Best of the best

The Indian real estate market seems to have survived the worst. Though some markets seem to be stable and appreciating, others can’t exactly be classified as buoyant but can’t be written off either. The announcement of several industrial corridors during the union budget, aimed at creating smart cities that will propel industrial, real estate and infrastructure development, has definitely improved market sentiment.

Here’s a look at some of the most promising ones.

Mumbai, Maharashtra

Ramesh Nair, Managing Director — West, Jones Lang LaSalle India, says, “In the Indian city that has for years carried the unwholesome reputation of being the most overpriced, there is no relief in sight for aspiring home-buyers. Over the past four years, property valuations in the financial capital have increased by an average of 66 per cent.

“All expert predictions over the past three years of an imminent correction have proved to be wrong. Navi Mumbai has seen a staggering escalation of 74 per cent. The Malad-Borivali belt has seen an increase of 85 per cent,” he says.

Retail activity has been slow, as has commercial absorption. Most of the launches have been in the mid-to-luxury segment such as the headline-grabbing World One project. Redevelopment activity is happening in certain pockets in the western suburbs, from Bandra to Andheri, although not enough to infuse the market with considerable supply.

The reduction in the floor space index for rental housing has been a dampener for the industry and those dependent on affordable housing. However, 2013 could also be a landmark year, with several infrastructure projects in the pipeline, such as the operation of the metro rail, monorail, Virar-Alibaug Corridor and a trans-harbour link.

Delhi National Capital Region (NCR)

Despite rumours of a market crash, this market has not only resisted a major price correction but also developed as an emerging location, had several infrastructure developments and boomed in segments such as luxury housing.

This area enjoys excellent connectivity by metro and road. Several township projects have come up along the well-developed expressways and national highways. A great deal of the real estate growth is led by the development of the industrial estates and industrial model townships.

Santhosh Kumar, CEO — Operations, Jones Lang LaSalle India, says, “The real estate market at Kundli in the Sonipat District of Haryana holds great future potential owing to several current and proposed developments such as the Kundli–Manesar–Palwal or KMP Expressway, the Rajiv Gandhi Education City at Sonipat, the 100-metre-wide road from the IGI Airport to Narela, improved rail connectivity, a proposed logistic park and a textile park, etc.”

It has also moved away from the trend of independent houses and embraced township and apartment projects. However, do check for social infrastructure before investing.

Kerala

The southern state’s real estate growth story was largely scripted by NRI demand and it is today seeing increasing domestic demand. The reduction in reduced NRI demand has definitely slowed down the market, though. One of the major reasons has been project delays, sometimes of two years or more.

All the major builders have reduced their unit sizes and thereby their costs to tap into the local demand.

Says J.C. Sharma, Vice-Chairman and Managing Director, Sobha Developers Limited, “The current situation is promising as banks have slashed their home loan charges and are offering competitive interest rates. The pre-payment charges have also been abolished and there is increased affordability now.

“We believe the industry is emerging from the recessionary impact and moving towards consolidations and improvement in volumes.”

Pune, Maharashtra

Pune has proven that not only is it not slated for a price correction but capital values will only increase, with experts even predicting an 8-10 per cent appreciation.

Until a few years ago, Pune’s realty market used to be unorganised, ruled by single-building players, many of dubious reputation. As the city expanded, the IT and Information Technology Enabled Service (ITES), automobile and manufacturing sectors led to job opportunities and a more cosmopolitan crowd with better buying power. The real estate sector responded to this demand and became more organised.

Another trend has been the emergence of township projects. Says Sanjay Bajaj, Managing Director — Pune, Jones Lang LaSalle India: “In Pune, buyers are now open to residential solutions that allow them to circumvent or reduce the impact of the city’s challenged infrastructure.”

Other trends include high-rises, green homes and luxury units.

While road infrastructure is slowly improving, public transport still remains a problem, as does water and electricity in certain areas. Its greatest strengths remain its weather, old-world charm and real estate offerings at several price points.

Bengaluru, Karnataka

This city has expanded exponentially despite problems with road infrastructure, water and public transport in certain pockets.

Today, it has also come on the radar of the luxury home seeker. There have also been several township projects and affordable housing projects announced.

It has also been attracting several national players.

Not only did Bengaluru resist a price correction, but there was a slight appreciation in the capital values in the residential segment, as per research reports released last month.

Gujarat

In keeping with its Vibrant Gujarat strategy, this state has been making all the right moves, especially in terms of infrastructure. Once largely a black market, the real estate sector has been slowly consolidating and cleaning up its act.

Karan Khetan, Senior Analyst, Jones Lang LaSalle India, says: “Many cities in India have been transformed by urbanisation and Ahmedabad is the most illustrative of them. Even before the metro rail link between Ahmedabad and Gandhinagar has sprouted tracks, the Gujarat International Finance Tec City (Gift City) phase I has already rolled out its construction plans.”

Gift City is the Gujarat government’s most ambitious project and is well on its way to develop India’s first international financial services centre. All this has ensured that national players are slowly entering this market.

The growth and maturity of the real estate market in this region can be gauged from the fact that it is now attracting professional facility management firms.

Apart from infrastructure and retail wherein the out-of-town retail format is expanding its footprint in Gujarat, this market is also attracting players in hospitality. Starwood is opening Four Points by Sheraton in Ahmedabad.

Tata Housing recently announced a non-binding agreement with the state government to help deliver urban affordable homes to five million people in Ahmedabad. Brotin Banerjee, Managing Director and CEO, says, “As part of our long-term strategy, we are looking at creating homes in the emerging tier-one and -two cities. With Gujarat and specially Ahmedabad being one of India’s most desirable cities to live in, this agreement will support our efforts in building sustainable townships for urban dwellers at affordable price points.”

Kolkata, West Bengal

The Kolkata real estate market has followed the slow and steady dictum without any major price fluctuations. It was one of the few markets that wasn’t affected much by the 2008 recession, since it’s largely an enduser-driven market, without excessive supply. The buyer preferences still remain smaller ticket sizes, with relatively lower prices.

The construction of the Park Circus-Parama Island flyover is in full swing.

It will not only change the city’s skyline but will also act as the new link between the central business district and other parts of the Kolkata Metropolitan Area.