Luxury apartment demand in Chennai to head north

Vijay Shanthi Builders sees Rs 1500cr demand in 3 years

Residential property developer Vijay Shanthi Builders Ltd estimates demand worth Rs 1,200-Rs 1,500 crore for premium and luxury apartments in Chennai over the next three years.

While the demand is mainly coming in from non-resident Indians (NRIs) and high networth individuals, there is also a segment of people who are looking for upgradation and planning to buy premium apartments due to rise in their income levels, according to Naresh Jain, executive director, Vijay Shanthi Builders.

The demand for luxury and premium apartments in the Rs 2 crore-plus bracket in Chennai is expected to increase tremendously with the entry of large multinational players into the city on the heels of the IT and manufacturing boom. The total demand for premium apartments in Chennai is expected to be about 6,000-7,000 over the next three years, he added.

Vijay Shanthi Builders, which has been executing premium apartment projects over the last two years, claims to have done an internal survey on the demand for premium and luxury apartments. "We find that about 1,500 Indians occupying top positions in many companies abroad, plan to come back to India over the next two years and look at property worth above Rs 2 crore," he said.

When Vijay Shanthi announced its luxurious residential apartment project called 'Patio' last month in Chennai's prime real estate area of Nungambakkam, all 15 apartments, valued at Rs 4.25 crore each, were booked on the first day.

"In the backdrop of the rising demand for premium apartments and the boom in the realty market, we are targeting a turnover of Rs 1,000 crore by 2011. To achieve this, we need to grow at 70 per cent a year and develop a 55 lakh sq ft area over the next four years," Jain said.

The Chennai-based company, listed on the Bombay Stock Exchange, reported a turnover of Rs 78 crore for 2004-05 and expects to end this fiscal with a turnover of Rs 120 crore.

Noting that the availability of land will be a major constraint in meeting the demand in the premium segment, Jain pointed out that six or seven locations in the city could cater to the demands of the premium segment. These locations include Nungambakkam, Boat Club, Raja Annamalai Puram, Chamiers Road and Perungudi.

Vijay Shanthi expects to launch residential projects valued at Rs 750 crore in the first four months of 2007. It has been funding its projects through a combination of equity, internal accruals and loans from financial institutions.

The company plans a slew of initiatives to increase margins by 10-15 per cent. It plans to execute larger projects which are expected to help reduce cost of material by buying building materials directly from the manufacturers. It plans training programmes to improve productivity and reduce wastage.

Vijay Shanthi has also drawn a plan to become a national player and diversify into areas like large townships in future.