Chennai: Despite huge investments by builders in residential projects across India, many areas in major cities are lying vacant due to lack of interest in the commercial front space,according to industry body Construction Real Estate Developers of India (CREDAI).
“While 12 million square feet is lying idle in Chennai, it will be more across the country. Many areas in Hyderabad, Bangalore and Gurgaon are lying vacant in commercial spaces,” CREDAI national vice-president Prakash Challa told the news agency.
Stating that the real estate industry saw lack of investments after the US market crash in 2007, he charged the Centre with not taking any steps to revive the industry.
“If they had taken steps immediately after the crash of the US market, the sector would not have faced this much of a problem... all developers and agencies would have been cautious”, he said.
Challa pointed out the government had in 2008 stated the housing sector was impacted badly (due to the crisis) and that for the first time CRR (Cash Reserve Ratio) was tweaked twice.
CRR is the amount of funds banks have to keep with the Reserve Bank.
Asked about any positive impact after the Government’s intervention, he said, “there are no good developments still in the commercial space front. Only limited investments are coming up.”
“If the government extends the stimulus package, it will generate employment. But if they withdraw it then there will be a serious problem. Today many buildings are sitting idle and every builder has become cautious, they dont want to commit themselves (by investments in commercial spaces)”, he said.
He said the situation is expected to improve in the next one or two-year.
Challa said Tier-II and III cities are worst hit with no major developments in the commercial sector.
However, Challa said real estate developers are investing heavily on huge properties in the residential sector.
“Particularly in the Oragadam-belt (near Chennai), many builders are doing good business. It has become the favourite area for many developers as it has many commercial establishments nearby”, he said.
He said residential projects in the sector have become a “grand success” for low income housing units. “I was told some builders have sold about 500-600 housing units in the low income category,” he said.
The success was not only due to the presence of Logistics Parks but the fact that people have also started looking at buying properties in newer areas, he said.
Oragadam and Sriperumbudur belt currently has various companies, including auto majors like Nissan Renault, Daimler India, Hyundai Motor India and consumer durable giant Samsung.
“Basically this area is only for budget homes... not for the high end ”, he said.
On the lack of proper connectivity to Chennai and other destinations from these localities, he said infrastructure would gradually be put in place as people begin to move in.
Infrastructure development would take time as many people working in far off areas commute today from the city, he said. Currently many real estate developers Arun Excello, TVH, Tata Infrastructure, MARG Properties, have real estate projects coming up in these areas.