Click to play videoChennai: If you have booked your dream home in Chennai there’s some bad news. The city's real estate developers are struggling to get clearance for projects totaling almost 50 million square feet.
The mall in Chennai has been delayed for over a year. It's not just shopping centers - almost 90 per cent of the total construction in the city has been in limbo in spite of the projects being announced a year ago.
And the reason is the Chennai metropolitan development authority - that's the governing body for approvals has been delaying the files for well over a year.
Confederation of Real Estate Developers Association member Chitti Babu says, “Project approvals are 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 lying vacant.
Ramesh Nair of Jones Lang Lasalle Meghraj says, “Most projects today are partly funded by private equity funds and private equity funds are looking at returns in 4-5 years. So if 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.
All most all the real estate developers in Chennai are not starting off their projects because they don't have approvals in hands.
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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