Vibrant cities for vibrant economy-X
By: Track2Media Intellisearch
A city with almost every household having one family member working in the Gulf, Kochi or Cochinâs resident population is waking up to new business avenues. This transition is also leading to a growing demand for commercial and residential property. What has transformed the once sleepy hamlet into a metropolitan zone is the fact that it is no more just the gulf money that is catalytic to the economy. Today Kochi is growing commercially with tourism and international trade. The IT industry is establishing a sound base here, and the demand for office spaces, hotels and retail outlets is increasing.
One of the most densely populated cities in the state of Kerala, Kochi has seen the real estate prices soaring with the influx of developers from other states chasing too little a land parcel and trying to get a bigger slice of the market pie. With the influx of foreign tourists, it is no wonder that the tiny city has developed an increasing need for real estate development.
Gone are the days of crowded apartments lining up the streets. The influx of developers from Bengaluru, Delhi and Mumbai has led to a fierce competition and the result is increasing thrust on the aesthetics, artistic excellence, high-end amenities and innovation forming an integral part of every residential project.
As per industry estimates, both demand and supply levels are balanced now and in areas where demand exceeds supply, prices are inching high. “Quite a few projects have been launched in the last one year, resulting in increase in demand,” says G Anil Kumar, General Manager, Operations, Southern Investments.
In the wake of the city being exposed to a few fly-by-night operators in the past, and instances like Apple-a-Day Properties’ unethical practices, the Kochi property market is extremely wary of the deals now.Â There is no speculative buying seen today and the genuine end-users are active in the market, according to property consultants monitoring the market movements.
Prices have gone up by 20-30 per cent but are currently holding steady across micro markets, and it is unlikely to increase in the near future due to a combination of factors, say realtors. Consecutive hikes in home loan lending rates and dip in affordability have impacted the overall demand for housing with people postponing their decision making, believes industry watchers.
However, a section of property consultants maintain that since the market is divided between residents and NRIs, home loan rate hike may not have much impact as not all of them opt for home loans. The supply level for built units has considerably reduced, resulting in demand for new projects.
The high-end projects are finding ready acceptance in areas like Marine Drive as well as in neighbouring towns like Thrissur. For instance, Sobha Developers launched villas in the price range of Rs 2 crore and high-end apartments in the price range of Rs 70 lakh-1 crore, which is in demand. “There is a market for good quality developers and high-end homes,” feels P Ramakrishnan, Deputy Managing Director, Sobha Developers.
With the proliferation of educational institutions and medical facilities, there has been a constant flow of migration from other areas in search of greener pastures. The cumulative impact of all this is that Kochi is the most 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. While upmarket residential demand has picked up, commercial property demand is yet to gain momentum.
The influx of several IT majors and MNCs in Kakkanad is instrumental for the surge in housing development in and around Kakkanad. While the real estate market is recovering, the developers are cribbing the new FSI norms bringing down FSI from 4 to 2.75 and the minimum road width has been enhanced from 5 m to 7 m which has pushed the land prices up for development.
Though retailing is yet to pick up as per mega city standards but retail rates are high on the main pockets of the city. However, there is lack of retail space in the city which is one reason cited for the surge in lease rentals for retailing.
A number of infrastructure projects under varying stages of implementation have given a virtual boost to the growth of all-round realty development. The roll-out of two mega infrastructure projects, the International Container Transshipment Terminal (ICTT) and the Smart City, have kicked off another round of upswing in the realty sector of central Kerala. The last such boom was seen around five years ago and had vanished three years later leaving the realty sector of the state in aÂ state of gloom.
The ICTT and Smart City projects have given a new lease of life to the industry if brisk land deals in Kakkanad (where the Smart City is coming up) Edappilly, Kalamassery and Thripunithura are any indication. The average land value in the vicinity of Kochi city has suddenly jumped by Rs 50,000 a cent and in locations like Kakkanad the increase is around Rs 1 lakh a cent. The average per cent value in this areaÂ isÂ Rs 6 lakh-plus now. According to real estate dealers, rich NRIs are now interested in buying a piece of land in the vicinity of the proposed Smart City as the current price is lucrative.
This upward trend in real estate in Kochi is an indicator of a healthy and reviving economy. In Jones Lang LaSalle’s World Winning Cities programme Kochi stands out as offering amongst the most favourable prospects of the India 30. The city offers shining possibilities across all sectors due to a favourable combination of wealth, connectivity, infrastructure, labour skills, low operating costs and tourist appeal.
- Booming tourism & international trade
- ICTT and Smart City projects
- Proliferating educational institutions
- Medical facilities
- NRI investment