How Real Estate Fares In Indian Metros

The real estate market in India has been facing a slowdown for a while now. But this does not mean that investing in real estate assets, anywhere in the country, is a raw deal. Indian cities are vast and there are opportunities lurking in many localities and micro markets.

PropGuide takes a look into how major Indian cities have been fared in the recent past.

Mumbai

Besides Gurgaon, Mumbai, the financial capital of India, is a city where demand for apartments priced above Rs 75 lakh continues to be high. According to the PropTiger DataLabs report for the third quarter of the 2015-16 financial year, 71 per cent of the total residential real estate demand in Mumbai is for apartments priced more than Rs 75 lakh. Of the unsold inventory in Mumbai, 57 per cent is that of apartments priced more than Rs 2 crore.

In calendar year 2015, beyond Thane, Central Mumbai, Mumbai-Pune Bypass, Thane, and Andheri to Dahisar emerged as the leading micro markets in terms of the number of units launched. Similarly, beyond Thane, Navi Mumbai, Mira Road and beyond, and Andheri to Dahisar are the leading micro markets for units sold. Real estate prices have seen a rise in Navi Mumbai in the past few months, driven by the upcoming Navi Mumbai International Airport. In Mumbai, in nominal terms, prices have risen moderately in the recent past. In 2015, among Tier-I Indian cities, Mumbai, Bengaluru and Pune were three cities that witnessed 30 per cent of the total absorption. Similarly, the top four micro markets of Mumbai accounted for 19 per cent of the sales in Tier-I cities. The number of launches were among the highest in Mulund, Kanjurmarg and Bhandup.

Delhi-NCR

The towns in the National Capital Region (NCR), including Noida, Gurgaon and Bhiwadi, witnessed a fall in nominal prices of houses in the third quarter of 2015-16 when compared with the same quarter the previous year. Greater Noida, Yamuna Expressway and Sohna, meanwhile, witnessed a rise.

According to DataLabs, Noida Extension emerged as the best micro NCR market in terms of both sales and the number of new launches, while Gurgaon witnessed the highest number of launches in the luxury segment.

The demand for housing in these regions is on a high, driven mainly by employment clusters. This is especially true of Knowledge Park V, one of the most impressive localities in the Noida Extension micro-market, where real estate has become vibrant because of the upcoming Metro lines.

Bengaluru

Bengaluru has seen a 13 per cent price increase in the 10 quarters to the October-December period of 2015-16. No other Indian city witnessed such a price rise during the period. In calendar year 2015, Bengaluru North and Hosur North were the best micro markets, both in terms of the number of units sold and launched. This was like other major Indian cities and employment clusters. The number of launches in Bengaluru, however, has seen a decline in the recent past.

Hyderabad

Hyderabad is one of the most affordable real estate markets among the largest Indian cities. This is partly because of better land use regulations in the city. For instance, the building height restrictions are far less stringent in Hyderabad. Besides, real estate prices in Hyderabad are lower when compared with other large Indian cities like Chennai and Bengaluru. But prices in Hyderabad are now on a rise, and are likely to increase further with the upcoming infrastructural projects like the Outer Ring Road. Real estate prices along the Hyderabad-Nagpur Industrial Corridor are likely to rise, too. Hyderabad Kolkata and Ahmedabad were the three Indian cities where the number of launches rose in the third quarter of 2015-16 when compared with the same quarter of the previous year.

Kolkata

Unlike many parts of NCR and Mumbai, Kolkata is basically an end-user market. Inventory overhang Kolkata is lower when compared with other large Indian cities, show PropTiger DataLabs data. Also, Kolkata is one of the three cities where the number of launches in the October-December quarter of 2015-16 rose on year-on-year basis, and the age of unsold inventory is relatively low here. However, the year-on-year price rise during the third quarter was modest, at 0.9 per cent. Kolkata North is a micro market where the greatest number of sales and launches took place in calendar year 2015. End users looking to benefit from the current stagnant prices could buy houses in Kolkata, even if prices do not appreciate in the near future.

Chennai

Office space consumption has been on a rise in Chennai, and demand for housing is also expected to rise. Like Kolkata, Chennai is largely a market driven by end-users. The city has, however, witnessed a steep supply decline in calendar year 2015. Price rise during the year was modest and buyers here have not been active in the real estate market for a while, but there could be an increase in the near future as infrastructure improves.