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Best Top places to invest in real estate sector in South India


Best Top places to invest in real estate sector in South India

South Indian cities such as Bangalore, Hyderabad, and Chennai have emerged as one of the best-performing real estate markets in the country. While the majority of the other areas across the country reported downward pressure on prices and a reduction in supply, the cities towards the South continued to resist the recessionary pressures and reported price appreciation, albeit moderate, year-on-year. The reasons behind the same can be attributed to limited new launches across the region, focus on completing delayed projects, availability of land parcels at reasonable prices, high retail growth, increased demand from Non-Resident Indians (NRIs) and the development of social infrastructure over several years. Moreover, the availability of excellent healthcare facilities, trained staff, and pleasant climate have made South India one of the most vibrant senior living hubs in India. Those who wish to invest in a safe place for the elderly, in the times of COVID-19 scare, can consider South India, as nearly 65 percent of the overall senior citizen projects are located in this region.

As averred by Eshwar N, Chief Marketing Officer, Casagrand, “South India is a preferred destination for homebuyers who are planning to purchase properties for several reasons. Unlike the majority of markets across the nation, real estate in South India is end-user driven and not speculative. Majority of the properties across the region have a 3-4 year completion cycle, which is unlike the north where it takes around 5-7 years to complete a project. The region has also witnessed increased investment from the Non-Resident Indians (NRIs) in the recent past, who are attracted to this part of the country because of the stability of the market.”

Here are the top three South Indian cities that you can consider for investing in real estate.

Bangalore:

Bangalore remains one of the most preferred real estate destinations for investors and end-users, not only from within the country but overseas as well. Buoyed by factors such as strong macro-economic dynamics, smart infrastructure, favourable climatic conditions, presence of IT hubs, and the presence of varied housing options for all the sections of the society; Bangalore has witnessed an incremental upsurge in its population over the years. Led by rising consumer demand, the city reported an increase of 80 percent in the overall housing sales between 2017 and 2019. Resultantly, the overall unsold stock reduced by 44 percent during the same period and quarters-to-sell, too, witnessed a substantial decline from 42 months in Q1 2017 to 15 months by the end of Q1 2019.

The data as per 99acres suggests that there are over 37,000 properties available for sale as of now, of which around 86 percent is ready-to-move-in. While a lack of clarity on the new GST rates and water crisis posed short-term challenges for the market, the dust around the same settled in H2 2019 and the city reported improved buyer sentiments. To apprise, the focus of the homebuyers in Bangalore is majorly skewed towards projects that are either ready-to-move or nearing completion. Led by increased user enquiries, particularly in this segment, property prices in Bangalore have increased by six percent,YoY, in H2 2019 (source: JLL). As per 99acres.com, the rental market of Bangalore, too, has remained upbeat and has reported an increase of three percent in the average rentals, YoY, in Jan-Mar 2020. Hennur, Devanahalli, Thanisandra, Hebbal, Hosur Road, and certain areas towards the South such as Bannerghatta are some of the popular micro-markets in the city.

Chennai:

Chennai is one of the top metropolitan cities of India, having a high standard of living. Dotted with a wide range of housing options, including apartments, row houses, villas, bungalows, and luxury homes; the real estate market of Chennai has registered significant growth over the years. Moreover, the city is quite rapidly expanding its land coverage area, to attract not only homebuyers but also those who wish to invest in residential plots. While March 2020 witnessed a slowdown and deferment of purchase decisions due to the impact of the pandemic, the overall launches in the first quarter of FY 2020-21, witnessed a growth of 23 percent, YoY. In 2019, the southern suburbs, including Perungudi, Pallavaram, and Navalur remained the most popular in terms of new launches. Nearly 57 percent of the total launches during this period were concentrated in the middle and upper-middle segments. As per 99acres Insite Report for the Jan-Mar 2020 quarter, South Chennai remained in the thick of the action in terms of new launches during the studied quarter. While homebuyers in the city continue to prefer completed units over under-construction projects to avoid inordinate delays, the developers have resorted to discounts and attractive offers to lure buyers in the recent past. As a result, property prices in the city witnessed a price correction of five percent in H2 2019. In addition to the reduction in prices, the growing trend of co-living in the city also presents a big opportunity for the real estate investment community. And though the supply of water posed short-term issues for the city’s realty, the gloom seems to have receded as healthy monsoons helped replenish natural water bodies to a great extent last year. This has again revived the buyer’s interest in the market.

Hyderabad:

Hyderabad has been one of the fastest-growing markets in India since the past few years. As per a survey conducted by JLL, the city was ranked as the second most rapidly growing cities among 131 cities across the Asia Pacific Region. Robust office sector, with supply and net absorption levels surpassing Bangalore in 2019, augers well for the growth of the city’s residential market in the short-medium term. In Q3 2019, the city reported heightened activity in the western suburbs, including areas such as Kondapur, Gopanpally, and Kismatpur. In terms of sales, the city trailed close behind its neighbouring counterpart Bangalore and reported 10 percent increase, YoY, in the same quarter. While the western quadrant emerged as the frontrunner in terms of new launches in 2019, the northern suburbs, including Kompally and Bachupally, reported the maximum hike of 14 percent in property prices. Despite the negative impact of the outbreak of COVID-19 in Jan-Mar 2020, the first two months witnessed robust commercial and residential activities. Further, the completion of the 11-km long section of the Green Line of Hyderabad Metro Phase 1 in the first quarter of 2020, helped increase the demand along the neighbouring corridors. Resultantly, nearly 65 percent of the localities reported an upsurge in the average weighted property prices, QoQ, in the last quarter of FY 2019-20. In contrast to the story of India’s residential market, Hyderabad has emerged as a preferred destination for real estate investments due to demand from IT professionals, immigrant attractiveness, and affordable property market.