Whatever interpretations could be given for the recent election results, one thing is clear- the results represent people`s anger against corruption & nepotism and support for good governance.

One blessed thing for Tamil Nadu is that whichever party comes to power, developmental activities in the State continue. The degree may differ, that is all.

As recently as May 04, 2011, Mr Velmurugan, Executive Vice-Chairman, Guidance Bureau, Industries Department, Government of Tamil Nadu, had said that our state is likely to attract investment worth Rs 20,000 crore in the next six months with nearly 15 companies — many of them of the ‘Fortune 500′ list — expected to announce their plans to set up manufacturing facilities.

He further said, “Tamil Nadu was ranked third in attracting foreign direct investment. There are nearly 3,000 foreign companies, including Fortune 500 such as Ford, Hyundai, and Foxconn, operating in the State.”

“Tamil Nadu is ranked third with 93 Special Economic Zones (SEZs) of which 62 are operational. Further, 71 SEZs are in the approval stage, while 19 have got in-principle approval from the Government. There are 36 information technology SEZs in the State”, he had added.

Read the full report here…

Business Line : Industry & Economy / Economy : TN likely to attract Rs 20,000 cr investments in next 6 months

Since Chennai Zone contributes 39 per cent of the State’s GDP and accounts for 60 per cent of the country’s automotive exports, a large chunk of these investments are likely to be in and around Chennai.



One major beneficiary of such Industrial developments will be the Construction Industry.According to Mr.Cherian Varkey, the newly-elected National President of the Builders’ Association of India (BAI), the construction sector is all set for a major boost in building activities during the next five years as the Twelfth Plan period (2012 – 2017) is expected to see more than Rs. 40 lakh crore investments in developing the country’s infrastructure. Tamil Nadu, Maharashtra and Delhi were some of the States that were seeing a number of infrastructure projects. The housing requirements were huge in the country and this would be a growth area for the builders.

Read more here:

http://www.hindu.com/pp/2011/05/07/stories/2011050750110700.htm

Several challenges stare at the Industry.

Surging prices of essential raw materials such as steel, cement and sand. Couple of critical areas which the new State Government needs to concentrate are- to curb the tendency towards cartelization in the organized cement industry and to remove mafia style operators in the sand mining operations of the state. Construction costs which are high already are set to go higher.
Shortage of skilled labourers in the Industry. Traditionally Tamil labourers are known for their masonry and carpentry. Even a decade ago, the state used to have spets in tile laying. The older labourers want their wards to go for better paying jobs. Younger skilled labourers are either off to the Gulf countries and Malaysia-Singapore belt or are working in construction markets outside Tamil Nadu, where pay is better.
Migrant labourers also are dwindling in number:Construction labourers mainly come from Orissa, Bihar, West Bengal, Jharkhand and Andhra Pradesh. Most of them are unskilled. Even their arrival has now reduced. Many of them are finding work in and around their native place. The National Rural Employment Guarantee Program which is the largest and most ambitious poverty alleviation scheme to be launched in India also has reduced the number of people who take up construction work in faraway cities.
Interest rate Hike: RBI has raised the Interest rate nine times, since March 2010.Project loans which are already difficult to come by for the Construction Industry, are now going to be pretty expensive.Housing loans are going to cost a bit more
So how will it all boil down to the real estate scenario in Chennai? Since both positive and negative factors are expected to be in play for the next one year, we can expect the home market to be steady. Developments with approvals and where construction is ongoing will see sales happening. Smaller projects with assured completion also will have takers.

And if the Government gets into some serious streamlining in terms of controlling corruption, then the market confidence will surely see an upsurge, resulting in many investors and end users, venturing boldly in to the market.
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