South In­dian real es­tate hotspots

Thanks to the bur­geon­ing IT sec­tor and a strong in­dus­trial base, cities such as Chen­nai, Ben­galuru, Kochi and Hyderabad have shown great real es­tate po­ten­tial

HT Estates - - HTESTATES - Juggy Mar­waha

Un­til only re­cently, the south In­dian real es­tate mar­ket was known as highly price sen­si­tive, with buy­ers pri­mar­ily fo­cused on the af­ford­abil­ity quo­tient. De­vel­op­ers had to adopt a strat­egy to en­tice po­ten­tial en­dusers and in­vestors by of­fer­ing their prod­ucts in the right price band.

How­ever, with more and more for­eign com­pa­nies es­tab­lish­ing their back of­fices in prime lo­ca­tions of south In­dian cities and of­fer­ing power jobs to the lo­cal pop­u­la­tions, the south In­dian econ­omy has wit­nessed rapid growth over the last few years. This has vis­i­bly re­flected on their real es­tate mar­kets, as well.

Of late, the most im­por­tant south In­dian real es­tate mar­kets - Ben­galuru, Chen­nai, Hyderabad and Kochi, have been f ar­ing very well. This dy­namic was ev­i­dent even when the na­tion was go­ing through a phase of low sen­ti­ments.

While the bur­geon­ing IT sec­tor in th­ese cities is the main rea­son be­hind the real es­tate boom, some of them also have a rapidly strength­en­ing in­dus­trial base which is fur­ther aug­ment­ing real es­tate de­mand. Res­i­den­tial prop­erty prices in Chen­nai have es­ca­lated the fastest among the cities in In­dia, wit­ness­ing an ap­pre­ci­a­tion of al­most three times of what they were in 2007. How­ever, Chen­nai still faces sup­ply con­straints in its prime lo­ca­tions in terms of new and or­gan­ised de­vel­op­ment.

Tra­di­tion­ally, buy­ers in Chen­nai were hes­i­tant to move to the sub­urbs, as the op­tions avail­able in the key pock­ets were highly priced. Sim­i­lar to south Mum­bai, Delhi and Kolkata, buy­ers in Chen­nai are par­tic­u­lar about ad­dress and pin code value. As the city is in ex­pan­sion mode with the rapid de­vel­op­ment in Chen­nai’s so­cial and phys­i­cal in­fra­struc­ture, the sub­urbs and ex­tended sub­urbs such as Velacherry, Perun­gudi and OMR belt are wit­ness­ing an Tak­ing i nto con­sid­er­a­tion the cur­rent pre­vail­ing prices, de­vel­op­ers have very lit­tle room for profit. Prop­er­ties here are value buys in all re­spects, and one can­not go wrong with buy­ing into qual­ity projects at the cur­rent price lev­els with an in­vest­ment hori­zon of three to five years. The Te­lan­gana ag­i­ta­tion was the pri­mary rea­son for the stag­na­tion of prices in Hyderabad.

While Hyderabad’s av­er­age prices may re­flect stag­na­tion, there are mul­ti­ple ex­emp­tions to this rule. A few such in­stances are Jayab­heri’s Orange County, which has seen 33% absolute ap­pre­ci­a­tion within a span of three to four years up­surge in its prop­erty prices with cor­re­spond­ing de­mand.

Ar­eas like Ayanavaram, Virugam­bakkam, Nungam­bakkam and Ashok Na­gar have recorded the max­i­mum ap­pre­ci­a­tion. With lim­ited sup­ply and few or­gan­ised de­vel­op­ers in Anna Na­gar and Kil­pauk, end-users and in­vestors are find­ing prices at­trac­tive in th­ese neigh­bour­ing ar­eas. With noted de­vel­op­ers such as Chai­tanaya, Vi­jayshanti and Ari­hant-Unitech ac­tive in th­ese ar­eas, there is a steady in­crease in de­mand.

The cen­tral business dis­trict of Chen­nai, Nungam­bakkam, has man­aged to main­tain the high­est ap­pre­ci­a­tion val­ues with only few or­gan­ised de­vel­op­ers ac­tive in the area. How­ever, with the Metro rail route pass- and Jayab­heri’s Sil­i­con County, which has al­most dou­bled in the last four years. Aparna’s Sarovar Grande has seen about 43% absolute ap­pre­ci­a­tions in the last 12-15 months.

Good projects by re­puted de­vel­op­ers have shown ro­bust cap­i­tal ap­pre­ci­a­tion in the city. The so­cio- po­lit­i­cal and eco­nomic sce­nario is now far more ing through Ashok Na­gar and a host of de­vel­op­ers ac­tive along the belt, a con­sid­er­able amount of de­mand has shifted to this mi­cro-mar­ket. The pres­ence of large com­mer­cial and en­ter­tain­ment-shop­ping es­tab­lish­ments and the avail­abil­ity of ad­e­quate so­cial and phys­i­cal in­fra­struc­ture have helped garner de­mand from end-users and in­vestors.

The key growth driv­ers of IT / ITES, au­to­mo­bile man­u­fac­tur­ing and education sec­tor are in­stru­men­tal in driving job cre­ation in Chen­nai. The price ap­pre­ci­a­tion in spe­cific pock­ets is set to be good over the next 12-18 months. Some of the projects pop­u­lar among home­buy­ers are Fall­ing Wa­ters in Perun­gudi, Oceanique on ECR, Em­bassy Res­i­dency and Pris­tine Acres on OMR. favourable for the real es­tate sec­tor. Com­pa­nies like Face­book, Google and Ap­ple have long­stand­ing plans to ex­pand their bases in Hyderabad - a fac­tor which will work in favour of faster ap­pre­ci­a­tion. One of the hottest emerg­ing lo­ca­tions is Vi­jay­wada, where land prices have in­creased by al­most 300% be­cause of spec­u­la­tion.

PHO­TOS: GETTYIMAGES

The Kochi res­i­den­tial real es­tate mar­ket is now re­plete with af­ford­able hous­ing projects, which ac­count for about 60% of the to­tal hous­ing de­vel­op­ment in the city Ben­galuru is ex­pand­ing in all di­rec­tions, and with most phases of the Metro on track in terms of de­ploy­ment, it has emerged as one of the best in­vest­ment des­ti­na­tions across hous­ing seg­ments With rapid in­fra­struc­ture de­vel­op­ment, Chen­nai is see­ing an up­surge in prop­erty prices

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