Tag Archives: Urbanisation in India

Property market potential of top 5 cities

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: The realty markets of Mumbai, Pune, Chennai, Bengaluru and Hyderabad are proving to be magnets that attract potential home buyers from all over due to their massive infrastructure development, affordable rates and good job catchment opportunities.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news“Form is temporary but class is permanent,” goes an old adage in cricket. But class being permanent is equally true with the best asset class called property. Since the very nature of the business is cyclic, that goes up and down in its critical linkage to the overall economy; it often leads to lending credence to the prophets of doomsday that the market is down and out.

However, a closer look at some of the leading property markets of the country, like Mumbai, Pune, Chennai, Hyderabad and Bangalore, clearly suggest that the market is poised for an upswing in the next few years. More importantly, it is not just the analysts but also the home-buyers who are today; ready to bet high on the long term growth story of the property market in these leading cities.

City realities

Home-buyers are bullish over the medium-to-long-term growth story of the property market

Cities that are mostly being preferred are Mumbai, Pune, Bangalore, Chennai and Hyderabad

Infrastructure developments and job catchment are the investment magnets in these cities

Mumbai

“I don’t really subscribe to the view that Mumbai is saturated and hence, is facing a slowdown. The same was opined before the emergence of BKC (Bandra Kurla Complex) as well but the new destinations for both, residential and commercial spaces changed this outlook,” says Jessy Kutty, an NRI, who is soon planning to invest in the city’s property market.

After all, the kind of infrastructure upgrading, like the Eastern Freeway and Western Expressway, the metro rail, Jogeshwari – Vikhroli Link Road (JVLR), Andheri Kurla Link Road, etc, have had, they have changed the outlook of the city.

Add to it, the upcoming infrastructure projects like the Mumbai Trans Harbour Link and an international airport in Navi Mumbai, has suddenly given birth to a twin city that is ready for investment. Needless to add, these developments are on the stretches of high business corridors and hence, are all set to fuel the housing demand in the city.

Advantage Mumbai

Mumbai 7th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Impressive investment along the new growth corridors of upcoming MTHL and Navi Mumbai International Airport

New corridors of development emerging as the government pushes for Rs 46,000-crore expressway to connect Mumbai-Nagpur with Samruddhi Expressway

Pune

The story is no different in the neighbouring city of Pune as well where the Pune Municipal Corporation (PMC) has set up five special funds for urban projects. The PMC has set a target of raising:

INR 55 crore for the Pune Infrastructure Fund;

INR 23 crore for Critical Infrastructure Funds for Information Technology and Enabled Services (ITES);

INR 2 crore for Heritage Conservation Funds;

INR 20 crore for Urban Transport Land Development Charges and;

INR 40 crore for Urban Transport Building Development Charges.

“Pune is no more just a hot destination but the best market for investment today. Even in the wake of a slowdown, the performance of the IT industry in the city has been phenomenal. Even Cushman & Wakefield has placed Pune among the top 10 markets across the Asia Pacific region. For me, this is the market to bet on for a long-term growth story,” says Gaurav Gupta, an IT professional.

Advantage Pune

Pune 8th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Pune sells India’s first municipal bond since 2007 worth $31 million for 10 years for smart city project and aims to modernize the city

A detailed project report (DPR) for the ring road proposed by the PMRDA will be ready by September and civil work will start by October-November. This eight-lane 128km ring road will connect places on the periphery of Pune and Pimpri Chinchwad

Bengaluru

Bengaluru has always been an aspirational city for the average home-buyers. Now, with the boost of infrastructure projects, like the metro rail and Periheral Ring Road, this job magnet destination appears to be even more desirable.

The influx of global corporate occupiers, infrastructure deployment in the peripheral areas, rapidly improving connectivity and unleashing of large land parcels by the government for commercial and industrial growth, promises the emergence of newer nodes in the peripheral districts of Bengaluru.

Since land in these areas comes at a lower cost; the expat workforce that is employed in the numerous automotive, engineering and other industries located on the outskirts of Bengaluru, would continue to drive the property market.

Ashish Puravankara, managing director of Puravankara Ltd, finds reasons to suggest why Bengaluru is a huge investment magnet. The companies are also realising the cost of doing business here; the average rental cost of office space per sq feet in Bengaluru is about INR 45 and that works well for companies. Then look at the customers’ point of view. The average cost of housing in Bangalore is INR 5,500 and that works well for their workforce too.

“So, it is all supporting each other and it is not that only one factor alone is driving the market. If the prices have become unaffordable due to the high demand in the city, people would have started looking at other cities but Bengaluru continues to drive the major share of investment in the property market,” says Puravankara.

Advantage Bangalore

Bangalore 6th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

A Colliers report suggests Bangalore market maintained its top position across nine cities despite low vacancy and recorded an overwhelming share of 37% of total absorption

Bangalore is the only Indian city that has now scaled up to global level of consumption of office space per household, an impressive 65 sq feet as against the national average of 25 sq feet 

Chennai

Chennai seems to have moved ahead from its flood disaster of 2015. Today, it is the biggest manufacturing hub in India. The city has more industries coming up and it is termed as the Detroit of Asia. Almost every manufacturer has a facility there. It has attracted more investments and has more industrial corridors in almost every nook and corner of the city.

The IT sector here is also booming and growing at a rapid pace. Top Indian IT majors have a considerable chunk of employees operating out of Chennai.

“The best part about Chennai is the price point that hovers in the range of Rs 2500-5500. Premium projects are located in Nungambakkam, Egmore, Anna Nagar, Nandanam, Mandaveli, RA Puram and locations in ECR such as Muttukadu, Uthandi and Injambakkam. Low and mid-segment projects are coming up at Perumbakkam, Ottiyambakkam, Thalambur, Mevalurkuppam, Avadi, Padappai, Mogappair, Thirumazhisai, Navalur, Manapakkam, Padur, Kelambakkam, Thaiyur and Velappanchavadi,” explains Ravikiran Donthamsetty, a local broker.

Advantage Chennai

Chennai 9th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Vision 2023 of State Government aims to boost infrastructure and industrial growth in the city

Expansion of Chennai airport, laying of Chennai peripheral ring road, widening of East Coast Road, and setting up of Chennai-Bangalore Industrial Corridor promises to alter the investment climate of the city

Hyderabad

Parth Mehta, managing director, Paradigm Realty agrees that markets like Hyderabad have been outperforming their peers in larger metro cities. The city is improving currently with respect to the infrastructure and government policies for doing business.

“Also, due to the IT and e-commerce boom, there would be a lot of start-ups that would prefer to operate from low cost office spaces at these locations,” says Mehta.

Probably, no other city looks as promising as Hyderabad from a medium-to-long-term perspective. The continuous growth of the IT sector in the city has had a cascading effect on the housing market in corresponding hubs as well. The residential activity in north Hyderabad is now driven by the presence of industries such as pharmaceutical, bio-tech, electronics, etc.

“In 2016, Hyderabad witnessed strong office leasing, registering a 109 per cent y-o-y growth during the year. In the January to March 2017 quarter, the city witnessed an uptake of more than 1.3 mn sq ft of office space. This growth in office leasing activity, coupled with robust infrastructure development and competitive pricing, positions Hyderabad as one of the most affordable residential markets for buyers in the region,” says Rami Shetty, a local property agent.

Most of the homebuyers in the city also agree that the metro connectivity and transit hubs will fuel further demand in the housing segment in the near future. Due to the lowest office rentals across top markets in southern India, corporates are increasingly looking at Hyderabad while planning their expansion strategies in the region. With the demand going up for office space, the city is experiencing a demand-supply gap at present and its organic effect on the housing market is a logical conclusion.

Advantage Hyderabad

Hyderabad tops the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

With political stability the city is high on the wish list of corporates due to low cost of doing business

The upcoming metro connectivity & transit hubs fuelling investment climate in the city

In Conclusion

In a slow moving housing market at present, these cities are displaying exemplary resilience to suggest that the medium-to-long-term outlook is pretty bright. The best part is that the home-buyers and other investors are ready to believe the long term growth stories of these cities.

Why Tier II cities could not share load of top 8 cities?

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: The pace of urbanization & migration is heavily concentrated into top 8 cities as Tier II cities have failed to take the load.

indian real estate news, realty news india, india property news, india infrastructure news, track2realty, track2media, ravi sinha, Infrastructure development, National highwayA Newsweek report in 2006 had claimed Ghaziabad to be among the 10 most attractive real estate destinations; not in India but in the world. Much water has flown in the last nearly a decade and the phoenix city that was once assumed to be the flagship of the Tier II cities taking over metro cities has failed to live up to its promise.

The story of Ghaziabad is no different from many other Tier II cities across the country that were claimed to be the investment magnet. The fact remains that none of these cities have been able to share the load on the top eight cities of India.

The supply of quality housing even today is confined to eight key cities. It is not that the new cities are not coming up, but neither the investors nor even the end users want to buy a house in Tier II cities today. The dream and aspiration is always Delhi, Mumbai, Bangalore, Pune kind of life.

With Tier II cities one of the major problems that happened is that they were all projected as next big thing in terms of real estate opportunities and not talent pool. The irony is that even if there is talent pool in these cities, they are willful expat workforce in metro cities.

Anish Shah, Director, Amal Realtors feels the less investment in Tier II cities is not just because there is less depth in that market but also the fact that there is a fear that exit would be really difficult. If there is no resale value then one would not go to that market. He, however, maintains that the difference between four main metros and cities like Bangalore or Pune, Hyderabad or Ahmedabad is reducing.

“The gap – be it talent pool, quality of infrastructure, social infrastructure – is reducing. In this downturn these cities have shown more resilience than the Mumbai or Delhi-NCR market, whether it is the price point or the absorption rate. Earlier we used to see the revival from the main metro and Tier II and III cities catching up then but now Bangalore, Pune, Hyderabad or Ahmedabad markets are picking much faster than MMR or NCR. I feel earlier the migration was confined to the four metros but now the migration is more towards these other cities because the infrastructure gap and the opportunity gap has very much reduced,” says Shah.

Arvind Nandan, Director – South Asia, Colliers International says the problem is that a lot of these things are transient; they are not permanent or fixed. Many of these cities are, and they appear to be, big magnets because of which the businesses are locating but the key thing in creating any settlement, be it urban settlement or semi-urban or rural settlement, is that there has to be core economic activity around which people can gather in creating urban centres.

“In order to create an urban centre, around which housing and other shopping & entertainment will be created you will have to figure out where the core activities will be established. Unless those things are identified, labour pool will migrate to where these activities will take place. If only there are raw materials available and rail and roads are put in place it won’t work,” says Nandan.

Sandeep Ahuja, CEO, Richa Realty thinks these eight cities will continue to lead the pack the way it is happening globally with cities like London or New York that have not lost out to other cities and continue to be ahead of other cities. He says some five years back there was a lot of buzz on the Tier II cities and what has happened is that money was chasing to these cities but the developers completely misread the demand & supply dynamics and the result is cities like Noida, Indore, Jaipur, Kolkata.

“The kind of inventory that has come up in these Tier II cities is massive in such a short time. India eventually will follow what we have seen globally; it will take twenty to thirty years for a city to develop. These eight cities will continue to attract the end users. Reason being what is more important than emotional or rational need is the aspiration. If I have lived in Tier II city and all through the life aspired to be in the metro, it is very obvious that if I make it really big I will fulfill my aspiration of buying a house in the metro city,” says Ahuja.

Even from the buyers’ investment point of view, there is one more thing from end users’ point of view and it is connected to research. In a market where not much research has been done from end users’ point of view, in these eight top cities at least one has lesser chances of going wrong. In Tier II cities a buyers does not have the bandwidth to decide which cities and for how long it will take for his investment to give the returns. 

By: Ravi Sinha