Bagging the best bargain

With property prices continuing an upward spiral, finding the right place to buy a home can be one of the toughest decisions facing prospective homebuyers.

But like many other things in India, a home or a piece of land can be had for a bargain — if you know where to look, how to negotiate, and when to bag the deal. GN Focus identifies five hotspots that are underpriced and undervalued, making them the best markets to invest in at the moment.

Rudrapur, Uttarakhand

Location: Rudrapur lies in one of India's most fertile regions, Tarai, in Udham Singh Nagar district, Uttarakhand. It is served by the Pantnagar Airport, numerous rail connections, and the Nainital-Delhi and Khatema-Panipat highways.

Claim to fame: The setting for Jim Corbett's Man Eaters of Kumaon, Rudrapur is known as the ‘Gateway to The Kumaon Hills', being an embarkation point for the Himalayas. It is also called ‘Mini Chandigarh' because most residents speak Punjabi, and like Punjab and Haryana's capital, it is a planned city.

Rise to the top: While its topography makes it an agricultural leader, Rudrapur also has power generation capability, with ten government projects in the pipeline. Electricity is priced very low, andwater is available less than five feet below the ground. The NRI Lake City did much to attract individual investors, while its Special Economic Zone (SEZ) continues to attract corporate investors such as Nestle, Tata, Dabur, Honda, Bajaj, Britannia, Parle, Jindal, Mahindra and Mahindra, and Voltas.

Is property purchase related or restricted to the SEZ? Yes and no. Rudrapur's 3,339-acre SEZ has attracted several large companies by providing multiple incentives, including income tax exemption for the first five years.

Another reason is Delhi's market saturation: as commercial properties in the capital get exhausted, Rudrapur offers cleaner, greener, larger spaces. Besides, picturesque Rudrapur enthrals prospective homebuyers and residents.

Conclusion: Last year, David Stanley Redfern of DSR Asset Management went as far as to say that Rudrapur is one of the best investment opportunities in the global market. "It presents such a massively good opportunity because of the level of new businesses and factories coming into the area. Since Rudrapur was made a special economic zone by the Indian government, the tax incentives have attracted some 458 companies to build factories in a massive industrial estate on the outskirts of Rudrapur."

Pune, Maharashtra

Location: The second-largest city in Maharashtra — and its cultural capital — has an international airport and is well connected with a network of local and express trains, and national and state highways, including a dedicated expressway to Mumbai.

Claim to fame: The bastion of the Maratha Empire later became a cantonment town for British India, and even later a ‘Pensioners' Paradise'.

Rise to the top: The transformation from a small town to being a serious contender in the property market was slow but steady. Pune's ambient climate attracted mostly retirees, until its industrial revolution was ushered in by the Maharashtra Industrial Development Corporation. Soon, the list of companies included Fiat, Whirlpool, Sharp, Kinetic Engineering, Mercedes-Benz, Tetrapak, SKF Bearings, and the Bajaj and Kirloskar Groups. While corporate investors took advantage ofthe city's copious land availability, residents liked the high education quotient and infrastructure.

If property is already priced high, why is this a bargain? Pune's property prices are rising and will continue to do so. According to data released by the National Housing Bank, Pune is one of only three Indian cities to have witnessed an increase in property prices between January and March this year.

 While prices in seven cities dropped by 2.63 per cent to 17.6 per cent, Pune registered an increase of 5.02 per cent.

Conclusion: In March, Mohammed Aslam, Head of Pune operations for Jones Lang LaSalle India, was quoted as saying that Pune is virtually unrecognisable from the sleepy, laid-back city it was a few decades ago. "There were no signs of any significant real estate action in the erstwhile Punyanagari before that. Today, however, Pune numbers in the top seven property hotspots within the country."

Vadodara, Gujarat

Location: Gujarat's third-largest city lies 140 kilometres from state capital Gandhinagar, has a domestic airport, is a major junction on the Western Railway, and lies on the Mumbai-Delhi national highway.

Rise to the top: Vadodara witnessed a spurt in industrial activity in the 1960s, with the establishment of the Gujarat Refinery. It also became the largest beneficiary of the oil and gas discoveries in Ankleshwar.

Several factors — availability of raw material, product demand, skilful mobilisation of resources and attractive property prices — have contributed to its emergence as one of India's foremost industrial centres. Famous firms include ABB, DuPont, Reliance Industries, Larsen & Toubro, ERDA, General Motors, Chevrolet, ONGC, Sun Pharmaceuticals, Apollo Tyres, and JCT Electronics.

What is the biggest attraction currently? The Synefra Hi-Tech Engineering Zone is all set to be India's first ‘plug-and-play' SEZ for high-technology engineering. According to a company report, Synefra Engineering and Construction is expecting investments of Rs50 to Rs70 billion (Dh3.7 to Dh5 billion), and to generate 10,000 direct jobs at the SEZ in the next few years. The 386-acre industrial park is touted as ‘a true engine of growth' for being the only SEZ in India with uninterrupted operational gas supply. Other advantages such as hassle-free documentation and extensive water management systems make it a stellar project.

Conclusion: "In the industrial sector, cities such as Vadodara are seeing the highest growth. This is mainly driven by logistics and warehousing. We expect investment to fetch returns of 15 to 20 per cent over the long term," Anuj Puri, Chairman and Country Head of Jones Lang LaSalle India, said in December 2010.

Gurgaon, Haryana

Location: About 30 kilometres from India's capital, New Delhi, and 270 kilometres from state capital Chandigarh, Gurgaon is part of the National Capital Region (NCR). It is close to Delhi's international airport, and has expressway connectivity.

Rise to the top: Gurgaon underwent rapid construction, development, and transformation in the last 20 years, especially when numerous companies followed GE, which established operations in 1997. The current roster includes behemoths such as American Express, Oracle, American Airlines, The Coca-Cola Company, Nokia, Motorola, Airtel, Sapient, DLF, Maruti Suzuki and Hero Honda. Gurgaon is now an important financial, outsourcing and call centre in India.

If it is crowded, why are people still buying? Gurgaon is deemed the most lucrative proposition for real estate investment in North India, because of its long history of assured returns. For instance, a plot of land valued at Rs11,000 per square yard in 2003 is currently estimated at Rs130,000 per square yard. Gurgaon's residential property has offered investors maximum returns, when compared to Delhi or any other NCR city.

Conclusion: Two years ago, Gurgaon was ranked ‘the best Indian city to work and live in', according to a survey conducted by Business Today. "Gurgaon has the third-highest per capita income in India after Chandigarh and Mumbai. Gurgaon is also the only Indian city to have successfully distributed electricity connections to all its households," they noted.

Hosur, Tamil Nadu

Location: Hosur is a town in Krishnagiri district in Tamil Nadu, with ample road and rail connectivity and within an hour's drive of Bengaluru in Karnataka.

Claim to fame: Hosur is admired for its pleasant climate, and is an industrial hub for various industries. TVS, Ashok Leyland, Hindustan Motors, Titan, Hindustan Unilever, Premier Mills, LuK India, and Madhucon are among several companies with manufacturing units in Hosur.

Rise to the top: As apartment and land prices in Bengaluru continue to skyrocket, a bulk of homebuyers have developed a strong interest in Hosur, which offers everything that Bengaluru is slowly giving up on in its race towards urbanisation — tree-lined roads, empty sidewalks, perpetual springs, and cold and crisp unpolluted air. Bengaluru's high real estate prices have also forced companies to look elsewhere, and Hosur is set to attract this market — with its relatively low land rates, an impending SEZ and plans for a software technology park.

The demand for residential spaces is directly connected to the demand for commercial spaces, and it is only a matter of time before these needs will be realised.

Conclusion: In January, S. Venkatachalam, Proprietor of Jacpel and Co, was quoted as saying that the time is right to invest in real estate in Hosur. "Global recession has not affected realty in Hosur, and it has been picking up very fast. The sale of houses, ranging from Rs1.5 million to Rs2 million, has been going up on Bagalur Road, where the Information Technology Park of ELCOT will be established."