Kerala: Adani's Vizhinjam Port, NRI demand revive property market

Dubai: Kerala’s property market is finally starting to see the pick up in demand and value that the brand-new Adani Group backed Vizhinjam Port was supposed to bring about. And, not surprisingly, the most obvious boost for the south Indian state’s real estate sector has started off in Thiruvananthapuram, Kerala’s capital and where the Port is located.

“There are definitely more NRIs committing investments in property these days in Kerala property,” said Ashok T.S., Managing Director at the developer Artech, which has multiple projects in Thiruvananthapuram, including possibly one with the costliest penthouses in the city.

“The Vizhinjam Port has a lot to do with this rise in demand – it’s noticeable in the number of new re-conversion projects that are being OK’ed by the city authorities. What this does is free up more areas in the city and on the outskirts for more residential and other property. Because greenfield sites are hard to come by within the city.”

Land re-conversion or re-purposing will be crucial for Kerala’s property market. Have too little of these and a situation is created where there is too much of demand chasing fewer supply. In the coming months, re-purposing of land is where the big money will be as land owners offer their holdings to big-name developers to create new homes, offices or other destinations.

So, finally after years, Thiruvananthapuram’s real estate scene is seeing serious action. It was in May that the Vizhinjam Port – with the first phase costing about $1 billion - was officially commissioned as ‘India’s first deep-water container transshipment port’. It’s built and operated by the Adani Group, founded by the billionaire Gautam Adani.

For some time now, property sources in Kerala had been talking about the Port creating a boom for the state’s economy, with real estate one of the key beneficiaries. But the last 2-3 years had been sluggish for the property market, according to industry sources, even when a Lulu Mall opened in Thiruvananthapuram and turned into an immediate success.

The active (re-)entry of NRIs – expat Keralites in the Gulf and from beyond – could fire up Thiruvananthapuram’s property prices too.

Thiruvananthapuram had been ‘playing a secondary role to Kochi’s property market for some time’, said a developer. “That’s changing for sure – the Adani Port will create a deep economic impact up and down the state, with Thiruvananthapuram real estate leading the way.”

For way too long, Kochi’s property market had been burdened by overcapacity in apartment buildings and indifferent demand, especially from NRIs who were the hardest hit when property values did not gain as had been forecast. In the 5 years to 2020, Kochi real estate had gone through testing times, and it was only by 2023-24 that activity picked up again.   

Suresh T.S. is General Manager at Varma Homes and he says, “These days, we see NRIs making up 30%-35% of property buyers in our Kochi projects. The sweet spot they are looking for in prices are from Rs10 million (Rs1 crore) to Rs31 million (Rs3.1 crore).

“What we are seeing right now is that Kochi still lags Thiruvananthapuram when it comes to new re-conversion applications. Only a limited number of such projects are greenlit, which means lesser capacity of new builds compared to the Kerala capital.

“But what you can say for sure is that NRI investments are firing up demand in leading Kerala cities and towns.”

According to the real estate consultancy Anarock, India’s emerging Tier 2 and Tier 3 cities ‘hold immense potential - but attracting businesses and ensuring planned development will be key’.

“The strong economic base, supportive government policies, and a growing young population position India’s southern cities for continued growth across residential and commercial segments,” said Morgan Owen, Managing Director at Anarock Middle East. “However, ensuring enough affordable housing options and navigating rising construction costs will be crucial.”