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.
‚ÄúForm is temporary but class is permanent,‚ÄĚ 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.
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
‚ÄúI don‚Äôt 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,‚ÄĚ says Jessy Kutty, an NRI, who is soon planning to invest in the city‚Äôs 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.
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
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.
‚ÄúPune 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,‚ÄĚ says Gaurav Gupta, an IT professional.
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‚Äôs 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 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‚Äô point of view. The average cost of housing in Bangalore is INR 5,500 and that works well for their workforce too.
‚ÄúSo, 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,‚ÄĚ says Puravankara.
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 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.
‚ÄúThe 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,‚ÄĚ explains Ravikiran Donthamsetty, a local broker.
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
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.
‚ÄúAlso, 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,‚ÄĚ 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.
‚ÄúIn 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,‚ÄĚ 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.
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 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.