Property rates play important role when investing in real estate
We surveyed four non-metro cities to gauge the trends in the local residential property markets and check whether these are good destinations for investing.
India's economy is estimated to have grown by 8.6% in 2010-11, according to the Economic Survey 2010-11. The Reserve Bank of India projects the economic growth at 7.4-8.5% for 2011-12. It's not just the metros that are driving the country's growth. Signs of progress are visible in state capitals and small towns as well.
Though prices of residential properties have already peaked in the seven major cities-New Delhi, Mumbai, Chennai, Kolkata, Bangalore, Pune and Hyderabad- non-metros and small cities could still be great destinations for investing in real estate .
MONEY TODAY, in association with property portal 99acres.com, explores the residential property market in four non-metro cities- Ahmedabad, Bhopal, Patna and Thiruvananthapuram. We surveyed the residents, property builders and brokers of the cities to learn about the trends and developments in their local housing market.
AHMEDABAD
Gujarat has been one of the leading states in terms of economic growth for several years and has attracted a lot of fresh investments. Due to its focused growth initiatives, Gujarat has leaped ahead of other Indian states in growth, whereas some other states are witnessing a slump, according to a report title "Retaining the Edge: Sustaining South India's Growth Momentum" by McKinsey and Co. Gujarat grew by 11% in 2010-11, against India's average of 9%, the report says.
Ahmedabad, the largest city in Gujarat, is witnessing rapid growth in the real estate market. The prices of residential properties have moved up more swiftly in the past two years. More than 80% of the builders and brokers surveyed said prices have increased by more than 20% during the period. Apart from appreciation in capital value, residential properties also yield 3-5% return annually as rental income.
The growth in the housing market is expected to continue. Around 80% of the local industry players expect property prices to strengthen up to 10% in the next two years. The rest of the respondents expect the prices to rise up to 20%. The locations which are in demand include Satellite, New CG Road, SG Highway and Bopal. Residential apartments constitute around two-thirds of the demand. One-third prefer buying plots.
BHOPAL
Though Madhya Pradesh grew at a slower pace than Gujarat in the last financial year, it still registered a growth rate close to the national average. State capital Bhopal has seen demand for housing properties rise in the past couple of years. Residential properties in the city have given huge returns over the past two years. Around 70% of the residents, local developers and property brokers polled in the survey said prices of residential properties have gone up by more than 20%.
Only 4% of the respondents said that the prices had increased by 10% or less. The outlook for the housing market looks bright with every respondent predicting the trend to continue. Around 70% of the respondents expect value of residential properties to grow by 10-30% over the next two years.
As commonly seen in non-metro cities, buyers prefer residential plots compared with apartments. Even property brokers are in favour of owning a piece of land rather than an apartment in a high-rise. Hoshangabad, Kolar Road, Airport Road, Harera Colony and Bagh Mughaliya are the preferred locations in the city.
PATNA
During the past few years, Bihar has transformed from being one of the states with poor performance into the second best performer in terms of growth. Of course, its huge growth rate is partly due to the low base of the previous financial years.
High demand for housing has resulted in rapid appreciation of houses and plots. Property prices have gone up by more than 20% over the past two years. Most of the local respondents expect prices to grow by 10-20% or even more over the next two years.
The city has witnessed rapid growth in infrastructure development. Over the past few years, several small shopping malls have come up in the central locations of the city. This reflects the confidence in economic growth of the state. Here too, local residents prefer residential plots over apartments.
THIRUVANANTHAPURAM
In the southern part of the country, Bangalore is not the only destination that you can explore for investment in residential properties. Of course, the information technology hub is among the top seven destinations for real estate investments in the country. The state capital of Kerala can be a good alternative investment destination if you are looking for cheaper properties with possibility of higher returns.
According to the individuals surveyed in the city, residential property prices have witnessed strong growth over the past couple of years. Around 70% of the respondents said prices have gone up by more than 20%. Among property developers and brokers, more than 80% predict a growth of more than 20% over the next two years. Improved infrastructure facilities in the city should help strengthen property prices.
Like Patna and Bhopal, the demand for residential plots is high in Thiruvananthapuram. Around 75% of the respondents said investing in a residential plot is better than buying an apartment. In Thiruvananthapuram, the preferred investment destinations include Kannamoola, Peyad, Kazhakootam, Pettah, Sreekariyam, Peelamedu and Vellayambalam.
Though prices of residential properties have already peaked in the seven major cities-New Delhi, Mumbai, Chennai, Kolkata, Bangalore, Pune and Hyderabad- non-metros and small cities could still be great destinations for investing in real estate .
MONEY TODAY, in association with property portal 99acres.com, explores the residential property market in four non-metro cities- Ahmedabad, Bhopal, Patna and Thiruvananthapuram. We surveyed the residents, property builders and brokers of the cities to learn about the trends and developments in their local housing market.
AHMEDABAD
Gujarat has been one of the leading states in terms of economic growth for several years and has attracted a lot of fresh investments. Due to its focused growth initiatives, Gujarat has leaped ahead of other Indian states in growth, whereas some other states are witnessing a slump, according to a report title "Retaining the Edge: Sustaining South India's Growth Momentum" by McKinsey and Co. Gujarat grew by 11% in 2010-11, against India's average of 9%, the report says.
Ahmedabad, the largest city in Gujarat, is witnessing rapid growth in the real estate market. The prices of residential properties have moved up more swiftly in the past two years. More than 80% of the builders and brokers surveyed said prices have increased by more than 20% during the period. Apart from appreciation in capital value, residential properties also yield 3-5% return annually as rental income.
The growth in the housing market is expected to continue. Around 80% of the local industry players expect property prices to strengthen up to 10% in the next two years. The rest of the respondents expect the prices to rise up to 20%. The locations which are in demand include Satellite, New CG Road, SG Highway and Bopal. Residential apartments constitute around two-thirds of the demand. One-third prefer buying plots.
BHOPAL
Growth and better infrastructure facilities should push property prices in non-metros.
Only 4% of the respondents said that the prices had increased by 10% or less. The outlook for the housing market looks bright with every respondent predicting the trend to continue. Around 70% of the respondents expect value of residential properties to grow by 10-30% over the next two years.
As commonly seen in non-metro cities, buyers prefer residential plots compared with apartments. Even property brokers are in favour of owning a piece of land rather than an apartment in a high-rise. Hoshangabad, Kolar Road, Airport Road, Harera Colony and Bagh Mughaliya are the preferred locations in the city.
PATNA
During the past few years, Bihar has transformed from being one of the states with poor performance into the second best performer in terms of growth. Of course, its huge growth rate is partly due to the low base of the previous financial years.
High demand for housing has resulted in rapid appreciation of houses and plots. Property prices have gone up by more than 20% over the past two years. Most of the local respondents expect prices to grow by 10-20% or even more over the next two years.
The city has witnessed rapid growth in infrastructure development. Over the past few years, several small shopping malls have come up in the central locations of the city. This reflects the confidence in economic growth of the state. Here too, local residents prefer residential plots over apartments.
THIRUVANANTHAPURAM
In the southern part of the country, Bangalore is not the only destination that you can explore for investment in residential properties. Of course, the information technology hub is among the top seven destinations for real estate investments in the country. The state capital of Kerala can be a good alternative investment destination if you are looking for cheaper properties with possibility of higher returns.
According to the individuals surveyed in the city, residential property prices have witnessed strong growth over the past couple of years. Around 70% of the respondents said prices have gone up by more than 20%. Among property developers and brokers, more than 80% predict a growth of more than 20% over the next two years. Improved infrastructure facilities in the city should help strengthen property prices.
Like Patna and Bhopal, the demand for residential plots is high in Thiruvananthapuram. Around 75% of the respondents said investing in a residential plot is better than buying an apartment. In Thiruvananthapuram, the preferred investment destinations include Kannamoola, Peyad, Kazhakootam, Pettah, Sreekariyam, Peelamedu and Vellayambalam.
