Chennai realty projects in limbo

Your dream home in Chennai could be in jeopardy. The city's real estate developers are struggling to get clearance for projects totaling almost 50 million square feet.

 

A mall in Chennai has been delayed for over a year. It's not just shopping centers; almost 90% of the total construction in the city has been in limbo in spite of the projects being announced a year ago. The reason is that the Chennai Metropolitan Development Authority, the governing body for approvals, has been delaying the files for well over a year.

 

Chitti Babu of Confederation of Real Estate Developers Association said that the project approvals were delayed by 12 to 18 months and without approval the investments on the land are very high. With the growing interest rates all the builders are finding it difficult to manage

 

The situation is worse in the IT space.  According to the IT policy in Tamil Nadu, builders do not need an approval to construct the building but they need one to start operations. This has led to a large number of newly constructed buildings to lie vacant.

 

Ramesh Nair,Jones Lang Lasalle Meghraj said, "Most projects today are partly funded by private equity funds and private equity funds are looking at returns in 4-5 years. So, if the project gets delayed by more than a certain period of time the return obviously gets a hit."

 

This is true for developers like DLF. Their housing projects were a sell-out in Chennai. But the company has not even enchased its cheques as their project is stuck due to lack of approvals. The CMDA officials were not available for comment.

 

Almost all the real estate developers in Chennai are not starting off their projects because they don't have approval in hand. And if this delay continues, the much talked about real estate boom of the city might just remain in the papers.
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