Mumbai, Delhi NCR And 6 Other Cities To Remain Favored Real Estate Investment Destination In 2013
Economic Times [ 15-01-2013 ]

MUMBAI: I want to buy a property this year' is likely to be one of the key resolutions of many Indians in 2013. And, not necessarily for living in that house, but also for investment purposes. After all, property, along with gold and fixed deposits, continues to maintain its stronghold over the average Indian investor's psyche. For many investors, the allure of real estate has not dimmed, despite the slump the sector witnessed in 2012.

"With property options ranging from Rs 3,200-15,000 per sq ft and investor returns in the range of 18.6-29% per annum residential real estate will emerge as a promising asset class for the next 5 years. From the perspective of return, real estate investment especially in India has garnered superior returns in comparison to other asset classes over a long term. But the truth remains that Investment in real estate is burdened with decisions based on gut feeling and tips which result in poor investments," says Gulam Zia, executive director, retail, advisory and hospitality with property consultancy firm Knight Frank India in its investment advisory report 2012.

Clearly, the tougher part is zeroing in on the right destination, price and project. This is because unlike stocks and mutual funds, whose performance can be easily tracked thanks to published prices and net asset values (NAV), the real estate sector lacks transparency.

Nevertheless, you can always bank on certain parameters to make the right choice. "Identifying the right markets becomes easier if one looks for certain at key market triggers. The critical ones that highlight the potential of any property markets include existing infrastructure readiness, implementation timelines for new infrastructure initiatives, demand for commercial space in the market (leading to job creation), social infrastructure, and price trends," says Om Ahuja, CEO, residential services, Jones Lang LaSalle India.

According to real estate consultants these are the cities and the locations within that will continue to be attractive this year:

According to Knight Frank's investment advisory report 2012, Wadala and Chembur are expected to witness price appreciation of 133% and 125% respectively between 2013 and 2017. The factors in its favour ? Strategic location, proximity to premium office markets and upcoming infrastructure projects like Monorail and Eastern Freeway project.

Within Navi Mumbai, localities like Ulwe and Kalamboli look promising. "Ulwe will immensely benefit from the upcoming Seawood-Uran suburban rail network, which will connect it to the prominent office hubs through a mass rapid transport system," notes the Knight Frank report.

Then, there are Kharghar and Panvel. "In Noida and Navi Mumbai, there are market drivers over and above job creation at play - namely superior infrastructure and affordability. Navi Mumbai and Noida are absorbing investor demand from Mumbai and Delhi, where affordability plays important role for investors. In the case of Navi Mumbai, one can further extrapolate the investment potential to Kharghar, Kalamboli and Ulwe," explains Ahuja of JLL.

Knight Frank expects Noida Extension and Dwarka Expressway to consolidate their position as attractive investment destinations. Property rates in Noida Extension could see a 111% price appreciation. JLL, too, places its bets on Noida's extended growth corridors of Noida Extension and Noida Expressway.

Another city that has consistently made it to the hot property destinations list, Pune looks set to maintain this reputation this year as well. “With four investment destinations namely Hinjewadi, Ravet, Tathawade and Wakad, Pune has the maximum number of promising residential property options...Proximity to employment hubs of West Pune and strategic location on the Mumbai-Pune Bypass Road will immensely benefit these residential markets," says the Knight Frank study.

IT and ITES will continue be the key driver for growth in Bangalore this year as well. "North Bengaluru will be the biggest beneficiary of the Bengaluru International Airport (BIA) and is expected to emerge as the new Central Business District (CBD) of Bengaluru within the next decade. Hebbal will be the biggest beneficiary of this development. Destinations like KR Puram in East Bengaluru possess the potential to provide a lifestyle shift, which is possible generally in projects developed on large land parcels that facilitate high rise premium developments with plush amenities," notes the Knight Frank report.

"Pallikarnai and Medavakkam iwll witness price appreciation of 93% and 103% respectively in the next 5 years," predicts the Knight Frank study. These destinations will benefit from IT/ITeS and automobile industries located on the Old Mahabalipuram Road (OMR) and GST Road.

Hyderabad, like other cities mentioned here, scores high on the job creation front, which in turn, translates into demand for residential properties. "In all these cities, massive job creation will further fuel the demand for residential property for quite a while to come. Every individual employed by IT/ITES and BFSI industries is eventually a buyer of a residential apartment. The current absorption of residential apartments in Hyderabad, Bangalore, Pune and Chennai shows the lion's share of demand coming from IT/ITES and BFSI employees," says Ahuja.

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