A total of 5.5 acres in prime real estate along Chennai's iconic Mount Road (Anna Salai) belonging to the TVS Group, is on the block. Sources close to the transaction have told CNBC-TV18 that the next fortnight could see a deal closed between TVS and a prominent developer from Bengaluru with a sizeable real estate footprint in Chennai."

Recently, reports indicated that the deal in question could be closed at a ticket price of Rs 550 to Rs 600 crore for the land parcel. Analysts believe that the estimate is accurate. "The transaction comes to Rs 6 crore per ground, which totals to Rs 550 to Rs 600 crore in total value," said the head of a well-known property consultancy firm under the condition of anonymity.

However, while some reports claimed Bengaluru-based Prestige Constructions was the buyer, another real estate consultant said there were indications that this may not be the case: "We have reason to believe it is not Prestige but another A-grade developer from Bengaluru."

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TVS Group's 5.5-acre property presently houses its Sundaram Honda sales and dealership business, which has made Mount Road its address for several years now. The property is especially significant as prominent city landmarks like Spencer Plaza, Express Avenue, the LIC Building and the 178-year-old Higginbothams bookstore are in the vicinity.

"Whichever developer ends up buying the land bank could look to build yet another iconic landmark, which in turn will attract marquee names," said Siva Krishnan, managing director, JLL Chennai, "This, in turn, could be a catalyst to drive Chennai’s commercial real estate forward."

Property could see mix of commercial & retail

Most property consultants agree that building commercial and retail space is the way forward for the developer who buys the TVS land parcel.

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"There isn't much Grade-A office space on Mount Road, so it makes sense for the developer to leverage on this demand and build a commercial space on upper floors and retail space on lower floors," said Sanjay Chugh, city head and senior vice president (Chennai) at Anarock. "The property is tailor-made retail and commercial development," he added.

Residential development on the land parcel is all but ruled out as similar attempts at building high-end luxury residential development in CBD locations within Chennai haven’t exactly been rewarding or clocking healthy sales.

In fact, there are views that retail development in excess of one lakh square feet may not be viable either, since one of Chennai's best-known malls, Express Avenue, is just around the block. CNBC-TV18 learns that the TVS Group intended to sell the property in 2019, but was unhappy with its then-valuation of Rs 480 crore.

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The transaction, on completion, will outscore similar deals in the past. In 2013, Chennai-based developers VGN bought Tata-owned 1.5 acres of land in Chennai's Nungambakkam neighbourhood for Rs 195 crore, in order to build luxury apartments.

More recently, city-based Ceebros developers bought out hotel properties like the Viceroy and Atlantic for re-development and is said to be in talks with city-based luxury hotel Crowne Plaza (owned by Adyar Gate Hotels) to buy out the property for re-development.

(Edited by : Jomy Jos Pullokaran)

First Published:Feb 9, 2022 8:11 PM IST