Best Indian city for Real Estate investments - 2

March 1st, 2008

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A while back we covered our take on the Best Indian city for Real Estate investments  from an investment perspective. We have received lot of comments following that article and that more or less prompts us to do this follow up piece.
 
Although at a broad level, it is true that past record of growth is usually a good predictor of future performance as well, there are exceptions. It does not mean that a city with poor growth record will never do well in the future. Take for instance, Bangalore. It was a genteel retiree’s place two decades back. At that time anyone forecasting growth would have predicted a very dull future, however as we all know that is not what transpired. The reasons for the resurgence were multiple and we will not get deep into that space here.
 
Another point to note is that, real estate investments are always local in nature and not based on a large city. One usually bets on the local growth prospects in terms of townships, malls, office complexes that are coming up and the city performance is only at the background of this analysis.
 
There are also some key factors for predicting the areas within a city that will do better than other areas in the same city. For instance why did South Chennai growth take off, while North Chennai did not see much growth in recent years. Why did Kochi’s growth move to the North rather than the South? Answers to these questions are interesting and we will address them in a following post. We don’t have all the answers and most of our comments will be based on what we have observed in the real world and some rational thinking.


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3 Comments to “Best Indian city for Real Estate investments - 2”

  1. riathareja | March 6th, 2008 at 3:27 pm

    The real estate action is no longer limited to the large metropolises of India but has now permeated to the burgeoning smaller towns and cities. These emerging centres of growth are lending sparkle to India’s booming economy. What is leading this transformation?The upswing of the Indian real estate sector has been an outcome of a number of positive micro and macro factors.Consistent and sustaining GDP growth, expanding service sector, rising purchasing power and affluence, proactive and changing government policies have all lent momentum to this rapidly growing sector.Accounting for almost 80 per cent of the total office space absorption, the Indian IT/ITES sector has been the primary demand driver. India’s low cost-high quality and productivity model has given it a leadership position in the outsourcing arena.India’s investment scenario is already undergoing a sea change and has been seen to be making roads in rural India with telecom, rural retailing, agricultural supply chain and logistics facilities, micro-credit, etc. All these factors foretell that the real estate growth will soon spread out of the established boundaries.As the Indian real estate sector moves higher on the growth curve, a number of state capitals and smaller cities which have relatively better infrastructure and are able to support higher economic growth have come into limelight.These emerging growth centres are characterised by low real estate costs, availability of land for development, untapped manpower pool and rising quality of life. Many of these towns have industrial and tourism driven economic base that can be leveraged for growth. Various parameters were selected on the basis of key decision making factors that are taken into consideration while choosing a location over another. Some of them being Real estate,people,business environment,Physical infrastructure,Social infrastructure,etc.These factors also determine the efficiency of conducting business in a particular city. Our study reveals that currently Chandigarh leads the way on the real estate front, owing to its ready availability of quality residential and office space with good prospects for future development. Kochi, witnessing hectic real estate development and being actively promoted as an IT/ITES destination by the state government, follows Chandigarh. Cities of Bhubaneswar, Ahmedabad, Nagpur and Mysore are next and rank equally on this parameter. This implies that all these four cities are evolving real state destinations and poised to take a quantum leap ahead. Guwahati and Surat score low on the real estate parameter as real estate development in both the cities is still in the infancy stage.I have shared a lot more about Indian rela estate sector in my blog-www.realtydigest.blogspot.com

  2. Williams | June 21st, 2008 at 9:37 pm

    Riathareja, thanks for your comments. I think a lot more cities deserve mention in the top tier - Vizag, Coimbatore, Nagpur, Ahmedabad being a few.

    The only unbiased survey I know of was done at behest of NASSCOM by AT Kearney. It categorised the top 40-50 cities into leader, challengers, followers & aspirants. Check out the results of it. Don’t have the link with me right now, but you can get it on google..

  3. riathareja | June 23rd, 2008 at 3:54 pm

    The real-estate market in Kolkata has been largely unaffected by the soaring inflation and the US economic crisis. While the sales and price figures in other metros and cities have shown signs of cooling down, the prices in Kolkata have increased by 7-10 per cent over the last four months. The city has managed to avoid a crisis because prices here had never reached ‘unrealistic’ proportions. Kolkata’s real-estate market is also relatively stabilized since the number of speculative investors here is much less compared with end-users.For more view- http://realtydigest.blogspot.com/

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