After a considerable lapse of time, real estate market in the God's own country is gaining momentum, thanks to the improved infrastructure, proactive government and determination to improve the investment climate in the state. In particular, the need to overhaul the archaic development control rules has given a virtual boost to the developers in and around Kochi to voice their concerns on the issues plaguing the sector.
The residential supply was high earlier and with limited new project launches, there has been a healthy absorption of accumulated supplies in the market. As the number of new projects has drastically come down in the last two years, most of the existing stocks have dried with the result prices are likely to inch high, feel realtors.
The key demand drivers for housing are the Non-Resident Keralites (NRKs) and emerging new middle class with disposable income keen to enter into homebuying exercise.
Apartment prices range from Rs 4,000 to Rs 10,000 per sq ft depending on the location, developer, specification and amenities offered in the project. As supply is exceeding demand, prices are stable and in some areas have come down by five per cent. Residential rentals for good quality buildings range from Rs 20,000 to Rs 35,000 per month in select areas. Whereas commercial rentals for office range from Rs 50 to Rs 80 per sq ft per month and retail rentals range from Rs 150 per sq ft onwards depending on the location.
An estimated 15-20 leading developers focus on residential and commercial development besides national players like DLF, Puravankara Projects, Sobha Developers, Unitech and others. However, the local players still dominate significantly due to a combination of factors. The impact of competition in the market is the proliferation of housing built to international standards, a range of amenities hitherto unheard of in community development.
With the resumption of the much delayed Rs 2,000 crore SmartCity project at Kakkanad, there is all-round optimism in the city. The first phase is expected to be ready in two years which will provide employment to about 7,000 people. SmartCity is a conglomerate promoted by Dubai Holding member, TECOM Investments, to develop and manage Knowledge industry Townships Worldwide. It is based on Dubai's models of Internet City, Media City and Knowledge Village to promote the growth of 'knowledge-based' companies.
Among the areas undergoing real estate development, specific mention must be made about Kakkanad, where IT sector is seeing growth, sea-port – airport road, bypass road, Varapuz, etc.
Yet another significant factor towards improving infrastructure is the approval given to model the Kochi metro rail on the lines of Chennai Metro rail. The Ministry of Urban Development has reportedly given approval. A draft in this regard has been prepared by the Cabinet. There will be no private participation in the project. The capital outlay which went up from Rs 1,886 crore to Rs 5,016 crore and 51 per cent of the capital will be funded by way of loan. The project will be submitted before the cabinet only after receiving a nod from the Finance Ministry.
With the gradual improvement in the overall infrastructure, improved connectivity levels and a receptive government in the state, the long-term outlook for the real estate sector appears better, according to industry sources.
(The article is written by V Nagarajan. He is a property consultant and NRI columnist on real estate investment to Indian and overseas publications.)
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