Kerala Another Bright Spot in India Real Estate

Dhruva Jyoti Chowdhury, Kolkata, India Riveting the attention of both property developers and homebuyers recently, is Kochi, the nerve centre of the southern state of Kerala in india. Demand for large-scale apartment complexes is up and it exceeds supply now. Apartment prices are up by Rs. 100 per sq. ft. while some estimate 20 per cent jump in the last one-year alone. Similarly, land prices zoomed in places like Kakkanad from Rs. 30,000 – Rs. 80,000 to Rs. 3 lakhs. “The market is predominantly end user driven and not speculative and that is one reason for a consistent growth in the demand for residential property”, says Jacob Chandy, director, Southern Investments. There has been a perceptible shift in trend among homebuyers from the days of compelling necessity, to buying homes for self-occupation, to the analysis of multiple options for viable avenue for investment. The Kerala Builders Forum boasts of 28 builders who have agreed to follow a common code of ethics. Property buyers are not unduly worried over the new entrants to the market as they feel the demand is also equally on the growth path. In a swift move to support the sector, the government has been quick to reduce the approval time for building plans from 7 months to just 2 months. This has been widely welcomed by the property developers. The state government is marshalling efforts to support the requisite infrastructure needed for the city. Investment is trickling down from the traditional tourism and health related spa to commencement of smart city, container transshipment terminal, fashion city and retailing. What is more, entertainment sector is opening up in a big way. The home loan market in and around Kochi has been estimated at Rs. 50 crore plus every month with the market dominated by ICICI Bank followed by HDFC, State Bank of Travancore and others. The Greater Cochin Development Authority (GCDA) has sold land and generated Rs. 350 crore and with margin money plans to raise additional resources from the lending institutions to fund infrastructure development in and around the city. Incidentally water supply project has already been taken care of by the Japanese management team. On the flip is the exorbitant stamp duty that is eluding the policy makers. The demand for housing has been quite strong if the number of new entrants to the sector and the projects under implementation are any indication. This has convinced developers like Bangalore based Puravankara, Sobha and Brigade, Delhi based DLF and Dubai based Emaar group to join the bandwagon. “The confidence level is high and the entry of outside builders will bring in more quality and organised level of activity to the market

eventually benefiting the end users”, feels Gerald Pavamani, consultant, marketing to Heavenly Homes. Capital values for apartments in the city areas range from Rs. 1,500 to Rs. 2,000 per sq. ft. and in areas like Marine Drive it touched Rs. 2,800 - Rs. 3,000 per sq. ft., whereas in suburbs like Kakkanad it ranges from Rs. 1,300 to Rs. 1,500 per sq. ft. On the lower side, budget apartments are available from Rs. 800 to Rs. 900 per sq. ft. The entry of IT majors like Wipro and TCS has given a virtual boost to the demand for housing. Wipro is talking about employing a 5,000 workforce in the next 3-4 years. Even if 25 per cent accommodation is taken into account, 300 projects are needed in just 2-3 years for which there is no adequate supply or even a contingency plan. Additionally 5-6 IT companies are planning to make a beeline to the city now. “Rental market is expected to get a boost and investment in residential property will become a viable option shortly”, predicts G.S. Venugopal, managing director, Gokulam Engineers India Pvt. Ltd. This is one reason for the entry of new players to the market. Even landowners are keen to enter into joint venture development with established developers for a larger slice of the pie. Yet another reason for the sudden spurt in demand is the returning NRIs from places like UAE where steep rental levels locally have compelled families to return to India. The migration of medical personnel has created a new wave of NRI demand for Kochi from hitherto unheard of markets like London and Russia. The NRI demand has also pushed the requirement for high-end market in the price range of Rs. 20 – Rs. 40 lakh. A significant feature is that people are looking for health related amenities in apartment projects where the maintenance cost is competitive and easy to manage, say realtors. Commercial Property Mart: The commercial property mart is yet to pick up momentum though Info Park is a major complex and set to change the skyline of Kochi. A number of unanswered questions still remain in smart city, according to market sources. Retailing is on the upswing and Aerens is launching a gold souk in Vytilla. A wedding souk is being planned on the main arterial Marine Drive where capital value is Rs. 8,000 per sq. ft. It is said that a number of jewelers have already invested in the units. With the proposed entry of Lulu centre and KM Trading in Dubai, malls are the next in store to lure shoppers. Not to be left behind in the race, entertainment sector too is poised for a turnaround with Le Meridien's discotheque and a number of new players devising projects and appropriate time to enter the market. “With investor sentiment scaling new high, Kochi is undoubtedly poised for all-round development”, feels Col John K Manavalan (Retd), director, RDS Project Ltd. confidently.
Kochi Residential Property Prices

Location Panampally nagar Kadavanthara Vytilla Marine Drive Vaduthala Off MG Road Tripunithura Kakkanad Kalur, Palarivattom, Edapalli Thevara

Capital value (Rs per sq ft) 1400 - 1800 1400 - 1800 1400 - 1800 2500 - 3000 1600 Rs 1800 1200 - 1500 1200 - 1500 1100 - 1500 1500 - 1800