Mumbai
Most people are familiar with the legendary beauty of Mumbai's most famous promenade — the Marine Drive. But what many don't know is that at the beginning or the end of the road, depending on how you approach it, is a residential tower called the NCPA Apartments. When the building was constructed, it promised to usher in an era of unprecedented luxury in the real estate market. It made history in 2007 for fetching the city's highest price of Rs97,000 (Dh6,435) per square foot. Then again last year, another sale of Rs295 million in the same building hit the headlines. While not as impressive as the aforementioned transaction, it was news as the deal happened at a time when the real estate market was considered to be in a slump.
As India's financial capital, Mumbai attracts massive investment in the real estate sector primarily due to scarcity of land and availability of liquidity. "A whopping Rs276 billion has been invested in land in Mumbai since 2005 — and this does not even include the confidential transactions and investments made into Slum Rehabilitation Projects and other redevelopment projects. The sum of the unaccounted transactions could possibly be another Rs100 billion in the same time period," says Subhankar Mitra, Head, Strategic Consulting (West) Jones Lang LaSalle India.
Over the past five to six years there have been many record-breaking land transactions in the centrally located newly free mill lands and by the Mumbai Metropolitan Region Development Authority at Bandra Kurla Complex. Some of the aggressive land purchasers have been Indiabulls, Lodha Developers, Piramal Sunteck, Wadhwa and Peninsula Land Limited, among others.
The fact is that when it comes to the property market, Mumbai is notorious for bucking all the trends, points out Gulam Zia, National Director — Research and Advisory Services, Knight Frank India. "Housing and commercial prices don't follow any trends and today a penthouse in Imperial Tower in Tardeo is going for Rs1 billion and there are at least 20 such addresses that are in the Rs750 million to Rs1 billion bracket." These include NCPA Towers, Maker Towers, Bellissimo, Buckley Court, CCI Chambers, and Kalpataru, to name just a few.
Despite these exceptional cases, the prices in Mumbai are currently stable, says Vikas Oberoi, Chairman and Managing Director, Oberoi Realty. "Mumbai has historically never had any oversupply and has always witnessed huge demand. The government should free up more land parcels so that a healthy housing supply can be created to cater to this demand. This will in turn make the market healthy, stabilise the prices further and make it a win-win situation for all."
The lack of a proper infrastructure is a worrying factor though. From 2005 about Rs153,050 million have been invested in infrastructure projects such as the monorail, skywalks, the sealink and the Versova-Andheri-Ghatkopar metro corridor — but this amounts to only 60 per cent of the investments made in prime land in approximately the same period (the past five to six years). And experts estimate that the city needs additional investment of about Rs275 billion in the infrastructure sector over the next five years if any of the undertaken civic projects are to be completed on schedule. "This is equal to the amount that the city has buried in its land. The paradox of the situation is that, despite sitting on such massive money resources, Mumbai is unable to generate funds for its most essential requirements," points out Mitra.
But hype alone cannot sustain the market over the long term, which is why most people feel that the time has come to view real estate and infrastructure development in Mumbai cohesively and not as isolated phenomena. (S.P.)
Kolkata
Recent times have seen a number of national players such as DLF, Godrej and Unitech set up operations in Kolkata giving a boost to supply. Typically, Kolkata's prime residential locations are concentrated in the central and south-central part of the city in areas such as Park Street, Camac Street, Gurusaday Road, Jodhpur Park, Gol Park and Lake Garden. Besides these, other important residential developments are Alipore, Ballygunge, New Alipore, Rashbehari, Tollygunge and Gariahat. The city has expanded to the eastern side with the development of Sector V and Salt Lake City as the IT/IT-Enabled Services hub, further fuelling demand to a great extent. Suburban locations that have seen extensive development in the past five years are Rajarhat in the east, Jessore Road in the north and Behala in the south.
Kolkata's residential sector was least affected by the economic slowdown compared to Tier I cities, and the demand for housing has been consistently growing, according to property consultancy Knight Frank India. While end users contribute significantly to the housing demand, there has been growing interest from investors.
Developers have been able to capitalise on the demand and have launched a number of projects in the affordable and mid-segment housing in the past couple of years. They have been smart in getting into joint venture projects with the government, which has resulted in unlocking huge parcels of urban land as well as developing ample housing stock. But the focus continues to remain in the suburban residential pockets of the city with affordable and mid-segment housing being in demand. (S.P.)
Chennai
According to a recent report by property consultancy Knight Frank India, Chennai will witness the infusion of around 67,500 residential units in the next three years. An impressive number for a city that is seeing a fair amount of activity in the realty segment, driven primarily by IT/IT-Enabled Services sector. While there was a slight dip during the worst years of the economic downturn, Chennai's residential market has seen a rebound sooner than anticipated. Demand has returned, prices have increased and a number of new projects have been launched in the market.
Chennai south leads the market in terms of number of units under construction, accounting for 68 per cent of the total, followed by the western region with 27 per cent. Majority of the new projects are situated along the Old Mahabalipuram Road (OMR) in locations such as Perungudi, Sholinganallur, Thoraipakkam, Tambaram and Perungalathur. Another emerging market on the OMR with several new residential launches is Kelambakkam, which is more investor driven due to its lower prices. In the western region, micro-markets worth mentioning are Sriperumbudur, located on the Chennai-Bengaluru highway, where a number of residential projects by leading developers have been launched. Then there is Mogappair, Oragadam, Vanagaram and Porur.
But overall demand, says Dr Samantak Das, National Head Research, Knight Frank India, is in the mid-end category, primarily towards the peripheral locations of the city where majority of the affordable projects are located. But despite the subdued economic conditions, developers went ahead with their plans and several large-scale projects were announced during 2011. This may be due to the fact that the Chennai market is primarily self-sustained and is not much affected by the upheavals in the global markets. Another important observation regarding the Chennai residential market is the demand for three-bedroom apartments; around 46 per cent of the total number of units under construction belong to this category, followed closely by two-bedroom apartments at 44 per cent. While one- and four-bedroom apartments are lower in numbers, five-bedroom apartments have a marginal presence in the number of units under construction in the city. (S.P.)
Surat
According to the National Housing Bank's latest residential index covering 15 cities, housing prices have risen the fastest in Surat at 9.4 per cent for October-December of 2011 as compared to the previous quarter. The sector has been growing on the back of investor buyers who turned to real estate after burning their fingers in the stock market. While other Gujarat cities such as Ahmedabad have seen a dip in housing prices, Surat saw prices in its east, south, central, north and west zones rise by 42, 27.7, 11.6, 11.2 and 2.40 per cent, respectively.
Surat realty has clocked a 100 per cent growth in the past two years. According to a report by Crisil Research, cities such as Surat are the ones to watch out for, which will add more than 354 million square feet of residential development over the next three years. With property prices still lower in Surat than most developing cities despite its higher GDP and increasing number of migrants, the scope for future appreciation increases. A large market for weekend homes also exists as the huge pool of rich people will opt for these second homes. (By Sanghamitra Roy. Roy is a journalist based in India.)
Bengaluru
The dynamics of the Bengaluru market are fascinating. Residential demand is dominated by an immigrant, salaried employee class working in the IT sector. It's one of the few metros in India where you will still find affordable homes since prices haven't escalated as fast as in Mumbai and even Delhi-National Capital Region. Interestingly, the location of the project and the quality of construction are not that important as Bengaluru provides many options in any given area with negligible product differentiation among top developers.
According to global property consultants CBRE South Asia's India Residential Market View, the residential market in Bengaluru witnessed an overall positive momentum in 2011 with several project launches across key micro-markets. The new projects were largely in the premium and mid-end category to cater to end users as well as investors. Formats varied from villa and condo-villas being launched in the north and east, with high-rises launched in the south and south-east. The report points out how Bengaluru has emerged as an attractive investment proposition, with high-net-worth individuals attracted by its stable demand outlook and attractive pricing. Agglomeration of stock continued to be a demand driver for residential developments in the south and south-eastern micro-markets of Bannerghatta Road, Sarjapur and Outer Ring Road. Rising migrant population and an expansion of corporate occupiers continued to bolster the leasing market in Whitefield and Koramangala.
North Bengaluru attracted significant interest from end users and investors. Some of the key luxury projects launched include Nitesh Logos at MG Road, Four Seasons' CityView at Bellary Road, Sobha City at Thanisandra and Prestige Edwardian at Cunningham Road. Other key projects include Prestige Sunnyside and Nitesh Cape Cod located along the Sarjapur Outer Ring Road and The Promont by Tata Housing located at Banashankari in the south. Prominent developers such as Mantri, Prestige and Brigade Group have also made their entry into the affordable segment by launching projects such as Prestige Tranquility at Budigere, Mantri Alpyne at Banashankari and Brigade Meadows at Kanakpura Road in the city's periphery. Prices are expected to remain stagnant for the next few months.
JLL Pulse's Property Market Monitor says residential demand remained upbeat with buyer sentiment shifting towards purchasing a property rather than paying high rents. The projects that saw good absorption in the past few months included Karle Zenith, Prestige Tranquility, Mantri Alpyne, Prestige Park View, DLF Maiden Heights, Provident Harmony and Prestige Silver Crest.
The most sought-after area remains Koramangala thanks to its location. While a majority of investors are looking at north and east Bengaluru for investment, consultants share that untapped potential exists in west Bengaluru. According to the Global Initiative for Restructuring Environment and Management (GIREM), an independent body focused on urban planning, development and corporate real estate, Bengaluru has become one of the most sought-after destinations for luxury housing segment, with a property costing more than Rs30 million. (S.R.)
Delhi-NCR
On the price front, the National Capital Region (NCR) has fared well, compared to other metro cities, and hasn't seen a drop in prices. According to property consultancy firm Knight Frank India's research product, Residential Traction @ Glance, NCR is the largest residential market in the country by volume of residential units launched. Nearly 86,000 residential units entered the market in the financial year 2012. Developers launched more affordable and mid-segment projects than premium projects this year to cater to the demand. Nearly 40 per cent of the units launched fall in the Rs2.5-Rs5 million ticket sizes. As of March 2012, nearly 500,000 units are under various stages of construction. An additional 94,000 units are slated to enter this market by 2015, the report says.
In the NCR, the growth is in Gurgaon with its booming IT/IT-Enabled Service sectors. The Gurgaon-Delhi expressway, metro rail, etc., have made Gurgaon easily accessible. Real estate majors such as DLF, Unitech, Omaxe, Parsvnath and Ansal have a presence here. The average ticket size in Gurgaon is high, compared to other micro-markets. Employees working with various companies in the Cyber City, Golf Course Road and Udyog Vihar contribute to the demand. Most of the end users want to buy properties that are ready to occupy.
Santhosh Kumar, CEO - Operations, Jones Lang LaSalle (JLL) India, a real estate services firm, says, "Over the past one year, capital values rose by more than 30 to 35 per cent in Gurgaon's residential sector. Residential property prices on the upcoming southern peripheral road connecting to National Highway 8 (NH8) have seen considerable appreciation over the past few months. It holds great investment potential thanks to enhanced connectivity that NH8 provides to Manesar and Dwarka."
Existing properties in the Noida-Greater Noida area have registered an appreciation of nearly 70 to 80 per cent in the last one and a half years. The Antriksh Group is coming up with a golf-centric township, Antriksh Golf City, in Sector 150 on the Noida-Greater Noida Expressway. In Ajnara Panorama, the group is constructing London Square, which has 225 high-end villas of 1,900 square feet to 6,000 square feet. Greater Noida has also emerged as an important residential market. Newer locations such as Naharpur and Sectors 70-89 have also seen a number of project launches, ranging from affordable to high-end residential.
A JLL India report says that in the Delhi-NCR, the most favoured second home format is the farmhouse.Farmhouse developments are located in clusters around Mehrauli, Bijwasan, Rajokri and Chattarpur and come in various sizes and configurations. Delhi-NCR is unique in the respect of offering a farmhouse culture that has not found many parallels elsewhere in the country. These properties are available in the price range of Rs25-Rs120 million. (S.R.)
Pune
There's no denying that the Pune real estate has been holding steady despite market conditions in India in both the residential and commercial segment backed by some serious job creation and thereby migration into the city. According to market reports, commercial property in Pune fetches about 20-25 per cent returns on investment. Residential rates grew by minimum 6-8 per cent in the last year. This makes Pune a clear favourite with investors.
Sameer Gholve, Manager — Capital Markets, Jones Lang LaSalle India, says, "Pune has been a favoured destination among real estate private equity (PE) funds since 2005. The total flow of PE funds into Pune until December 2011 was approximately $800 million (Dh2,938 million). Significantly, 61 per cent of the total PE investments in Pune were in projects located in east Pune. East Pune has the majority of the city's IT industry developments such as Magarpatta Cyber City in Hadapsar, Eon IT Park in Kharadi, CommerZone in Yerawada, Weikefield IT Park on Nagar Road, etc. These IT developments have had a major spin-off effect on the profile of these areas and have generated a huge demand for quality residential projects."
According to JLL Pulse, the monthly Property Market Monitor, Pune's residential market continued to witness a fair number of launches. Some of the major recent launches have been Casa 7, GAIA and Down Town. Sales velocity has remained stable.
In keeping with market sentiments, real estate developers have focused on the affordable segment. Prominent builders such as Kolte Patil and Gera Properties have announced affordable housing projects, including one- and two-room houses that cost between Rs1-1.5 million. In the past few years, property in areas that were once considered fringe such as Kothrud, Vanwadi, Aundh have come to command a premium. Some interesting projects are in the pipeline such as City Group's township project Amanora Park Town at Hadapsar. Some other projects include Greensville Sky Villas in Kharadi by Gera; Bloomfield in Ambegaon by Amit Enterprises; Regent Park in Baner by Gera; Princetown in Undri by Kumar Properties; Sobha Carnation in NIBM Kondwa by Sobha Developers; and Picasso in Hadapsar by Kumar Properties.
Gated communities are the clear trend here, with a focus on design quality, amenities and quality construction. However, builders also caution that fly-by-night operators still exist in the city and urge consumers to do their due diligence before investing in a flat in Pune. (S.R.)
Kochi
Kochi is one of the fastest-emerging cities in India. It has excellent connectivity by sea, air and road, which is one of the reasons it is such an attractive investment destination. The National Association of Software and Services Companies ranked it as the second potential city for investments in the IT sector. Major IT firms such as US Software, IBS, Sun Tec, Gemini, NeST, Ernst and Young, TCS, Infosys, ACS Inc. and Allianz Cornhill have a presence here. Kochi finds a mention in the global real estate services company Jones Lang LaSalle's World Winning Cities programme that seeks to identify the rising stars among India's Tier III cities as offering the most favourable prospects.
In Kochi, two mega infrastructure projects, the International Container Trans-shipment Terminal and the Smart City, have galvanised the real estate sector. Kakkanad, where the Smart City is sited, has witnessed 100 per cent growth in residential, retail and commercial real estate sectors in the past few years. The average land value in the vicinity of Kochi city has seen an exponential increase. Real estate dealers point out that there is huge demand for land around the city, especially in areas such as Vypin, Parur, Aluva, Irimpanam and Mulanthuruthy. Non-resident Indians have especially been keen in investing in land in the vicinity of the proposed Smart City.
Also, as land is not available within the city limits of Kochi, Kakkanad area will be developed as New Kochi as a new township comes up. The areas surrounding two important roads, the Bypass and the Seaport-Airport roads, are expected to become the most important location in the city as new shopping malls, vehicles dealers, corporate offices and hotels set up base there. Places to look out for are Puthiyakavu, beyond Thripunithura and Chottanikkara where land values will show much appreciation after the Seaport-Airport road is completed. Thripunithura, Kakkanad and Aluva are safe bets for investment in property in Kochi
High-end projects too enter the picture in Marine Drive and neighbouring towns such as Thrissur. You can gauge the market movement from the fact that national developers such as Puravankara Projects, Sobha Developers, Prestige Group, Emaar-MGF and Brigade Group have invested in the city. Unitech with 670 acres, Sahara Infrastructure and Housing, and Larsen and Toubro have also pitched for property with niche projects. Satellite townships are being absorbed into the city as better connectivity gives easy access to the new IT locations. Sobha Developers launched villas in the price range of Rs20 million (Dh1.32 million) and high-end apartments in the range of Rs7 million-Rs10 million. Tata Realty and Infrastructure has awarded Rs2,860-million project to Leighton Welspun Contractors for developing five residential towers in Kochi. The Dewa Projects, a construction firm in Kochi with an investment of Rs6,000 million, has launched a 24-storey residential project. DLF has launched its two-, three- and four-bedroom air-conditioned residential apartments and duplex at Riverside Kochi. There are also four luxury villas by Anzera Properties.
The Cochin Special Economic Zone, the financial capital of Kerala, has also spurred the growth of the Kochi real estate. Then there's the Rs950-million joint venture projects between HDFC and Larsen and Toubro. However, the Rs15,000-million Smart City project, proposed by the Dubai Internet City, remains the biggest project so far in the city. But be warned: Kochi too has had its share of fly-by-night operators in the past and customers should exercise due diligence. (S.R.)
Visakhapatnam
Real estate prices in Visakhapatnam have appreciated many times in the past couple of years, nearly 50 per cent since 2007, say experts. The local economy, thus the real estate sector, has received a boost from the IT sector. TCS, IBM, Wipro, Satyam and other IT employers in Bengaluru and Hyderabad have set up shop in Visakhapatnam now.
There is huge demand for land in Sabbavaram, Nakkapalli, Chodavaram and Anakapalli mandals on the district's periphery. Square-foot rates in posh areas such as MVP Colony, Lawson's Bay Colony, Kirlampudi Layout, Seetammadhara, Beach Road, Dasapalla Layout, Asilmetta and Dwaraka Nagar have almost doubled in the past five years. Localities such as Madhavadhara, Murali Nagar and Akkayyapalem are still considered middle class and affordable. In Madhurawada, Kommadi, PM Palem, Gajuwaka, Kurmannapalem, Sheela Nagar, Duvvada and Sagar Nagar, which are considered affordable, there's been a 50 per cent price appreciation. Visakhapatnam is a city with enough infrastructure, connectivity, long-term private sector investments, and extreme long-term central government investments (India's nuclear submarine projects are run out of the city). There are several projects in the pipeline in the Rs3 million (Dh199,030)-Rs6 million range. Upcoming projects include Sea Breeze Villa on Beach Road, Suvarna Srinivasam, Royal City, Uplands Palace and Anand Castle.
The Visakhapatnam Urban Development Authority (VUDA) is also constructing a residential township near National Highway 5 to provide 1,800-2,000 affordable and premium apartments. VUDA has launched mega housing projects at Madhurawada and Rushikonda in collaboration with Singapore-based promoters. Madhurawada and Rushikonda are witnessing faster appreciation. Maurya Developers has a residential project coming up on the highway at Kommadi, which offers duplex homes. Over 20 residential townships and numerous apartment projects are planned in the city. MVP Colony, Beach Road, Lawson's Bay, Waltair are considered premium residential locations.
According to real estate services firm Jones Lang LaSalle India's reports, the city is also the second home investment location of choice for Hyderabad dwellers. Its USPs include relatively affordable property rates, decent appreciation potential, pleasant weather and the fact that it is a coastal region with many sea-facing property options available. Bungalows are the preferred second home configuration and are available for Rs4.5-Rs9 million. (S.R.)
Nagpur
In the Wealth Report 2012 by Knight Frank and Citi Private Bank, one of the cities to watch out for as an emerging market middleweight - defined as a fast-growing city with population between 200,000 and ten million — is Nagpur. Considered Maharashtra's second capital, it is a hub today for medium to heavy industry and IT and IT-Enabled Services. Large facilities have been set up by Satyam, TCS, Hexaware, Wipro and Lambent. Boeing's $100 (Dh367)-million maintenance, repair and overhaul base for Asia is slated to come up in Nagpur. One of the key elements for its growth could be the Rs70,000-million Multimodal International Cargo Hub and Airport. Reports say that property rates have shot up by almost 500 per cent since 2006. The surge has also been attributed to NRI investors. It has a cosmopolitan crowd and is one of the greenest cities in the country with relatively low crime rates. Its connectivity to Mumbai and Pune has also added to its attractiveness.
A lot is happening on its north-west, north-east and southern fringes. Civil Lines remains the city's premium residential neighbourhood. Properties in Ramdaspeth, Dhantoli, Dharam Peth and Shankar Nagar too command a premium. Colonies such as Vardhaman Nagar, Pratap Nagar and Surendra Nagar are also sought after. There's also the trend where defunct mill lands are being sold to developers. The National Textile Corporation has offloaded defunct properties such as the 1.49-acre Model Mills property on the Main Umrer Road. The Tata‘s Empress Mills property sale to KSL and Industries led to the ambitious integrated township project, Empress City. Other township projects include those by developers such as the Satyam Group and Sahara Group. Mahindra Lifespace Developers Ltd recently launched its gated community project, Bloomdale. Locally active builders in the city include Hindustan Builders, Nikunj Builders (P) Ltd, Roshni Developers and Shewalkar Developers Ltd.
Interestingly, shopping malls cover about 1.8 million square feet in Nagpur, and more shopping malls are in the pipeline. Orange Walk is slated to be a one-million square-feet shopping mall on the arterial Sita Buldi Main Road (MG Road) to be built by the Pune-based Goel Ganga Group. Nagpur is expanding towards the north-west and southerly direction, especially further down Butiburi industrial estate towards Hingna. (S.R.)
