Top 5 urgent issues to fix in Chennai

Anyone who lived in India’s bigger cities like Delhi, Mumbai and Kolkata would consider Chennai (formerly Madras) as a city with comparatively better infrastructure. But then, why should Chennai be compared and measured against other cities in India, when Chennai is the biggest producer of automobiles in India and only the second biggest city exporting IT services in India?

But these facts hide more than what they reveal. Some of the biggest infrastructure issues in Chennai were not even known to local residents. They just continue to suffer and wonder what is wrong. Though there are many, I’m trying to list top 5 infrastructure debacles that not only rob efficiency of this city, but hinder its future growth potential as well.


1. Dumping Garbage in own Garden:

Chennai has one of the most beautiful, few of the last remaining natural wet lands of south India. It’s called Pallikaranai Marsh, an ecologically sensitive, scenic area visited by 100’s of migratory birds from Europe and Asia. The area, Pallikaranai, itself could have received this name from one of its visitors, Pallid Harrier, a bird from Eastern Europe! (Pallid Harrier= Pallikaranai, though this is my guess, there is information available that Englishmen had sighted Pallid Harrier south of Guindy, which is where Pallikaranai is).




The original expanse of the marshland was 1200 acres, which acted as one of the biggest catchment reservoir area for about 250 square kilometers (Which is proved by its soil type, alluvium and granite gneiss). Thanks to the government’s innovative ‘idea’ of dumping Garbage right on the wet lands, the area of the marsh was being encroached day by day by indiscriminate garbage dumping and other activities by the corporation. What is left now is just about 100 acres of the wet land! Laying the outer ring road (Thorapakkam-Pallavaram road) right across the marshland became the master lethal stroke, enabling the corporation to dump garbage on both sides of the water body.

Impacts? Almost all of the southern suburbs are flooded during every monsoon, with no reservoir to drain the rain water! In low lying areas like Velachery, Pallikaranai, Adyar, Tiruvanmiyur, Thuraipakkam and Perungudi Industrial estate, it’s a common sight every year to see residents getting trapped in their own flooded homes frequently visited by snakes and other floating animals.



To add fuel to the fire, corporation started burning the garbage to create more space for more ‘garbage’, thus making the marsh one of the most polluted area in India! In 2006, air quality analysis, done by a U.S.-based Global Community Monitor, rated this dump yard the most poisonous area in India. With the intervention of local residents and court, the burning has stopped, but the garbage dumping goes on!
The Expert committee formed by the High court has categorically stated that

“The current dumping site on Pallikaranai marsh does not meet 13 out of 17 criteria set out for selection of a dumping site as per MSW regulation. So, Dumping should not only be immediately stopped, but whatever has been dumped so far should also be removed”

But then, who cares?

Chennai generates about 3300 Tons/day of waste. With no proper planning for waste disposal in place, there is no surprise that precious-but-easy resources are over exploited and garbage mounts are being increasingly seen everywhere and the residents are slow-poisoned by the emissions of the burning.

2. The Chennai daily Massacre:

In Chennai, more than 1,000 people die in road accidents every year! This is the highest in the country. Going by this number, we’re witnessing the equivalent of Mumbai 26/11 massacre on Chennai roads, once EVERY 2 MONTHS.



Delhi has more than double the number of vehicles as in Chennai, but still number of accidents and number of casualties is the highest in Chennai. Bangalore had the highest number of accident causalities in 2005, but since then Chennai’s roads have taken over the title of the deadliest roads. (Bangalore suffers from bumper to bumper travel condition for most part of the day, thus eliminating one of the accident-causing factors ‘speed’).

For Indian metro standards, the roads are not too narrow in Chennai, but the lack of enforcement of traffic regulations is taking it’s toll on people’s life and happiness.

3. Lack of social infrastructure in Peripheral District Areas:

With beautiful coast on the eastern side, old Industrial activities on Northern side, Chennai is left with only two directions to grow. South and West. And it has. With the government declaring ‘Old Mahabalipuram Road’ (now Rajiv Gandhi Salai) as the ‘IT Corridor’ encouraging Information Technology majors setting up their shops in the area, supplemented by a 6 lane express way, south Chennai has seen a growth unprecedented in Chennai’s history.

With the Bangalore highway declared as ‘Industrial Corridor’ with automobile and electronic companies setting up their shops, West Chennai is fast catching up.

The IT Corridor employs about 130,000 employees with all of India’s top#5 IT Companies running their shops in multiple locations along with many more companies. With the crazy number of hours IT employees spend in their offices, there is no surprise why many hate to waste their precious time in commute. Most of the IT people I had spoken to, expressed their helplessness in having to spend many hours for commute to office. Fixing the traffic bottle neck, though, is important, this is not a solution.

The answer lies in creating better social infrastructure in Peripheral Business Districts. An hour lost in the evenings is a precious hour lost spending with family! The time lost in commute is directly taken from the time people used to spend with their families or friends. This ‘recharging’ time, if missed, will have negative consequences in the long term, on employee’s productivity, morale and so happiness.

There is not even one movie theatre along the IT Corridor or GST Road or Bangalore Highway!
There is not even one shopping mall in any of those 3 important corridors! Though all these three arterial roads and nearby areas are catching up, there is more to be done to ensure that employees start ‘living’ in nearby areas with lesser time spent on commuting.


4. Perennial Water problem:

With many short-sighted attempts to resolve the water crisis, there has not been even a single holistic permanent solution attempted, implemented or even proposed for Chennai. The humongous proportion of the issue could best be understood by this one example: In April 2010, few of India’s biggest software companies in Chennai had to shut their shops down for a day due to water unavailability. Imagine the loss of productivity for a day of tens of thousands of employees!

The private tanker Lorries, who normally supply water to majority of the companies and residents wanted to show their strength to protest against Government’s insistence on following regulations related to public lakes. The water supply regulated and rationed by Chennai Metro Water is infrequent and insufficient and does not even cover 35% of Chennai Metro area.

Chennai Metro’s current water requirement is about 2000 MLD (Million Liters per Day). Water supplied by Chennai Metro Water is about 700 MLD. Remaining 1300 MLD is met by tanker Lorries and other means. That’s a whopping 65% deficit! The total reservoir capacity of all major lakes, Chembarambakkam, Poondi, Puzhal and Cholavaram, is only 11 TMCFT; which is just 3 month supply to the metro area!



Corporation is building Desalination plants to purify and supply water from the sea. But even with the newly proposed desalination capacity, it’s only 10% of the demand (200 MLD). The total deficit is 55% (1100 MLD)! On the other hand the economics of desalination leaves much to be desired. Singapore has one of the most cost efficient desalination plants which costs about Rs.25 for 1000 Liters. This is about 8 times costlier than other conventional water purification methods.
Chennai Corporation has hired a consulting company to explore and identify new water resources so that the demand can be met. Let’s hope that they come up with some credible and innovative solution.


5. The Inconvenient truth of public transportation:

I used to wonder how the public transportation is still very popular in Chennai, despite being one of the toughest experiences, both physically and mentally (A one way trip on 5E will tell you why). Thousands of people are moving into Chennai on a daily basis from many parts of India. Many of those, who need to ‘survive’, are left only with the inconvenient public transportation and one can see the desperation in the crowd.
When the National Urban Transport Policy aims at 70% usage on Public transportation, the state of public transportation in Chennai is anything but inviting.
Most of the buses and trains are overcrowded all the time. When the patronage is there, why not plan and ply more buses and trains?
Take the hassle of using an auto. The charge for a meager 2 km will be Rs.50 against the stipulated Rs.16 (and Rs.100 if you look like an IT employee or a foreigner). Autos are Chennai’s most unfriendly face. I had not met even one Chennaite or tourist who felt ‘not cheated or exploited’ by Auto.
Try to hire a call taxi for a short distance (<5km). You will get assurances that they’ll arrive on time but the taxi will never turn up. Getting around Chennai is one of the biggest issues to any tourist or expat. When the public is ready to use public transportation, it’s the responsibility of the corporation to respond quickly.

Why Sholinganallur could be the best address on OMR?

With the 'OMR dream' already in shatters due to the global economic turmoil, unoccupied office spaces along OMR, inordinate delay in completing the 6 lane highway and absolute lack of progress in constructing the much needed service lanes, there is little positive news surrounding OMR nowadays.

However, one positive news about OMR is that Sholinganallur could well become the best address on OMR. And in the long term, possibly in Chennai!

Disclaimer: I do not have any real estate interest/business in Sholinganallur neither I live in Sholinganallur.

I traveled through all the villages along OMR in the last month and observe that Sholinganallur could well attract quality residents and positive developments in times to come. I’m trying to list some of the reasons. Differences in opinion are welcome!

Being a suburb far away from the chaos of the city, encroachments are much limited in Sholinganallur. And when the OMR and ECR developments brought it closer to the city, developments outpaced encroachers in the game! However, encroachments do exist and notable ones are those on the lake off Medavakkam road and narrow lanes behind Satyam office (on the eastern side of OMR).

Wide roads criss-crossing a village is the best sign for growth in the Indian context. Velachery is one of the best examples. Of many villages along OMR, most do not have good roads cutting through them. Sholinganallur is an exception. It has good connectivity to Tambaram-GST Road, Multiple access to Chennai city, Mahabalipuram and the entertainment corridor East Coast Road (ECR)-Pondicherry. Even I saw some interior roads that are wide enough to attract quality retail space and office space. Kelambakkam could have been the other one to boast good connectivity, but due to the proposed bypass roads on OMR, the connectivity advantage would be lost for Kelambakkam.

One of the most important factors in getting quality residents is the availability of good educational institutions. Somehow, Sholinganallur has attracted many good schools in the recent years. Out of these, I like Gateway-The complete schools, as it has good infrastructure and boasts offering activity based education in addition to the multi-racial, multi-cultural exposure at an early age.

Most of the residents of Sholinganallur are happy that they have a panchayat that actually ‘listens’! I could see street lights installed across most of the approved areas. There is a massive initiative underway to lay tar road in approved layouts.
Residents are happy that metro water connection is being provided fairly quickly.

Recently Regional Transport Office (RTO) has been inaugurated on the Sholinganallur junction, near ECR Link road (Kalaignar Karunanidhi salai -KK salai), which will cater to residents of Perungudi, Thoraipakkam, Karapakkam, Sholinganallur and Semmencherry on OMR; Uthandi and Ijambakkam on East Coast Road (ECR), Medavakkam, Madipakkam, Pallikarnai, Sitlapakkam and Ottiyampakkam.

Office of the Asst Commissioner, Civil Supplies and Consumer Protection Department, has started functioning from New Kumaran Nagar, off KK salai, Sholinganallur. This will cater to the residents of villages along OMR, ECR, Medavakkam, Madipakkam, Nanganallur etc.

The most important advantage Sholinganallur has, is the density of A-class office space. One could say this is where the maximum number of professionals work per a given area, outside CBD (Central Business District). Siruseri or Taramani might beat this record once fully developed, but currently, no competition is even close to Sholinganallur.
The impact of the slowdown could be less on Sholinganallur, as Sholinganallur is building huge Special Economic Zones. Though no one will be spared by the economic meltdown, SEZs are considered to be safer than STPIs.

Sholinganallur has an interesting diverse geography with lot of A-class office spaces, good residential layouts, Various entertainment and dining options, a small stretch of beach and above all plenty of empty spaces to grow! It all leaves Sholinganallur with a fair chance of becoming the best address on OMR!

Who really made a fortune from the 2002-2007 Real estate boom?

Do you think it's the IT professionals who made merry in the 2002-2007 IT boom? Well, I would say 'Yes', if your question was about who lost their money!

Let's get a bit deeper in Chennai. When the boom happened, people started buying lands, apartments and homes both within and outside the city. But if you look at the volume of transactions that happened within the city and outside the city, suburban transactions are 400% more than the former. (For this comparison, I considered only places within 45km from Chennai, leave alone the investments that have gone into smaller cities!).

In their quest to own a piece of property, affordable IT professionals lost their money to people who owned these land pieces (of course with the help of banks). So thr IT professionals have spent their money and it's the seller who actually gained. They not only lost or spent their 'possessed' money but also their future savings!

If you argue not everyone bought land parcels, think how builders get lands for apartments?. Except very few builders who had huge land banks in suburban areas, most of the builders bought lands during 2002-2007 period. So, the builders too, have actully spent!. They made a killing profit both from top and bottom, but again, most of the builders have re-invested in land banks again in the assumption that real estate bull market would last forever!.

So, who actually gained? Now, who typically owns lands in areas 45km away from Chennai? Well, lower middle class people (no way related to IT), small business people, brokers and very few farmers. These very people are those who made a killing during the boom period. I mention 'very few farmers' because most of the farmers did not have any understanding of the boom and so gave Power of attorney to brokers, who could see both the unsuspecting farmers and affordable buyers. Pity, many of the farmers who gave PoA to brokers did not even know how much their lands were sold for!

However, this money flow itself is not unique in India. Infact, its a well known real estate phenomenon called 'Gentrification' which means 'affordable people displacing the less affordable ones'!
So, if you track the money flow, its from 'outside' clients (US, Europe, and middle east)-> Builders -> Brokers -> Small business people, lower middle class people and farmers.

Good for the society, as money spreads to all strata! But, bad for the govt, as many of these people neither pay Income tax nor register the property at the market value (thus generating huge black money)!

Count down starts- Indian Real estate all set for a crash

Indian Real estate market is all set for a crash, a spectacular one, that is! Let me give you some prominent reasons, why its going to be spectacular, the kind one has never seen before.

Who typically buys apartments, homes, land here?. Leaving out the exceptions, its mostly driven by Indian Software Engineers, who normally earn 2-3 times more than their non-IT counterparts. Engineers who join a company when they are between 21-25 years, make up the 10-15% down payment needed for buying an apartment in 2,3 years. Banks used to hunt them to give Home loans at attractive interest rates. This phenomenon gained momemtum in the 2002-2003 period when the US economy started picking up after the 9/11 attacks and then came one of the biggest booms, we've ever seen.

By 2004-2005, I knew so many bachelor IT professionals in Indian metros who owned their apartment. By the later part of 2005, so many speculators (who buy apartments, land parcels and make huge money just by flipping the properties to someone else) had already entered the Indian RE market. All of us have seen where the Indian RE prices were taken to in 2006 and 2007. Now the important question is why can't the same story happen again and why the drop is going to be spectacular?

Well, the very IT people who would or could fuel the property purchase and drive growth in the coming years are wiped out. They were not generated this year, and wont be, in 2009 and 2010 too! Look at the projected drop in IT hirings. A survey by India Today says there is a drop of 83% on the future IT hirings from the planned levels. If apt buying IT professionals are not generated in 2008 and 2009, then who will buy apartments and Independent villas in 2011, 2012, 2013?

Now to get the whole picture of it, Textile industry has planned to drop hirings by 51%, Retail by 78%- these were the very 'new age' opportunities in the recent times with the promise to create more 'wealthy' people. So, if fresh apartment buying people are in scarce, the demand will be skewed. With banks already starting to twist-arms of the construction companies, the panic selling will start. Builders will start selling apartments at whatever costs they can.

Now, add to that the entry of 'defaulted properties' which were previously bought by those who thought they could afford it. But with either job losses or price correction (that is, when the pending loan amount is bigger than the price depreciated apartment)- they will stop paying the EMI, making the banks take over the defaulted property. This process, under SARFESI act, will take between 18 months to 2 years. These apartments will come to market at an attractive price than their new counerparts, thus pulling down the prices.

We are essentially in a downward spiral, with each factor pulling down the other and getting pulled down in the process, leading to a spectacular crash. Now, what should one do in this crash?

Follow the age-old tradition of 'Saving for the rainy day'. Then wait for RE buying signals, like Rent-to-EMI ratio or rent-to-cost ratio. While experts are predicting return of bull phase in RE market by 2010, my guestimate says Indian Real estate is essentially in a bear grip that might last for a minimum of 3-4 years.