Residential real estate has emerged as a mainstream asset class for investment. Despite adverse economic conditions, residential real estate has provided steady returns to investors. In this article we have handpicked top investment destinations for 2014 in major cities. What makes these locations top choices for investment are their strategic locations, upcoming infrastructure developments, arbitrage opportunities and availability of land for development.
Mumbai Island City - Wadala & Sewri
Parts of the 7 islands of the city of Mumbai, Wadala and Sewri were once neglected regions. In 2010, large tracts of mill and Bombay Port Trust land was made available and thus arose an opportunity for development of premium residential projects over there. For people who want to reside in the ‘island city’, this provides an attractive opportunity, located close to employment hubs. The area is hardly 30 minutes away from the commercial hubs like Bandra-Kurla-Complex (BKC) and developed residential micro-markets like Worli, Prabhadevi, Parel, Matunga, Sion and Dadar. The Eastern freeway project has tremendously improved the road connectivity of this micro market with CBD in the south. Moreover, the established train network connects it to Mumbai CST in the island city zone, Andheri in Western, Vashi and CBD Belapur in Navi Mumbai. Mumbai Metropolitan Region Development Authority (MMRDA) plan to develop 109 hectares of land of Wadala as a new commercial hub like BKC and further infrastructure plan such as Sewri-Nhava Sheva trans-harbor link and monorail project are the growth stimulators for this area.
A number of developers such as Lodha Developers, Ajmera, Sanghvi Group of Companies and Kamla Group have launched luxury projects such as Lodha New Cuffe Parade, Lodha Codename Metropolis, Lodha Evoq Lodha Sky Gardens, Ajmera i-Land, Ajmera Treon, Ajmera Zeon, Spectra Royale, Sanghvi Heights and Kamala Estelle etc.
Indicative capital values for prime residential properties vary between INR 20,000 – 35,000 per sq ft. This is approximately 40 to 50 per cent less than nearby locations of Prabhadevi and Worli.
NCR - Southern Peripheral Road
The Southern Peripheral Road (SPR), a 150 meter-wide road is a part of New Gurgaon that is drawing the attention of many end users and investors. SPR is positioned as an up-market location which is expected to fetch handsome appreciation in the years to come. Excellent connectivity to existing commercial hubs like Sohna Road, Golf Course Extension Road and developments on NH-8, is the prime demand driver of this location. The New Gurgaon-Sohna Master Plan - 2031 focuses to develop major infrastructure on SPR like metro connectivity, link to Gurgaon Faridabad Road and extending the SPR into a six lane expressway. Developers such as Unitech Ltd, Raheja Developers, IREO, Parsvanath, BPTP, Vipul, and Emmar MGF have large tracts of land in this area.
Many developers such as Tata, Unitech, BPTP and Spaze have already launched their premium projects in this location. Apartments being developed in this micro-market are typically 3 and 4 BHK of 1,500 to 3,000 sq ft. Currently, these projects are priced in the range of INR 5,000 to 6,500 which is approximately 20 to 30 per cent lesser than the nearby residential hubs such as Golf Course Extension Road and Sohna Road.
Bengaluru - Thanisandra
Thanisandra, located towards north-eastern region of Bengaluru, has been emerging as a popular affordable investment destination. It caters to the housing requirements of the IT/ ITeS catchments present along the north-eastern corridor. This area has recently come under the domain of BBMP. The area is poised to develop in the coming years due to the expansion of the main road as an alternative road to Bangalore International Airport.
Recent developments have transformed this area into an urban locality with all the modern amenities and accessibilities. The area now is dotted with apartments, companies, schools and other educational institutions. The major reason driving the spurt in development of real estate is the overall connectivity through the ORR towards commercial hubs, the Central Business District and proximity to the airport. Large commercial establishments like Manyata Tech Park have also had significant impact towards the growth of this region.
Major developers like Sobha, Mantri, Bearys, etc have already established their presence in the micro market with successful completion and sales of their projects. Majority of the projects have been developed by Grade “A” developers and match up to the high levels of construction quality associated with the same. The projects have majority of the apartments in the 2BHK & 3BHK segment. Most of these projects have facilities like clubhouses, swimming pools, etc., apart from providing 24x7 security and power back up.
AREA TO WATCH FOR - OTHER CITIES
Chennai - Navallur & Siruseri
These are the upcoming residential clusters located towards the south of the city in close proximity of OMR - the IT/ITeS and industrial hub of Chennai. Connectivity to the prime localities of CBD (Central Business District) and ongoing infrastructure development initiatives like the ‘Elevated Highway Project’ along OMR (Old Mahabalipuram Road) and 6 lane roads is attracting investors to the residential projects in these micro-markets. At present, capital values range from 3,000 to 4,000 per sq ft and expect to appreciate significantly in the coming years.
Kolkata - EM Bypass
Eastern Metropolitan Bypass, a 21 km peripheral bypass with six lane road has emerged as a preferred destination of real estate investors. There are a number of connecting roads that link the bypass to major hubs of the city along its route. Improved connectivity to the city and the IT-hub of sector 5 and Rajarhat makes this an attractive residential location. Capital values of residential apartments along the Bypass road have appreciated by 50 per cent over the past 5 years. More than 28,000 apartments are planned in this region. Capital values here range between 5,000 and 16,000 per sq ft.
Pune - Hinjewadi, Baner & Wakad
Recently, locations like Hinjewadi, Baner & Wakad in western region has become a favourite residential destination due to proximity to Mumbai via the express highway and to the Special Economic Zones and IT/ITeS development There is a huge demand for rented accommodation because of which the area is favoured by investors. A number of projects have been launched in this area recently in the price band of 3,300 – 7,500 per sq ft.
About the author
Surabhi Arora, leads the research team in India and has more than 13 years of experience in carrying out multi-disciplinary research and analysis in the area of finance and real estate industry. Surabhi specialises in real estate economics, policies, commercial and residential real estate research with in-depth knowledge of market dynamics across major markets in India.