The top five hotspots for residential property investment in the country today, are Mumbai, Bengaluru, Hyderabad, Ahmedabad and Chennai. Not only are these cities attracting new businesses and industry, their respective governments are also investing resources in building adequate infrastructure to attract capital.
With their local economies growing, the influx of talent and skilled workforce into these cities is inevitable and this results in increased demand for residential properties. Also, the earlier slowdown in the economy and glut in the real estate sector, have ensured that prices in these cities have come down and developers active there, have now invested in launching affordable housing projects that are in high demand. With the economy now growing, more people will have money to invest in real estate – which still remains a preferred asset class for most Indians.
India’s top five cities: What makes them residential property hotspots?
These cities not only have basic infrastructure, in terms of electricity, water and other amenities, but are also improving in terms of communication and commuting facilities, with metro and road developments. They also offer a better quality of life, because they have a good saturation of leisure and entertainment facilities. This factor boosts the potential for outright sales and increased rentals.
While Hyderabad, Bengaluru and Chennai are IT hotspots, Navi Mumbai is emerging as a growth corridor, due to the increasing saturation of the mainland. These cities are witnessing constant growth in employment opportunities, attracting people from all over the country. This has naturally led to a lot of new residential projects being launched, especially in the high-demand affordable segment.
As a result, NRIs looking for lucrative returns in new developments in these cities, can expect handsome growth in capital values over the mid-to-long term and steady rental income in the meantime. Also, with the regulatory environment turning pro-consumer with the Real Estate Regulation Act’s (RERA’s) imminent deployment, investing in residential property is all set to become even more attractive for NRIs.
Other cities that are ideal for property investment in 2017
After the government announced the list of Smart Cities in 2016, a few other cities have also become attractive for investments, especially among NRIs focused on residential property.
These cities include Pune, Kochi, Vishakhapatnam and Indore. These cities have a strong and growing IT/ITeS sector and they have the added attraction, of being commercial hubs and educational hotspot of their respective regions. These cities will show a lot of potential for lucrative property investments in the future.
Changes in 2017 that will affect the real estate sector
By April, 2017, the entire country will be covered by the Real Estate Regulation and Development Act. This act is likely to infuse a massive dose of transparency and efficiency, into the Indian real estate sector. NRIs looking to invest in residential property in 2017, should focus on states where the RERA is active. If they have other cities in mind, they will not have to wait beyond May 2017, after which, the real estate sector will be a level playing field for everyone. However, the nation-wide implementation of RERA, will bring a lot of compliance-related cost escalations for developers, forcing them to raise prices even if they do not wish to.
The recent currency demonetisation, may keep a certain segment of buyers and investors away from the market for a while. Nevertheless, for those planning to invest in projects developed by reputed builders and using formal and legal channels of financing, this is the right time to invest. Also, a lot of developers will be looking to achieve better liquidity for their future projects, making the first 1-2 months of 2017 an ideal period for buyers to negotiate favourable terms.
(The writer is CEO – residential services, JLL India)