Top ten residential real estate investment hotspots

News Posted - 2010-02-02

JLLM’s Key locations to watch out for in 2010

Amidst the recent turmoil faced by India's real estate industry, the residential sector has emerged as the sole bright spot for retail investors. It's resilience in the face of negative global cues is as much a result of the latent demand for affordable housing in India as the large share of the Indian real estate pie that the residential sector holds. As with office space and retail malls, residential property did, to a lesser degree, suffer the effects of the global downturn in 2008 and 2009. However, unlike its counterparts, the residential sector has begun to show signs of stability in many markets, and even recovery in certain cities. Whether this trend will continue depends in large part on economic factors and prudent decisions by developers on issues relating to prices and quality of product. Jones Lang LaSalle Meghraj (JLLM) Research has conducted an analysis of residential markets across India to help identify investment hotspots for retail investors. While abnormally large returns can be found in specific projects throughout the country, JLLM limited its analysis to India's 7 largest cities due to high residential demand from their large populations, relatively higher transparency levels and presence of premium regional and national developers. JLLM has also included 3 additional noteworthy cities which it feels have the potential to provide significant returns to investors. A look at the top 10 locations and their key features.


Massive infusion of commercial office and retail space: Currently 22 million sq ft office space expected to grow to 40 million sq ft by 2012 Substantial rationalization of prices: Correction of over 25-30% across micro-markets Wide breadth of projects across price ranges and geographies:Downturn has opened new geographies at much rationalized prices Shortening absorption period: Increased absorption rates leads to reducing housing units to be sold Quality developers and developments: Tier I developers and good quality developmentsWater, power and connectivity are concerns: Metro is expected to improve connectivity.


High income demographics: High investment activity levels across price bands Massive infusion of commercial office and retail space Relative affordability in suburban markets: Most of the markets within the city unaffordable. Affordability in Eastern Suburbs, Thane and Navi Mumbai Infrastructure can't keep pace with growth of city: Infrastructure developments to boost residential demand in suburbs.


Affordable micro-markets: Reasonable price range has led to increased absorption momentum Excellent connectivity: Connectivity through existing road infrastructure and metro Commercial office space: Addition of another 12 million sq ft of office space in the next 3 years Residential demand primarily linked to IT/ITES sector


Huge supply of office space – Addition of another 19 million sq ft of office space in the next 3 years. Affordable micro-markets close to the city. Oversupply in select micro-markets only. Proximity to Mumbai.


Shifting geographies of commercial office development. Most of the micro markets highly affordable. Residential demand linked to growth of IT/ITES sector. City has attained a critical size of IT occupiers which shall help attract more IT occupiers. Infrastructure hasn't kept pace with the growth of the city.


Diversified migrant population working in industrial, logistics and IT & ITES sector. Prices have rationalized across micro-markets. Properties along OMR benefits from excellent connectivity and proximity to IT hubs. Absorption rate yet to pick up


High affordability in Hitec City and Gachibowli. Oversupply in Hitec City - Gachibowli; other markets having low activity. Residential demand inked to growth of IT/ITES sector.


Absorption rate has picked up in Rajarhat. Highly affordable micro-markets. Growth in office take up projected to be low.


Newest metropolitan city with population of more than 4 million. Absorption rate has picked up in affordable markets closer to the city. Highly affordable micro-markets. Pharmaceuticals, logistics and automotive sector to drive population growth in the suburban markets. Poor IT/ITES presence. Short term growth of commercial activity uncertain.


Diversified economy with growing IT/ITES presence. Highly affordable micro-markets.Huge Non-Resident Keralite demand drives residential real estate. Micro-markets of Edapally and Kakkanad highly dependent on IT/ITES sector.

Source : DNA 26/12/2009