Investors betting on top six Indian cities
Housing has always been a preferred investment option not only for individual investors but also for institutional ones. In the past, institutional investors showed a preference for office spaces as against residential primarily owing to stable returns and recurring rentals. Of late, commercial development has been able to attract equity investors due to long tenor rental generating capabilities.
Further, REITs bring liquidity for their investment for commercial space. On the other hand, residential developments being self-liquidating in nature have a limited development timeline, and hence lag in equity investments. Residential developers are offered more of debt/structured debt options. With RERA coming into play and emphasis on compliances, institutional developers such as Godrej, Mahindra and Shapoorji are entering the realty market to develop mid-to-large housing projects. Most of these developers are either backed by strong institutional foreign funds or strong balance sheets of the parent corporate.
Few cities have been doing well in terms of attracting investors in India and certain growth factors contribute to their success.
Bengaluru, India’s Silicon Valley, has outperformed other markets in the country despite the lull in the IT sector. The demand for office space and commercial establishment continues to grow. Ready-to-move-in stock has seen the highest absorption. Housing needs of people who are preferring to stay close to their workplace have given a big boost to the residential projects around IT and commercial developments. Availability of large land parcels are perfect for the increased affordable housing sector demand. Robust road infrastructure, presence of excellent educational and medical facilities makes Bengaluru the preferred home-buyer market.
Mumbai is the financial capital of India and continues to attract investors for residential and commercial spaces. Being the most populous city in India, with an estimated population of 12.4 million, Mumbai has always attracted people from all over the country. The city always provides constant growth in employment opportunities. Mumbai, however, continuous to remain the most expensive property markets in India.
Hyderabad is picking up as the most active residential and commercial markets. The growth of the IT/ITeS sector has further resulted in the development of the organised retail sector in Hyderabad. Properties are better-priced and closer to work options are being preferred by the salaried/professional home buyers.
Pune continues to attract investors owing to its proximity to Mumbai. It is not only a major educational hub, but also home to IT companies, engineering, and automobile manufacturers. Migrant employees and student demand for housing have made Pune a good option for investors to invest in the residential market. Infrastructure initiatives by the state and central government such as Metro and Smart City projects will give the much-needed boost to the real estate micro-markets in Pune.
Chennai has a majority share in the country’s automobile exports and leads to massive employment generation due to presence of number auto manufacturers and industrial manufacturing units.
Faced with huge demand for affordable housing, supply for the same has been limited. There has always been a demand-supply mismatch in Delhi with supply in Delhi being low while Noida and Gurugram seem to perform comparatively better.