Coimbatore’s pricey realty
As the textile city recovers from the economic slowdown, there are renewed initiatives by builders to tap the higher end of the market segment.
But the problem they face is the high land cost in premium localities in the city and the low FSI limits and the substantial open space builders opting for multi-storey apartments have to provide, which in turn pushes up the cost further.
Apart from improving the infrastructure facilities within the city, a way out to deal with the high cost of investment in real-estate is to increase the FSI for multi-storey apartments so that the prices in prime localities could ease.
In an interview to Business Line, Mr Akshay Khanna, Joint Managing Director, Foundation One Infrastructures Pvt Ltd, Coimbatore, which has come out with apartment projects in the upmarket R. S. Puram area in the city, felt that that the premium segment was not hit “due to the absence of speculators here and if at all it was affected it was owing to some very optimistic pricing by builders”.
Price correction
He said there has been a significant price correction in select areas in land and built-up spaces over the past year. But Coimbatore was always a “premium reality destination” and this was so due to the large home grown businesses and their large land banks in the city, which were responsible for a faster recovery.
On the common perception that the realty prices in the city were priced higher than even in cities such as Bangalore, he blamed it on the high cost of construction because of high material and labour costs.
He also reasoned that the builders in Coimbatore offered better quality and specifications and “features considered standard here are packaged as premium in other cities”.
While there is a high pitch for affordable housing, in Coimbatore this may be hard to come by within the city limits due to high land cost. Mr Khanna said within the city limits, land would constitute about 50-60 per cent of the project cost whereas if the projects are located outside the city, land would form about 10-15 per cent of the cost of construction.
He said the affordable price band would be between Rs 25 and Rs 40 lakh. But this would be possible only outside city limits owing to lower land costs.
There was definitely a sizeable market for affordable housing in Coimbatore but Foundation One would continue to cater to the luxury segment “as that’s where our propensity and expertise would be well appreciated”.
Review the rules
On whether the Government should review the FSI rules in the city to permit more apartments to be built in the same plot to bring the overall prices down, he said “definitely yes”. It would make a big difference to projects within city limits as the land cost here contributes to half the project cost.
He said that a 0.50 FSI increase will directly lead to a minimum 15 per cent reduction in cost.
The Government should also notify more locations for high-rise construction (multi-storey buildings having 10 floors) as that would translate into larger setbacks and more open spaces in developments.
Improve infrastructure
Mr Khanna said apart from cost reduction that could be higher in premium localities, if the FSI goes up from 2.5 to 3, there could be more privacy, better ventilation and lighting because the space between buildings would be more.
He conceded that the city’s infrastructure will have to be beefed up by providing better sewage and drainage facilities, water supply and, most importantly, better traffic management. This would attract more investors, especially NRIs.
Within Coimbatore city limits, apartments in the price range of Rs 50-60 lakh get good enquiries. Despite more number of apartments being built due to higher FSI, the market could absorb them.
Source:http://www.thehindubusinessline.com/iw/2010/03/07/stories/2010030752211500.htm
Filed under: Builders/ Developers, Coimbatore, New projects Tagged: Real Estate in Coimbatore 
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