C Shivakumar
Chennai:
Chennai may soon be losing out few star hotels which are likely to be converted into luxury homes as the hospitality sector has hit a low with declining occupancy and fall in business.
Chairman of Confederation of Real Estate Developers’ Associations of India (CREDAI) Tamil Nadu and Managing director of Navin Housing and Properties Pvt Ltd, R Kumar told Express that many star hotels in Chennai are being bought over by real estate tycoons as the hotel business has hit a new low.
He says many hotel owners are now opting out to sell their properties or convert it into luxury homes rather than investing or refurbishing their hotels.
Interestingly, star hotels in the city like JW Marriot, Atlantic Hotel, Breeze Hotel, Aruna Inn have been bought by real estate tycoons as they propose to bring it down to build residential projects in the same location.
But Sivaramakrishnan, head, residential services, CBRE, India feels it is not the downturn in the hotel sector but other individual issues which may have forced these hotels to go in for conversion.
Surprisingly, real estate boom has subsided in the city but real estate developers are now eying the prime lands where the hotels have been set up, says Kumar.
According to Indiaproperty.com, many developers feel funding a ready-made building rather than constructing one from scratch is a better option. JW Marriott’s new property in MRC is now all set to be revamped. City-based real estate developer, Ceebros, has attained the ready-made building at a whopping cost of Rs. 480 crore.
The sea-side view, close proximity to schools and corporate offices are a few factors that are boosting prices in this area. Apartments here can cost anywhere between INR 15,000 to 20,000 per sq ft, says Indiaproperty.com.
But Sivaramakrishnan feels such prices are astronomical in the history of Chennai. “It will be interesting to note how Chennai market will react to this prices and whether the properties would be bought at such prices,” he says. Interestingly, many question the marketability and saleability of such properties.
Kumar says many star hotels which had plans to refurbish are now exiting by selling in their properties at a good price. “They feel the land would fetch the hoteliers a better price than their business,” he says.
Interestingly, ICRA has predicted a negative growth for hotel industry during this financial year. With uncertain demand conditions and further supply additions.
Meanwhile, many real estate developers are not happy with the artificial rise in land prices and even oppose foreign direct investment in real estate.
The CREDAI chairman of Tamil Nadu says FDI in real estate has increased the land prices so much that it is difficult to have affordable homes in the city. Now affordable homes are possible only 45 km away from the city, says Kumar.
Although he advocates for FDI in infrastructure stating that the repayment in infrastructure is for a long time unlike real estate which is about cash and carry business.
He also hits out the policy which now has reduced the townships from 100 acre to mere five acres or even less than it due to the demand for land.
Interestingly, it is not only hotels but also industries that have made way for real estate developers. Kumar says many industries along the Old Mahabalipuram Road have sold their property to the real estate developers as the land prices there escalated. “The artificial rise in land prices don’t augur too well for the sector as well as common man who dreams of a home,” he says
Most of the hotels offer different features and facilities in the rooms. There are also varieties that you would get in the rooms.
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