Special Report Real Estate

Real estate enthusiasts in India are convinced that the next IT/ITeS hub in Maharashtra (after Mumbai and Pune, of course) is definitely Nashik. The city shows great promise with its upcoming, slick infrastructure projects in power supply, roads, software technology parks and the works.

The recent World Bank loan of Rs.1.25 billion also seems to have weaved its magic on the city's drainage, sewage and transport system, which in turn has further fuelled the Nashik property boom. Needless to say, the city's proximity and connectivity with commercial hubs like Mumbai and Pune are only the icing on the cake.

Mahindra & Mahindra, MICO, Crompton Greaves, Siemens and Glaxo are some of the big names, which have established prominent industrial base in the region. A Five Star Industrial Area (on 7,000 hectares of land) is also being planned in the city. Catering to agro based industrial products, the complex will probably be the largest of its kind in not just India, but the whole of Asia. In the residential space, prices range between Rs.60 million to Rs.120 to 170 million for a 1,200-1,600 sq. ft. house.

In Sharanpur Road, Gangapur Road and the newly developing Trambak Road flats, quality houses are available for Rs.800- 900 per sq ft. The latest residential hubs are located towards Adgaon and Deolali, where large-scale projects are coming up on a grand scale. In the commercial space, the saturation in Mumbai is propelling new businesses to divert their corporate or regional hub towards Nashik.

The presence of developed industrial estates within stone's throw viz. Ozar, Sinner, Satpur and Ambad is further fuelling demand and therefore prices. On and around Sharanpur Road, capital values have escalated from just Rs.900-1,200 per sq ft in 2000 to more than Rs.1,200 per sq. ft. today.

Pune's USP is its youthful exuberance. Home to the legendary Pune University, the city is one of the educational hub of the country, attracting the best academic talent of India. The youth power of Pune attracts the bigwigs of India Inc. to this city and therefore the boom in both commercial and residential real estate prices.

In the last two years, realty prices have increased by 30-40% and even now real estate consultants point toward a spiraling of 10-15% every year (at least for the next five years) on real estate prices. Proximity to Mumbai via the new Mumbai- Pune Expressway has ensured connectivity to India's financial hub, moving prices northwards.

The commercial realty sector in Pune is driven mostly by Auto manufacturers and IT sector. Pune is also a striking option for shifting IT backend operations for MNCs. In fact, approximately 75% of the total commercial space in Pune is occupied by these sectors. Mahindra & Mahindra has even signed up with the Maharashtra government to develop a 3,000 acre SEZ in Karla, near Pune.

The other reason for the boom in commercial Pune is the rising demand for malls, recreation centres, discos, water parks, go-karting tracks and water sports centres in the young city. In fact, there are 9 malls expected to be completed by 2007 in Pune. The presence of Infosys, Wipro & other IT companies makes Baner, Hinjewadi & Aundh demand prices in the range of Rs.7,000 to 10,000 per sq. ft.

Similarly, rates in Pimpri & Chinchwad have risen (Rs.8,000 per sq ft) because of the presence of leading auto majors in the region. Aundh is near the famous Hinjewadi, where the IT Park is located, and residential prices are rising here because of the growing 'walk to work' culture in Pune.

Another noteworthy trend is that there is an increase in demand for smaller flats in Pune signaling that genuine need-based buyers, instead of speculators, are causing the real estate boom. It may be pertinent to add that the floods that swept away half of Mumbai last year are another major factor fuelling Pune's growth, as Mumbaikars are aspiring to set up their second homes in the safer & surer Pune.

With five star hotels, shopping malls, eating joints (umm.don't miss the delectable Hyderabadi Biryani) and entertainment facilities counterpoised with the city's pearls and minars, Hyderabad is a vibrant cosmopolitan city. Not as congested as Bangalore, easier traffic than Mumbai or Chennai, and with better facilities for water and electricity than Delhi or Ahmedabad, this thriving capital of Andhra Pradesh is not nicknamed Cyberabad for nothing.

In recent years global IT majors, telecom and insurance companies have been making a beeline for Hyderabad driving up the commercial and residential real estate prices in the bustling city. Commercial property prices prevailing in Madhapur (where private players have lined up multi storeyed office complexes) have burgeoned over the last two years.

And the price gap in this region compared with the main city of Hyderabad have narrowed down considerably. Some analysts feel that Hyderabad is a slow market compared to other metros. The past year and a half has seen enormous activity in the city; land prices are rising, not only within the main city, but also in the suburbs as more and more demand for office and thereby recreation spaces comes up.

Due to land scarcity in prime business areas of Hyderabad, now office buildings are being constructed in parts of Banjara Hills too. Incidentally Banjara Hills is also the prime residential location for senior executives of the IT sector, industrialists, expats and Hyderabad's affluent. Some feel that realty prices here have now reached their peak, but investors can still expect returns of 2-3% annually.

For long & medium term gains, Kapra & Madhapur are the places to invest, as they promise to be the future hi-tech hubs. The K.Raheja Corp (allocated 110 acres of land for construction of Mind space), Convergys, Cyber Pearl (Hi-tech City Ph III measuring 500,000 sq.ft.) & Vanenburg IT Park (Phase III & IV measuring 500,000 sq.ft.) are all pointing to Madhapur's lure. Moreover in east Hyderabad returns of over 30% can be expected in the next few years as prices are still low here but demand continues to surge.

One of the hottest contenders in the property market, Chennai's software boom, more expats in the city and affordability are enhancing the city's real estate prices in a big way. In 2004 alone, more than 40 IT Parks were cleared in Chennai, enveloping an area of 8.5 million sq ft. In the last few years, Philips, Accenture, iGate, KLA-Tencor, Kanby Software, Syntel, GECIS, Virtusa, Siemens, Alcatel, and sundry other companies have set up shop in this city.

A great physical infrastructure (albeit water scarcity is a growing issue), immense connectivity provided by BSNL and Bharti, international airports and seaports, are fuelling the real estate boom in the region. New apartments complexes are being lapped up in Chennai today, thanks in part to the boom in IT and associated sectors that has created huge demand for residential and office space.

In the residential space, Chennai has been growing steadily in the lower and middle segment of the market, typically where properties range between Rs.50-100 million. Seeing the demand for lower cost housing in the city, property developers are now focusing on developing this space. Since 2000, the upper middle and high-end properties segment have also got a boost. 2005 was a watershed year for price escalations in the Chennai residential mart.

The market witnessed an increase of nearly 20% on capital values over the last year, with land prices hitting an all time high. Last year international financial giants like the Government Investment Corporation of Singapore also invested in the Chennai residential real estate market, giving a fillip to other real estate venture capital funds such as HDFC, ICICI and Kotak in the city.

The bullish trend will in all likelihood stay throughout 2006 also. The presence of a huge talent pool for IT/ITeS and hardware industries is making Chennai home for numerous global software companies and retail chains. The government is promoting the area between Tidel Park and Kelambakkam as a software corridor. But, the trend for commercial realty in Chennai (for now) is more toward renting than outright purchases. Given the recent IT and retail push and government initiatives, property rates in Chennai may see a upward trend over the next few years.

Ahmedabad ever since FDI has opened up commercial rates are at an all time high

The epitaph for Ahmedabad - 'Manchester of the East' - is fitting for this industrial hub. Ahmedabad ranks 3rd among the most prosperous cities in the country, with excellent industrial infrastructure & conducive business environment making it the hub of India's textile sector and also the birthplace of some of India's largest organizations viz. Cadila, Orchid, Nirma, Torrent, Paras, Tata Telecom, Reliance, Arvind Mills, etc.

Higher purchasing power in the city, comparatively low priced real estate and improved infrastructure in the old city as well as on the outskirts is providing all the advantages for lucrative opportunities in real estate. Commercial rates are at an all time high, ever since FDI in real estate has opened up and NRIs are pumping in funds here. With more MNCs expected to come into the market, satellite areas like, Vastrapur, Judges Bungalows and the drive in behind Rajpat Club (R2 & R3) are some of the upcoming places in Ahmedabad.

In areas like Vastrapur, the prices for commercial set up are maybe as high as Rs.25,000-35,000 per sq yard. The last few years have also seen the mushrooming of shopping malls and departmental stores across the city. Prominent stores that have set up operations here include (but are not restricted to) Star India Bazaar, Big Bazaar, Pantaloon and West Side. Moreover, analysts predict a 6-8% per annum rise in capital values over the next few years.

Jaipur the residential sector is booming due to the city's commercial clout

By 2011, population of Jaipur is expected to reach about 4.2 million. The main impetus to Jaipur's real estate is coming from the growing commercial sector in the city. Prices have gone up in Jaipur due to this increase in demand of land for commercial & retail purposes.

The prices have gone up to as much as Rs.1,500-2,500 per sq. ft. Abundant availability of minerals, an ebullient gems & jewellery and textiles mart, a busy international airport, proximity to Gurgaon & Delhi and a flourishing travel & tourism sector, have all contributed to boosting the city's level of commercial development.

Apart from Mahindra and Mahindra (which is setting up an SEZ near Jaipur), other interest groups are also exploring Jaipur as a lucrative SEZ destination. Even the city's residential sector is looking up due to the ever-increasing commercial clout of the city.

Of late, some experts opine that residential rates in parts of the city have gone up from an Rs.600 per sq ft in 2004 to nearly Rs.5,000 per sq ft in 2006. Chances are that future residential space is going to be led by an IT park planned by the Rajasthan Industrial Corporation in Sitapur. Infosys Technologies Ltd too has announced the launch of a softwarecum- residential centre project in Jaipur, further bolstering the sector.

Indore a balance of hi-quality industrial and social infrastructure

The commercial capital of Madhya Pradesh, Indore offers the perfect balance of hi-quality industrial and social infrastructure (as compared to other metros), but at reasonably lower costs. Well connected by rail, road and air, Indore also boasts of lower labour rates and trained manpower, enticing many BPOs to move base here.

In fact, real estate firms from other cities are also excited about Indore's untapped potential, especially in properties lining the Khandwa Road. On the residential front, huge spaces are on offer at Bicholi, while places near the Bombay Hospital (being touted as the next commercialcum- residential destination) provide appropriate choices for those looking at small properties. Bicholi Mardana, Bicholi Hapsi and Nipania Road are the other realty hot spots.