Piramal’s Rs 200 crore fund to Appaswamy, a boost for city realty

Appaswamy, one of the largest developers in Chennai, has completed over 10 mn sq ft till date. It acquired this land parcel on River View Road, Kotturpuram, from the TVH Group. The company plans to develop a premium residential project with potential sales revenue totalling over Rs 1,000 crore.

Confederation of Real Estate Developers’ Association of India (Credai) TN President Ajit Chordia believes this is a clear sign that the stress in the real estate is receding. “NBFCs are fast filling the vacuum created by the reduced interest of PSU banks to commercial realty. Right price and size will make the property affordable. Logically, sizing should be the buyer’s strategy,” he adds.

Sanjay Chugh of Skylines Property Consultants too believes that right combination of size and price would determine sales in Kotturpuram. “Value and size have to be balanced out and given the connectivity of this location to all the key places in the city – be it Adyar, Mount Road or the airport, it is a good project to watch out for,” he says.

It is learnt that the apartment project will be available in the 1,500 to 1,600 sq ft range. Unlike TVH which had originally planned to build large premium luxury apartments, the strategy of Appaswamy would be different. 

Roughly one acre would make available one lakh sq ft of space that can be used for residential development. In this case, with this calculation, the usable space works out to 3.5 lakh sq ft and considering the apartment sizes, around 250 to 300 units will be possible.

Kotturpuram, per say, only now – in the last three years or so – has been in the radar of luxury market. “But the micro market it will cater to will be Adyar, RA Puram besides the Kotturpuram itself,” notes Chordia, who estimates the Rs 15000 sq ft plus apartments in this micro market to be less than 150 apartments. Not only is there very limited stock in the realty hotspot, buyers too are limited.

“Will have to wait and see as the luxury volume in Chennai is not very large. Hence, huge stock will still be a challenge,” says the realty player, who spearheads Olympia Group. In Kotturpuram, a large luxury project has been executed by the group, which claims to have sold 85 per cent of its apartments there. 

“Most projects in city particularly luxury on less than one acre sees traction of about 40 per cent sales in the first year. This trend is observed in the last three years,” Chordia says.

A structured debt model, realty players opine, make it convenient for the builders to develop the properties without the stress of accelerated principal repayment. It facilitates repayment from the project cash flow taking into account the uneven cash flow helps the project proponent greatly, he point out.

Khushru Jijina, MD, Piramal Capital and Housing Finance, said, “We are pleased to have partnered with the Appaswamy Group for this project which is situated in a preeminent location within the city of Chennai. The Appaswamy Group has a strong record of execution and delivery and we are happy to be associated with them to enable the delivery of this landmark residential development.”

He further added, “Within South India, Chennai is an important market for Piramal Capital and Housing Finance. Since inception in 2014, we have sanctioned and disbursed Rs 3,500 crores in Chennai market. With consolidation in the industry, we continue to explore strategic opportunities with partners that are focused on seamless execution, high quality developments, and timely delivery.”

Within the real estate space, Piramal Capital and Housing Finance, through its financial partnership model is uniquely capable of catering to the entire capital stack – right from early stage equity to late stage debt, construction finance, lease rental discounting, bulk buying apartments and housing finance solutions.

Ravi Appasamy, MD, Appaswamy Group, said “In Piramal, we found a deeply committed and knowledgeable partner who bring with them a rich experience in real estate along with a scale and breadth of offerings in financing. We look forward to a long-term and mutually beneficial relationship as we continue on our path towards success.”