Landmark Constructions has evolved into a diversified player with projects catering to varied market segments from affordable housing to luxury projects. It is positioning itself as a one-stop destination for residential projects in Chennai, says the company’s managing director, T. Udayakumar.
The company is looking at private equity funding to expand its project pipeline and has tied up for funds with leading investors.
At a time when most developers are looking at projects in multiple cities, Landmark’s strength is “being in one city, focussed on ideal locations” depending on the buyers’ budget. It targets city-centric, near-suburbs and well developed areas for its project, a strategy it has adopted since its inception in 1999.
As a Chennai-focussed developer what are your options to provide projects to suit a varied budget?
We have segmented our products between Rs 18-40 lakh in locations like Chromepet and Tambaram; Rs 16-32 lakh in Poonamallee; and Rs 20-60 lakh in Sholinganallur.
Landmark Constructions looks at the first peripheral circle around the city – Porur, Sholinganallur… and areas that are set to develop in the immediate future.
For luxury projects we look at more prime locations. We have projects in Gopalapuram, Palavakkam and Ashok Nagar.
In the affordable segment the target is anywhere between Rs 18 lakh and Rs 40 lakh.
What is the trend in the city?
Chennai is a strong market compared with any other city. If the government supports development with faster approvals and expediting infrastructure development, the real estate sector can support the growth of job generation and the economy. Demand is good and sales happening for the right product, right price and right location.
How about housing for those on a lower scale of affordability?
Housing for the economically weaker sections can only be on the outskirts of the city. The small, single-bedroom apartment is not a success in Chennai and is not in demand.
For instance, we are doing a 2.5-acre development in Anna Nagar. Going by the norms, 10 per cent of built-up space has to be given to housing for the Economically Weaker Section. But land prices mean houses have to be priced at about Rs 70 lakh.
At the lower end we do design apartments of two bedrooms at about 550 sq. ft. Re-development is another option to increase supply within the city.
What are your funding options?
The company has tied up for about Rs 180 crore of PE funding. This will support us to acquire land in the city, retire high cost debt and with project approvals opt for construction funding from banks. We are also looking for more deals. This is an advantage for investors and developers. Typically, PE funds expect returns of 17-18 per cent depending on the duration and construction funding is available from banks for about 13.5-15 per cent.
What are the locations you are targeting? How will you use the funds?
Primarily to bring down the high cost debt and buy land for residential projects. We are looking at Perungudi, Thiruvanmiyur and Porur where the company hopes to develop over 4-5 acres in each location.
You mentioned re-development…
We are pioneers in re-development, but it is not an easy business. We have to convince all the residents and can do it only when there is untapped FSI.
For instance in one project in Ashok Nagar in a TNHB development, there were 12 grounds with 24 apartments of about 700 sq. ft each and the apartments were a few decades old.
Today after re-development the owners have modern apartments of 1,600 sq. ft, got a cash compensation of about Rs 6 lakh each depending on the size of the apartment, and there are 40 apartments. The residents even got rental compensation for the construction period.
There are over 200 locations where such re-development is possible in prime areas of the city. In Besant Nagar, Thiruvanmiyur, Ashok Nagar, Korattur, KK Nagar and Anna Nagar. But the guideline value hike is an issue.