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IT SEZs results 35 % rise in land rises

Posted by Ramoo on March 4, 2007

http://economictimes.indiatimes.com/Magazines/The_…

RAJA AWASTHI & ANURADHA HIMATSINGKA

TIMES NEWS NETWORK[ SUNDAY, MARCH 04, 2007 12:00:00 AM]

It’s a real(ty) tale with a virtual plot. Even as real estate prices across the country have seen a southward dip in the last four to six months, land prices in and around IT and ITeS special economic zones (SEZ) are bucking the trend. In fact, this segment is now calling the shots and the big rush for IT SEZ projects across the country has resulted in a 25-35% rise in land prices in the past one year.
For those still waiting to tune into the SEZ story, formal approvals were given for 148 IT SEZs and in-principle approvals to about 75 such zones. And among the 63 SEZs notified so far, as many as 36 are in IT and ITeS sector. In Andhra Pradesh, for example, out of 14 SEZs notified so far, nine are for IT and ITeS projects.
In Karnataka, eight out of 11 are in this sector whereas in Tamil Nadu, it’s seven out of nine. Among the notified SEZs, only two happen to be in Madhya Pradesh, but both are in the IT sector. It is estimated that more than 300 such SEZs are in the pipeline in different cities around the country.
Explaining the reasons behind Realtors looking at development of IT-SEZ projects, P S Group director Pradip Kumar Chopra says, “Since real estate developers have the expertise and competence to undertake such large format developments, it makes business sense for them to undertake these developments as well.”
Rohtas Goel, CMD, Omaxe Group, feels that the IT/ITeS companies do not have the knowledge base or the expertise to undertake such developments. “These include amenities such as clubs, multiplexes, schools, food court, shopping malls, restaurants, residential-cum-commercial complex as well as an intelligent building, which only big and organised players can provide,” he says.
One reason for the sudden rush of activity in IT SEZs is that regulations like Urban Land Ceiling Act as well as land conversion rules are not applicable to any IT SEZ development. Again, the large and growing pool of skilled professionals has been a key driver of the rapid growth in the IT-ITeS sector. According to Nasscom, India has the largest pool of suitable offshore talent, accounting for 28% of the total suitable pool across all offshore destinations. It is unlikely that India will face a shortage of suitable talent pool for IT-ITeS in the future.
Even if one takes the opportunity cost, national statistics available with developers indicate that agriculture on one acre of land supports four people for nine months. Instant back-of-the-envelope calculations indicate 2.5 FSI means construction of over one lakh sq ft of IT space spread over one acre of land and can house more than 1,000 IT workers. It is also said every IT worker creates four additional jobs down the line, including some for caterers, drivers and support service

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