Bottom Line: At a time when the top 10 property markets are struggling against a possible price correction, a Tier II market like Kochi has performed far better.
The National Housing Bank’s RESIDEX shows constant growth in property prices in Kochi. Kochi might be a Tier II city for the outside view, but it is today an investment magnet for the developers. Nearly all the big ticket developers like Sobha, Prestige, Puravankara, DLF, and Tata among others have launched projects in this southern city of India.
As a result, the average capital values across the major micro markets of Kochi that was below INR 4000 per sq feet till recently has now breached the barrier of INR 5000 per sq feet.
What is driving the developers to Kochi? More importantly, who are the real demand drivers of Kochi property? How a cost conscious Tier II city is performing better than the established Tier I property markets? These are some of the questions which could answer the success of Kochi at a time when slow sales is a reality across the property markets of India.
There is a public perception that what has transformed this once non-descript city into thriving metro city is the gulf money since a large number of Kochi residents are working in the gulf region. However, Kochi property market is not being driven by gulf money alone; this could be only a reality in the luxury segment.
Today, Kochi is growing commercially, with tourism and international trade booming in the city. Added to this, the IT sector has found the city to be a happy hunting ground due to lower cost of doing business per sq feet and better climatic conditions. This is fuelling the demand for quality office spaces, hotels, retail outlets, and, of course, residential apartments. A conservative estimate suggests that one-fourth of the homebuyers in the city are expat professionals.
Kochi’s investment magnet
Booming tourism & international trade
Inclusion in the first 20 smart cities
First Tier II city to have metro rail
Proliferating educational institutions
JC Sharma, VC & MD of Sobha Limited believes that over the years, Kochi has seen remarkable infrastructure development with access to world class healthcare and educational facilities. It has emerged as one of the key commercial and industrial hubs of Kerala, making it a profitable investment option for Indians and NRIs alike. Kochi has the distinction of being the only city in Kerala with metro rail connectivity and a container terminal that facilitates international trade. In addition to this, IT parks such as theKochi Infopark and Smart City at Kakkanad has transformed the city into a key IT hub.
“This has augmented the demand for housing, especially luxury in the city. Most importantly, it houses Cochin International airport, the largest and most preferred airport of Kerala. The demand for good quality luxury housing is high in the city and there are few players who can provide that to the discerning buyers/prospects who are exposed to the Middle East. Within Kochi, Marine Drive area is considered to be of prime importance and good projects on this stretch do command commensurate premium,” says Sharma.
Ashish R Puravankara, MD of Puravankara maintains that Kochi’s landmark infrastructure initiatives coupled with government’s initiatives like single window clearance, concessional power tariff have been instrumental in driving up the price point for the city. Kochi metro has also provided a welcome boost to the realty market.
“A strong growth momentum in the IT sector has ensured that grade A office stock expanded from less than 5 million sq ft in 2012 to 10 million sq ft in 2017 resulting into an increase in residential prices. The city has three primary markets – Marine Drive, Kakkanad and Edapally, out of which Kakkanad has emerged as a prominent IT corridor. Kakkanad is primed for growth as 90% of the IT developments are envisaged along this corridor,” says Puravankara.
With the educational institutions and medical facilities spreading across the city, there has been a constant flow of migration from other areas of Kerala and other neighbouring states in search of greener pastures. This has led to Kochi evolving as the densely populated city in the state of Kerala.
On the commercial front, Infopark has ambitious plans to become one of the major IT Parks in the country. Established in 2004, it has already attracted investments from IT majors like TCS, Wipro, Affiliated Computer Services, OPI Global, IBS Software Services and US Technology. For example, several IT majors and MNCs in Kakkanad are instrumental for the surge in housing development in and around Kakkanad.
In a nutshell, it is not just the gulf money that is fuelling the real estate demand in the city. There are multiple demand drivers to elevate the city at par with the other metro cities of India.
By: Ravi Sinha @ravitrack2media
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