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
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.
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