2 Chennai e-auctions frozen

RANE (Madras), a leading auto component manufacturer, has put on hold its move to dispose of its prime property in Chennai through an e-auction. Asiatic Oxygen, which also wanted to adopt the same route for its property in an industrial suburb, has now decided to develop the property on its own. Both these companies had sometime back mandated international property consultants C B Richard Ellis to conduct the e-auction.

Rane (Madras) offered to sell 26.25 grounds (63,162 sq ft) of its prime property, situated on the Velachery Main Road, a fast growing hub. Likewise, Asiatic Oxygen also wanted to dispose of its 6.45 acre (2.81 lakh sq ft) vacant plot on MTH Road in Padi, an industrial suburb.CB Richard Ellis (CBRE), which prepared the ground for the e-auction, was expecting the process to be completed by April-end of mid-May 2007. ‘‘While Rane (Madras) wanted to wait for some more time, Asiatic Oxygen has indicated that they wanted to develop the property on their own,’’ official sources in CBRE told.

Property sources had expected the Velachery plot to fetch anywhere upwards of Rs 1.5 crore per ground (2,400 sq ft). The Padi plot was estimated to fetch about Rs 70 lakh-Rs 75 lakh per ground. In fact, industry sources had then termed the move as an attempt by corporates to unlock the hidden values in at least part of their land holdings since commercial property values were at its highest in Chennai. With corporates now hesitating, does this indicate a slowdown? ‘‘There is no slowdown as such, but there is resistance on what and how much to pay for, when it comes to land,’’ Mr Sanjay Chugh, vice- president (transactions management services), Trammell Crow Meghraj, told.

Mr Sanjay attributed this to end-users putting up huge resistance to the currently quoted rates. Hence, developers also have to rethink on whether it is viable to buy property at the present indicated prices. ‘‘Normally developers pass on the cost to the end-users, who are individuals in the case of residential space, and corporates in the case of commercial space,’’ he said. Further, the market is also seeing increased supply, which in turn offers various options to the end-users. ‘‘This is being witnessed in both residential as well as commercial space, especially on the IT space,’’ he added.