The KMRL or Kochi Metro Rail Limited is planning to venture into the real estate market in the city. The foray into real estate by the metro agency is aimed at tapping the burgeoning number of middle-class buyers and this move should definitely infuse new life into the Kochi realty industry.
According to the Managing Director at KMRL, Elias George, real estate is definitely on the agenda for the agency and it remains confident that the best possible apartments and fittings will be provided to buyers. KMRL is eyeing revenues close to around Rs.1,000 crore from the sale of the apartments in its portfolio. KMRL has already received 18 acres of land from the Kerala Government at Kakkanad where there are the old NGO quarters. The apartments will be developed at this location.
European-esque apartments are planned by KMRL and these will be sized between 1,000 and 1,200 sq. ft. on an average. The apartments will be priced lower in comparison to what is being charged by leading real estate players according to George. He added that there will be sizeable demand for apartments since the KMRL are absolutely transparent property dealers and there is a certain brand value attached to it as well. He talked of being able to provide an apartment to a young couple for just Rs.30 lakhs without any compromises on overall sophistication and amenities. This may indicate that apartments will be sold at approximately Rs.2,500 per sq. ft. by the agency.
CREDAI spokespersons have already issued a note of caution, stating that KMRL will find it really hard to sell their apartments at these phenomenally low prices. The land cost may not be a major hindrance for the agency since the Government has provided the same. They will also get several exemptions in terms of taxes while the Government might intervene for enabling the system of pre-contracted rates. These aspects may help KMRL in selling its apartments at considerably lower prices according to CREDAI representatives.
It has also been highlighted that leading developers usually sell premium apartments in the same location at rates of close to Rs.5,000 per sq. ft. and the construction costs for these are usually between Rs.2,750 and 3,000 per sq. ft. The land cost is around Rs.1,000-1,250. There are other costs related to funding and approvals. This makes costs around Rs.4,000 per sq. ft. approximately and according to developers, it is next to impossible to lower the costs involved in constructing buildings. However, there is a possibility of lowering costs that are attached to final works like flooring, bathroom fittings, landscaping and fire and safety provisions. A 10-15% margin is usually charged by the developers. According to CREDAI sources, when all the above mentioned factors are considered, it will always be tough to sell apartments at prices lower than Rs.3,750 per sq. ft.
