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Real Estate Economics of Tamil Nadu

Torbit - February 04, 2024 - - 0 |

Currently, Tamil Nadu holds the distinction of being the most urbanised state in India with 48% of its population residing in urban areas according to the Census of 2011. By the year 2047, it is anticipated that 68% of Tamil Nadu’s population will be urbanised. This translates to an estimated 35 mn households residing in urban cities, surpassing the projected average for India which is estimated to be 51% according to the India Real Estate Vision 2047, Knight Frank Research. To cater to the urban households housing requirement, cities in Tamil Nadu would require 20 mn additional houses by 2047.

As of FY 2022-23, Tamil Nadu had 1.4 mn  employees registered with the EPFO (Government of India). Considering this as a proxy indicator, to reach the potential state GDP estimate of USD 2.6 tn in FY 2047-48, the formal employment in the state is estimated to rise to 19 mn. This would necessitate a requirement of 1.2 bn sq ft of office space in Tamil Nadu, which includes office requirements for public, private and multinational agencies.

The expansion of economic activities will generate employment opportunities across sectors, which in turn will generate a demand for office real estate. Already, Tamil Nadu is an attractive destination for companies across categories such as Information technology, manufacturing, Global Capability Centres (GCCs) etc to establish their workspaces in the state. Currently, the state has the most operational SEZs in the country i.e. 50 out of 270 SEZs, which include both IT and non-IT SEZs, generating vast employment opportunities.

With the groundwork laid out and projections contemplated for the state, it is pertinent to delve into specific aspects that could accelerate the growth rate or strategically influenced key vectors for the state’s advancement.

 Retail-Focused Policy For Stimulating Growth

For Tamil Nadu to realise its ambitious target of achieving a USD 1 trn economy by 2030, a strategic imperative lies in the introduction of a targeted retail-focused policy. While the state has successfully implemented sectoral policies that have catalysed growth in specific industries, a dedicated retail development policy is essential to unlock the full economic potential.

Given Tamil Nadu’s status as the textile capital of the nation, a well-crafted retail policy can harness this strength, creating a symbiotic relationship that propels both the retail sector and the state’s economic landscape forward. Such a policy would not only stimulate economic growth by fostering employment opportunities and encouraging entrepreneurship but also contribute significantly to achieving the broader economic milestones set for Tamil Nadu.

Infrastructure & Housing Development 

Infrastructure development is a pivotal enabler for economic growth, connectivity, and overall liveability. While the Tamil Nadu government has made substantial investments in ongoing and upcoming projects, there are specific measures that can further enhance the existing infrastructure- Regular Debottlenecking of Ports, Regular Debottlenecking of Airports, Focus on Enhancing Stormwater Infrastructure Implementation across Tamil Nadu and smart urban planning. Given the geographical diversity of Tamil Nadu, with varying climatic conditions, there is a need to emphasize the enhancement of stormwater infrastructure. This involves the construction and maintenance of systems to manage rainwater, preventing flooding and waterlogging during heavy rainfall. Effective stormwater infrastructure contributes to disaster resilience and overall urban planning.

As part of the Centre’s  Smart Cities Mission, twelve cities in Tamil Nadu have been designated for transformation into smart cities. These cities include Chennai, Coimbatore, Dindigul, Erode, Madurai, Salem, Thanjavur, Thoothukudi, Tiruchirapalli, Tirunelveli, Tiruppur, and Vellore. However, it is an ongoing process that necessitates consistent updates and revisions to align with the evolving dynamics of both the city and its region

Tourism  & Hospitality Promotion

Tamil Nadu, known for its rich cultural heritage and varied landscapes, possesses considerable tourism potential.  While the recent Tamil Nadu Tourism Policy 2023 is a commendable initiative, incorporating global best practices  and taking strategic initiatives , can help boost tourism.These strategic initiatives include influencer marketing, upgrading of infrastructure, promoting ease of doing business and development of hotels – luxury hotels in tourist hotspots , branded hotels in industrial cities for meetings, incentives, conferences and exhibitions (MICE). Tamil Nadu has the potential to attract approximately 4.96 million tourists by the year 2047. This potential can be tapped by well-devised strategies and collaborative efforts , boosting real estate development

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