Around five years ago, it was announced that Dasaprakash Hotel would give way to a massive residential project. And then, around two years ago, Breeze Hotel, another landmark on Poonamallee High Road, was in the news for the same reason.
These are not isolated cases. Over the last five years, there have been other instances of commercial establishments being taken up for development of residential projects.
There is a variety of reasons for this situation, but the one factor that dominates all others is that residential apartments in the downtown areas of the city sell, actually sell very well, and according to analysts, in the current economic climate, developers stand to gain more from residential projects than from commercial redevelopment of these spaces.
“Returns is the reason,” says Ajit Chordia, managing director of Olympia Group. “The rate of returns is low on rental properties and we will get stuck in exit valuations.” Asked if there is a good demand for high-end projects in the city’s centre, he says it varies from one location to another.
One of the other reasons for commercial spaces — mostly, hotels and office complexes — in downtown areas being offered for sale is that their owners see in the move a greater opportunity for expansion of their business. As these spaces fetch good prices, they can invest elsewhere in large land parcels, mostly in Greenfield areas.
“Divestment for business expansion or restructuring is the reason for such projects coming up in the core areas of the city’s business district,” explains Sanjay Chugh, national head, mandated sales and business head, Chennai, of Jones Lang LaSalle.
There is also another reason for the sale.
T. Chitty Babu, chairman and chief executive officer, Akshaya, says corporate firms exited land parcels in the city as they realised that land was not appreciating beyond a particular point.
Another reason: home buyers want to stay in areas that provide quick access to social infrastructure, including schools and colleges, hospitals, places of leisure, shopping and entertainment zones and these are found in abundance within the core areas of the city, Mr. Chugh says, adding that high-end homes range anywhere between Rs. 4 crore and Rs. 12 crore in these locations.
Mr. Babu points out that some developers, who went in for hotel projects, were reconsidering their decision and planning residential projects instead as there were far too many players in the hospitality sector in the city now.
Sanjay Jain, who has purchased a flat in a luxury project in Egmore, says he does not mind the monthly maintenance expenditure of Rs. 12,000 as his home comes complete with all amenities and more importantly, is located close to all the most sought-after places in the city.
Resource: http://www.thehindu.com
These are not isolated cases. Over the last five years, there have been other instances of commercial establishments being taken up for development of residential projects.
There is a variety of reasons for this situation, but the one factor that dominates all others is that residential apartments in the downtown areas of the city sell, actually sell very well, and according to analysts, in the current economic climate, developers stand to gain more from residential projects than from commercial redevelopment of these spaces.
“Returns is the reason,” says Ajit Chordia, managing director of Olympia Group. “The rate of returns is low on rental properties and we will get stuck in exit valuations.” Asked if there is a good demand for high-end projects in the city’s centre, he says it varies from one location to another.
One of the other reasons for commercial spaces — mostly, hotels and office complexes — in downtown areas being offered for sale is that their owners see in the move a greater opportunity for expansion of their business. As these spaces fetch good prices, they can invest elsewhere in large land parcels, mostly in Greenfield areas.
“Divestment for business expansion or restructuring is the reason for such projects coming up in the core areas of the city’s business district,” explains Sanjay Chugh, national head, mandated sales and business head, Chennai, of Jones Lang LaSalle.
There is also another reason for the sale.
T. Chitty Babu, chairman and chief executive officer, Akshaya, says corporate firms exited land parcels in the city as they realised that land was not appreciating beyond a particular point.
Another reason: home buyers want to stay in areas that provide quick access to social infrastructure, including schools and colleges, hospitals, places of leisure, shopping and entertainment zones and these are found in abundance within the core areas of the city, Mr. Chugh says, adding that high-end homes range anywhere between Rs. 4 crore and Rs. 12 crore in these locations.
Mr. Babu points out that some developers, who went in for hotel projects, were reconsidering their decision and planning residential projects instead as there were far too many players in the hospitality sector in the city now.
Sanjay Jain, who has purchased a flat in a luxury project in Egmore, says he does not mind the monthly maintenance expenditure of Rs. 12,000 as his home comes complete with all amenities and more importantly, is located close to all the most sought-after places in the city.
Resource: http://www.thehindu.com
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