According to the National Housing Bank’s RESIDEX, property prices in Kochi grew by 12.8 per cent in the October-December quarter of 2017. This comes at a time, when the top 10 property markets are struggling against a possible price correction. The average property prices in Kochi across the major micro markets (capital values), which was below Rs 4,000 per sq feet till recently, has now breached Rs 5,000 per sq feet. Moreover, nearly all the big developers like Sobha, Prestige, Puravankara, DLF and Tata, have launched projects in this southern city of India.
This, hence, raises the question of how a cost-conscious tier-2 city, is performing better than the established tier-1 property markets and what are the real demand drivers of Kochi’s property market. There is a public perception that owing to the large number of Kochi residents working in the Gulf region, this ‘Gulf money’ has transformed this once nondescript city into thriving metro city. A conservative estimate suggests that one-fourth of the home buyers in the city are expat professionals. However, this may only be true for the luxury segment.
Today, Kochi is growing commercially, with tourism and international trade booming in the city. The IT sector has also turned to Kochi, due to the lower cost of doing business per sq feet and better climatic conditions. This is fuelling the demand for quality office spaces, hotels, retail outlets and residential apartments.
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Factors that have boosted Kochi’s property market
JC Sharma, VC and MD of Sobha Limited, maintains that Kochi has emerged as one of the key commercial and industrial hubs of Kerala, making it a profitable investment option for Indians and non-resident Indians (NRIs) alike. Kochi has seen remarkable infrastructure development, with access to world class healthcare and educational facilities.
Kochi has the distinction of being the only city in Kerala with metro rail connectivity and a container terminal that facilitates international trade. In addition to this, IT parks such as the Kochi Infopark and SmartCity at Kakkanad, have transformed the city into a key IT hub, adds Sharma.
“This has augmented the demand for housing, especially in the luxury segment. Moreover, Kochi also has the largest international airport of Kerala. The demand for good quality luxury housing is high in the city and there are few developers, who can provide the same. Within Kochi, Marine Drive is considered to be a prime area and good projects on this stretch command a premium,” Sharma elaborates.
Influence of the IT sector on Kochi real estate
Ashish R Puravankara, MD of Puravankara, adds that Kochi’s landmark infrastructure initiatives, coupled with the government’s initiatives like single window clearance and concessional power tariff, have been instrumental in driving up property prices in the city. The Kochi Metro has also provided a welcome boost to the realty market, he says.
“Healthy growth momentum in the IT sector, has ensured that Grade A office stock expanded from less than five million sq ft in 2012 to 10 million sq ft in 2017, resulting in an increase in residential prices. The city has three primary markets – Marine Drive, Kakkanad and Edapally, out of which Kakkanad has emerged as a prominent IT corridor. 90 per cent of the IT developments are envisaged along this corridor,” says Puravankara.
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With the educational institutions and medical facilities mushrooming across the city, there has been a constant flow of migration into Kochi, from other areas of Kerala and other neighbouring states, making it a densely populated city. There are also plans to transform Infopark into one of the major IT parks in the country. Established in 2004, it has already attracted investments from IT majors like TCS, Wipro, Affiliated Computer Services, OPI Global, IBS Software Services and US Technology. The IT majors and MNCs in Kakkanad, have also led to a surge in housing development in and around Kakkanad. In a nutshell, there are multiple demand drivers that have led to the growth of the real estate market in Kochi and not just the Gulf money.
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Kochi’s USPs
- Booming tourism and international trade.
- Inclusion in the first 20 Smart Cities.
- First tier-2 city to have a metro rail.
- Proliferation of educational institutions and medical facilities.
- Healthy investment from NRIs.
(The writer is CEO, Track2Realty)
