over the project.

They drew attention to the board’s services in providing affordable houses to the poor. However, the board had run into financial difficulties for various reasons, such as the recent writing off of the dues. Strengthening of the board was imperative to meet the housing requirements of the economically weaker sections.

With this view, they said, the State government, in the budget for 2009-10, proposed a project on the Marine Drive property and such other lands. Sufficient thought has already gone into the ecological aspects.

The project is among the several envisaged by the board, which is looking to revive its fortunes.

The proposal is for the development of around 100 acres of its land spread across the State. The projects are envisaged to bring in investments of more than Rs.2,000 crore.

The projects include those planned at Kaloor in Kochi, at Akkulam, near Thiruvananthapuram, in Kozhikode and in Thrissur.
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In the past one year or so, many of these agencies had shied away from construction projects, the reason being the downturn in the real estate sector. But, more that a decade ago, the Kerala State Housing Board and cooperative societies such as the Ko zhikode Bhavana Nirmana Sahakara Sanghom (house construction cooperative society) had made a mark in the real estate market. However, they seemed to have run out of steam with the coming of private builders.

The housing board has now drawn up a proposal on a build-share-transfer basis on 65 cents (0.25 hectares) of land at Chevarambalam in Kozhikode city. Tenders have already been invited from private builders for constructing either residential complexes or commercial-cum-residential complexes. The builders will be short-listed soon based on the bids, says Jacob John, Executive Engineer, who is the Regional Engineer in-charge.

Selection criteria

One of the basic requirements is that the builder should have designed and executed similar projects, at least three of them, within a three-year period.

The project cost is Rs.15 crore. Construction activities will be on the basis of the existing rules of local bodies. The selected builder should complete the project within a stipulated period, he says.

The company will be selected for the project based on the highest quantity of shares it offers to the board. The ownership of the project will be with the housing board, but the builder can do business, he says.

Mr. John says the proposals for build-share-transfer and private-public participation projects have also been envisaged on 12 acres (one acre = 0.4 hectare) of land near the medical college.

Foraying into the construction sector, the Calicut City Service Cooperative Bank has announced a Rs.12-crore construction project at Chalappuram. The proposed cooperative complex will be constructed at a cost of Rs.12 crore.

Four floors, with an area of around 12,000 sq ft, of the complex will be entirely utilised for the head office of the bank and a farmers’ centre, says P.A. Jayaprakash and T.M. Velayudhan, directors of the bank.

Fifty flats will be constructed on the remaining floors of the 14-storey complex. The total area will be more than 71,000 sq ft. Earlier, there was a proposal to construct office spaces and a head office. The bank is yet to work out the details of allotting the flats, Mr. Velayudan says.

The cost of the project will be recovered through sale of the apartment area, he says.

Earlier, the housing board has been spearheading big projects in Kozhikode city. Hundreds of dwelling units thus have come up in places such as Chevarambalam, East Hill, Chevayur, Bilathikulam, Chakkorathukulam and Malaparamba. The boom in the realty sector two years ago saw several allottees occupying the flats at reasonable rates. Some have brought them for investment purposes. By returning to the housing sector once again, the housing board is providing an opportunity to middle-class people to get reasonably priced homes.

The sanghom is searching for land in the city for new projects. It had constructed more than 550 units in various places in a span of 30 years, says K.M. Radhakrishnan, secretary.

The Gandhi Nagar and Vrindavan Colony were the first villa project constructed under the cooperative society in the city.

The society has constructed flats at Eranhipalam and Chintavalappu. The villas are at Chevayur, Hill View, Vidya Nagar and Field View. Devi Nagar at Bilathikulam; Ullas Nagar at Pottamal; Giri Nagar on Florican Hill Road; Netaji Nagar at Kottoli and Kairali Nagar on Florican Road are the other projects.

The housing societies target the middle class. The projects of cooperative societies get the benefit of stamp duty waiver. Many say these are affordable.

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The Chennai-based Prime Realty has come up with a villa project in a sprawling locale at Kuttiyilthazham close to the proposed Cyber Park. There will be 26 villas on 2.5 acres of land, near the proposed link road connecting the Ramanattukara-Thondayad bypass and the Meenchanda mini bypass.

“The current market scene has made builders stress new models. Buyers will not simply be tempted to choose a villa or flat with regular features,” says M. Rajeevkumar, director of the project.

Each villa has an area of approximately 2,000 sq ft, bound by a compound wall, on 5.5 cents to 8 cents of land. A tennis court, a children’s park, a playground, a swimming pool, a clubhouse, a multi-gym and a common parking area for visitors will come up on an acre of land. Round-the-clock security will be provided.

“Each villa will be fully furnished. An LCD TV will be provided. Customers can just walk into their dream home,” Mr. Rajeevkumar says.

The priced will be about Rs.50 lakh. There are different modes of payment. Either the land will be registered in the buyer’s name initially or the client will have the option to make payments in instalments during the various stages of the project, Mr. Rajeevkumar says.

“Townships have successfully gained acceptance in major metros. Earlier, housing projects were focussed in areas near hospitals and schools. Now, it is done in a better fashion with modern amenities,” he says.

Flats and villas

The Calicut Landmark Builders has launched a project at Methottuthazham Junction, near Pottammal, close to the proposed Cyber Park.

There will be 40 villas and 200 flats on six acres of land. The flats will be in two towers — one 11-storeyed and the other 17-storeyed.

The luxury villas and apartments will have amenities such as a swimming pool, a modern and well-equipped gymnasium and a walkway, says K. Arunkumar, managing director, Calicut Landmark Builders.

“The timely completion of our earlier township project near Kanndaikkal has given us the confidence to go ahead with the new township,” he says.

Townships help working couples.

“However, our target group belongs to all categories of people, including non-resident Indians and business executives. Owning a dwelling unit in a township is also a good investment,” he says.

The villas are priced at Rs.3,500 a sq ft. Mr. Arunkumar says the units can be customised according to the taste of the buyers. The minimum space is 1,800 sq ft.

Affordable concept

The apartments are based on the idea of affordable homes. These are priced at Rs.1,850 a sq ft. There will be three categories of apartments depending on the areas and the number of bedrooms. A one-bed room flat will have a space of 550 sq ft. The other two types are in the range of 615 sq ft and 940 sq ft, he says.

He says the township project on the Kannadikkal-Paroppadi route with 17 villas and 54 apartments have been a fresh concept in Kozhikode when started in 2006-end. Initially, each villa was priced at Rs.40-45 lakh and flat, Rs.1,300 a sq ft.

The area is in the fringes of the city and close to Silver Hills Public School and Silver Hills Higher Secondary School. Besides, the residents have proximity to major hospitals in the city and connectivity to the Kozhikode-Wayanad Road (National Highway 212) and the Ramanattukara-Thondayad Bypass.

The Kozhikode-based Apollo Build-Tec recently launched a villa project at Ramanattukara. There are 32 villas on 3.5 acres of land. The villas will have areas between 2,000 sq ft and 2,500 sq ft and the launching price is Rs.2,750 a sq ft.

Spring Dale Villas of ‘hi-lite’ Builders at Palazhi is another township project. The villas are priced at Rs.3,500 a sq.ft.

The area of a villa will be 2,200 sq.ft. Thirty-five of the 110 villas have so far been sold, marketing officials say.

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Why cannot the government come forward to amend the Constitution to protect the right of the citizens to have a decent shelter was the fundamental question raised in the paper, submitted at the 29th plenary session of the INTUC in the city early this week.

With the government having introduced steps such as the National Rural Employment Guarantee Programme, the National Health Insurance Scheme and compulsory primary education for all children, it is expected that the issue of housing will be addressed with the seriousness it deserves, said the paper, submitted at the session by Vithura Sasi, working president of the association.

The government cannot shy away from its responsibility to provide affordable housing for all, especially the weaker sections of society, said E. Sankaran Potty, general secretary of the association, explaining the contents of the proposed memorandum. According to figures provided by the association, there will be a shortage of 24.71 million housing units in the country in the near future.

The paper quoted a study by the Associated Chambers of Commerce and Industry of India, which said that despite the current slump, demand for housing would become “stronger and more intense” with rising income, a swelling middle class and rapid urbanisation. At present, the housing shortage is 19.4 million units in the country, of which 6.7 per cent is in rural areas.

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The government agencies seem to be not taking the initiative to tighten construction norms to ensure the safety of buildings. Usually, the buildings are designed on the Indian Standards Code, says S. Suresh, member of the Association of Structural and Geotechnical Consultants. A structural engineer need not issue a safety certificate during or after the construction.

A buyer may be under the impression that his building will stand for 100 years. An earthquake or cyclone may strike once in 50 years. Can the building which outwardly looks safe stand a wind velocity of 140 kmph or an earthquake high on the Richter scale? A structural engineer can ascertain safety only if stringent monitoring has been done at all stages of construction. Hence, he or she should be involved right from the planning stage, Mr. Suresh says. Sometimes, a structural engineer is called only at the start of the construction, as his or her role is considered only advisory.

Mr. Suresh contends that no structural engineer can certify such a building. Their work has two parts — the design and the execution. The structural drawing is important as the grid lines will be shown in that. It needs to be decided at the planning stage how many pillars are needed and where they should be erected.

Pending before the Supreme Court is a public interest litigation filed after the Gujarat earthquake on whether a structural engineer needs to certify a building.

Though structural safety is important with more and more multi-storey apartment complexes coming up to meet housing needs, the building rules in the country are yet to specify these norms. As Kochi has recently been denoted as an earthquake zone, the construction safety norms should be made stringent. An earthquake audit is likely to come up soon as part of the UNESCO programme to make buildings earthquake-resistant.
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K. Babu, MLA, moved a resolution to this effect at a meeting of the committee held at the collectorate conference hall on Saturday. M.J. Jacob, MLA, seconded the resolution. District Collector M. Beena presided.

MLAs, M.M. Monayee, and Dinesh Mani pointed out the various difficulties in the repair works and maintenance of roads in the district.

Dr. Beena said that efforts had been intensified for the construction of the approach road to the Kumbalanghi-Ezhupunna Bridge. Executive engineer, Public Works, said that maintenance works of Brahmapuram-Karimukgal Road would be undertaken shortly.Bills on works executed using the flood relief fund till June 30 had been cleared, Assistant Development Commissioner V.S. Soman said.

K.V. Beena, programme coordinator, National Rural Health Mission, said that tender procedures had been completed for the maintenance works of the taluk hospital at Muvattupuzha. Babu Paul, MLA, asked for more facilities at the hospitals in Pandappilly and Payipra.

Dr. Beena said that Rs. 13 lakh had been allotted for the community health centre at Malippuram. M.K. Purushothaman, MLA, asked about the progress of work on the health sub centre at Nayarambalam.

MLAs, Dinesh Mani and K. Babu asked to remove the shortcomings in the functioning of government hospitals at Chellanam and Palluruthy.

Mr. Monayee and Mr. Jacob wanted the maintenance works of the Muvattupuzha and Periyar Valley irrigation canals to be completed by November. Mr. Paul said that early completion of survey works in the irrigation project areas was vital for the eligible to be granted possession rights. Dr. Beena informed the meeting that approval had been received for the construction of village offices at Kalloorkkavu and Kaipattur.

T.U. Kuruvilla, MLA, brought to notice the construction of compound wall for the forest depot at Kothamangalam and the resultant traffic problems in the area.

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The project, coming up on 42 acres in Koratty in Thrissur district, is one of the fastest developed IT parks in the state, Siddhartha Bhattacharya, chief executive of Infopark Kochi, which is developing the project, told IANS.

“The 42-acre plot that was given to set up the park earlier housed the Madura Coats factory. In just seven months of taking over the land, we refurbished the 14 villas that existed over there. There is also an old club house, which has been modernised,” said Bhattacharya.

Eight villas and the club house are ready now and 10 companies which would employ 400 professionals are all set to function from here, he added.

The remaining six villas would be ready in the next few months.

“The rates here are so cheap that we offer plug and play facility at Rs.30 per square feet. Those who want semi-furnished facilities, the rate per square feet is just Rs.15,” Bhattacharya said.

The prevailing rates at the Infopark and the Thiruvananthapuram-based Technopark are around Rs.45 per square feet and upwards.

In the second phase development, the government plans to set up a 200,000-square feet IT building, incorporating the green building concept.

“This new signature IT building will be designed to provide a beautiful and inspiring atmosphere and once complete there would be more than 6,000 professionals working at the Koratty IT park,” Bhattacharya said.

In May last year, the state government announced that IT level parks would be developed under private-public partnership model in all 14 districts.

In the first phase, IT parks would come up in Kollam, Alappuzha, Thrissur, Kannur and Kasaragod districts.

Currently, IT companies operating in the state are based either at the Technopark or Infopark.

Nearly 150 companies are operating in the Technopark. They employ close to 20,000 people, while around 40 companies that employ nearly 8,000 people are in the Infopark.

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