Revitalizing Urban Housing: CREDAI Chennai – Savills Report Advocates Government to Retrofit and Redevelop Old Buildings for Affordable Homes
~ Tamil Nadu records a shortfall of 1.25 million urban housing dwellings ~
Chennai, 30th May 2023: CREDAI Chennai's Real Estate Vision 2030 report in association with Savills that was launched recently focuses on housing including affordable, rental, warehousing, and shared assets such as student housing and senior living for the city. With a shortfall of 1.25 million urban housing dwellings in Tamil Nadu alone, the demand-supply gap of urban housing needs to drastically improve. Locations such as Poonamallee, GST, OMR, and Tamil Nadu Housing Board land parcels in Foreshore Estate can be developed as housing clusters.
Redeveloping Government assets such as dilapidated buildings and developing vacant land parcels have the potential to be built as a mix of residential, commercial, and retail real estate. Under the ARHC Scheme of the Central Government, these can be built and rented out for 25 years to urban poor and migrant workers. Decongestion of the central areas of Chennai is another high priority that the Government needs to consider. Incidentally, over 2000 acres of SEZ land is available in the State that falls within the ambit of center-sponsored ARHC schemes.
Lastly, the Central Chennai decongestion plan holds a lot of opportunities. CBD (Central Business District) like Guindy and Mount Poonamallee are the ideal destinations and can be developed on the lines of Bandra Kurla Complex in Mumbai and Cyber City, Gurugram.
A contiguous land area of 575 acres with 20 buildings and each building having a leasable area of 0.5 million square feet and a FSI of 4.0 will ensure there are 10 million square feet of Grade A office stock ready to be used.
The total land area usage pattern would be 10% commercial office space, 30% residential, retail, and manufacturing with the balance 60 percent earmarked for infrastructure, public spaces, and green areas.
"The report highlights seven key points such as Housing: Affordable Rental & Specialized Segments, Labour focused housing, redeveloping government assets, warehousing parks, plug & play industrial facilities, start-up ecosystem, and decongestion said, Mr. Sivagurunathan, President, CREDAI Chennai
Expanding on the key points, the report says, "The state is encouraging industrial projects to develop housing and hostel facilities for employees within a 5 km radius of their work, this is bound to increase the housing demand. There are over 2.2 million people already employed by over 45,000 factories in the state and the ideal locations to build this is along the 62 km ORR, North Chennai and Sriperumbudur".
The CREDAI Chennai - Savills report has further explored and focused on Seven inherently strong yet high-potential sectors filled with opportunities such as Cold Storage, Media, Gaming, Tourism, Pharmaceuticals, BFSI, and the Toy Industry. Apart from these, potential sectors such as Home Automation, Furniture, and Sports & Recreation industry are also mentioned.
"The State Government with its ambitious plans to make Chennai the ideal destination for every global major player to establish themselves here is forging ahead as is visible. The next decade is a golden opportunity for everyone to tap into. The report in association with Savills highlights in detail the seven strong sectors that the State has to offer," said Mr. Sivagurunathan, President, CREDAI Chennai.
The announcement of mega food parks at Theni, Villupuram, and Trichy and investments to the tune of Rs. 380 crores on 450 acres of land parcels, is bound to increase the state share of the cold storage facility from the < 1% to a much enviable percentage in the coming years.
"CREDAI Chennai recommends a subsidy in electrical tariffs and offers tax benefits on infrastructure creation of cold storage logistics hubs," Mr. Sivagurunathan, President, CREDAI Chennai added.
Kollywood, the moniker for the Tamil cinema industry contributed revenues to the tune of Rs. 1750 crore (approximately) or 1/3rd of the Southern Cinema Industry. Understanding and acknowledging, Chennai has a vast land bank and resources, a world-class state-of-the-art media and entertainment city in either ECR, OMR or the Mount Poonamallee Road business district can be established by the Government to boost the state as an ideal movie destination.
A comprehensive policy on the Animation, Visual Effects, Gaming, and Comics (AVGC) Industry to encourage gaming studios to develop quality content is the need of the hour. The gaming market in India is expected to touch more than 1000 million users in India by FY 2027 from the current 507 million in FY 2022 and revenues wise grow from USD 2.6 billion to USD 8.6 billion in FY 2027.
Tamil Nadu has four UNESCO World Heritage sites and was ranked No. 1 in domestic tourist arrivals in 2021 and 6th in international tourist arrivals. Suggestions have been made to develop temple towns, hill stations and the East Coast Road (ECR) stretch with marine tourism, indoor aquariums in popular malls, and amusement parks to bring in more tourists into the state.
The pharmaceutical industry saw many a pharma company exit the state from 2006-2016 unfortunately as there was no special focus by the state. Despite the state government's instrumental in setting up the first pharma park in the country lost out to other states like Andhra Pradesh & Telangana, Maharashtra, and Gujarat enjoy a mere 3.4% market share of pharma production. Here lies a tremendous potential to regain its lost momentum with special pharma parks being announced.
The Life Sciences R&D real estate sector holds tremendous potential with demand to increase from 72 million square feet in 2021 to 152 million square feet by 2030.
The state is betting heavily on the growing BFSI market with a FinTech city being developed in two phases at Nandambakkam and Kavanur in Chennai and other Tier II cities like Madurai, Trichy, and Coimbatore also. With over 400 financial businesses already established in Chennai, it still has only 6% of the office leasing activity in 2022 compared to Mumbai which enjoys a whopping 38%.
The Toy Industry is a potential Rs 700 crore market in Tamil Nadu with an employment potential of 30,000. Port cities like Chennai and Tuticorin with excellent port connectivity along with other locations like Karaikal and Vellore can be tapped for the Toy Industry to grow by leaps and bounds.
There is a strong demand for warehousing in Chennai with over 3.7 million square feet absorbed in 2022 and 74% of the demand driven by 3PL & the manufacturing sector. Not surprisingly, there is only an 8.9% minimal vacancy in the warehousing market with the potential of many warehousing parks coming along the ring road of Chennai.
As Global manufacturing facilities are being shifted to India, plug-and-play industrial facilities are now the need of the hour. SIDCO is set to launch a dedicated world-class plug-and-play facility for MSMEs in Ambattur and Guindy that will cater to these companies.
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