Wednesday, March 18, 2009

SHRIRAM PROPERTIES TRIMS IT SEZ; TO ADD RESIDENTIAL SPACE

R. Balaji, Chennai
The Hindu Business Line

Shriram Properties & Infrastructure Pvt Ltd has pruned the IT and commercial space in its IT SEZ, ‘The Gateway’, to make room for a 850-apartment residential project.

M. Murali, Managing Director, Shriram Properties, said that the project has been re-jigged to add over 15 lakh sq.ft of residential space to offer the apartments, a new feature in the project.

Earlier, at the Rs 1,200-crore project road near Tambaram on NH 45, just on the outskirts of Chennai, the company had planned to set up over 52 lakh sq.ft of IT space and 8 lakh sq.ft of retail space. This has now been reconfigured as 40 lakh sq.ft of IT and 5.5 lakh sq.ft of shopping space.

More than a sign of the prevailing market conditions, the move is aimed at taking advantage of the latest changes in the city administration’s policy which allow a higher FSI (floor space index – area of built-up space allowed in a given plot of land). When ‘The Gateway’ was conceived, the developers would have been able to provide only about 1.5 FSI for residential space. However, the latest city plan provides for 2.5 FSI, which the company hopes to exploit, he said.

With the higher built-up area a residential segment in the project gives the IT space and residential zone mutual advantage, not to speak of improved cash flows to the company – residential projects mean faster delivery and speedier revenue flows while in IT infrastructure lease income is spread over the long term. The residential project would also have a captive market, as over 100,000 people are expected to be working in the SEZ.

Also, according to Murali, the location of the project holds strong advantages. In the city suburbs on the highway, there is a huge demand for developed residential space but relatively less supply. While a couple of large projects are located further down the road, Shriram Properties’ project is the closest to the City and is well linked by rail and road.

Shriram Properties plans to provide homes that would be affordable to its target segment – the average size of a unit would be 1,600 sq.ft priced at around Rs 3,500 a sq.ft. A test marketing of the project within its own client base to which it has delivered over 4,500 residential units has indicated that just one of the IT companies in the SEZ could absorb over 200 apartments in the proposed project, he said.

Shriram’s Gateway SEZ is one of the two operating IT SEZs in Chennai – the other is DLF’s – where over 13 lakh sq.ft of IT space has been completed. Shriram Properties & Infrastructure has been promoted by Shriram Properties and SUN-Apollo, a private equity firm that brings in international real estate expertise to India.

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