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IT locale with a touch of class
Sanjiv Shankaran in Chennai |
July 29, 2005
Guindy Industrial Estate, the last landmark at the south western margin of Chennai city, is in the midst of a transformation.
Punctuating weather-beaten engineering factories are gleaming glass and concrete towers. Right through the estate there are signs that more high rises are going to replace older buildings.
The estate, which was founded in 1956, has turned in to a sought after location for the Information Technology/Information Technology Enabled Services industry. Reasons that always made the estate attractive for manufacturing companies - proximity to arterial roads and the airport - have begun to attract the services sector.
The Old Mahaballipuram Road that cuts through Chennai's southern suburbs is perhaps the most high profile IT corridor in the city. The state government has begun to convert the road in to a six lane toll highway. Within the city, however, Guindy Industrial Estate appears to be the most sought after destination.
Ramesh Nair, associate director, Corporate Solutions, Jones Lang LaSalle, said that the estate's biggest advantage was that of location. The airport is about 7 kilometres away and a couple of top end hotels are close by.
For the IT/ITES industry, struggling factories provide opportunity to acquire land. Moreover the IT/ITES industry is not hampered by zoning restrictions. Not just IT companies, even an English daily Deccan Chronicle set up its printing press and office in the estate ahead of the launch of its Chennai edition this year.
One consequence of the interest in the estate is the rise in land price. One real estate consultant said that the price of well located property has increased by almost 50 per cent over the last couple of years. It has moved up from Rs 40 lakh (Rs 4 million) to Rs 50 lakh (Rs 5 million) a ground (2,400 square feet) about two years ago to Rs 60 lakh to Rs 70 lakh (Rs 7 million) now, he added.
A spokesperson for the Khivraj group, which is developing an IT park in the estate, said that property prices in Chennai have gone up by 40 per cent to 50 per cent in the last six to eight months, while the rise in the estate was perhaps 10 per cent more than the average.
The Khivraj group's IT park, Olympia, was identified by the real estate industry as a factor that has added momentum to the change in the nature of the estate. Eveready, Khivraj and two more groups are developing a Rs 220 crore (Rs 2.2 billion) IT park that will have more than 1 million square feet when finished.
The knock on effect of the entry of IT/ITES industry is the interest shown by other services. Next to Olympia, the Empee group is building a Rs 184 crore (Rs 1.84 billion) 5-star hotel.
Nisha Purushothaman, the managing director of Empee Hotels, identified the advent of the IT/ITES industry as an important factor in the decision to build a 5-star hotel. Initially, Empee planned to build a lower category hotel, but upgraded the project because Chennai is currently short of 5-star hotels, said Purushothaman.
It's not just demand for rooms, the spending power of people in the IT/ITES industry would trigger considerable demand for the Food and Beverages section of the hotel, she added.
The impact of the activity in Guindy has not been been noticeable on any residential areas close by, said real estate consultants. They felt that the rise in the price of residential units was widespread, and not connected in a meaningful way with pockets of commercial development.
Guindy's advantage of ideal location will soon be enhanced with better infrastructure along the approach roads. But the infrastructure within is in a bad state, said real estate consultants.
The estate's potential for growth has another limitation. The spokesperson for the Khivraj group said that the estate has only small parcels of land - an acre and below - that can be opened up for development.
The result is that it could meet the needs of individual companies, and not huge projects. If Guindy Industrial Estate loses its shine for the IT/ITES industry after a while, where do they go in a big way next? Another industrial estate where larger parcels of land are available: Ambattur outside the western limit of the city.