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  • What NCR??????????
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  • Hot spots for residential realty

    Several cities are seeing high growth turning them into the next investment destination for residential realty. Even as various studies point to their emergence, an investor would do well to carry out proper due diligence

    Home buyers are no longer content with a roof above their head, or a space they can call their own. They are approaching the entire purchase process with the mindset of an investor. Even as they are looking at comfort and other amenities, their sights are fixed on the appreciation potential.

    The country’s real estate market is also witnessing the rise of a new class of customers: double income couples who form a significant proportion of second home investors.

    Even as this new class has taken to calculating risks against returns, it is usually family elders, friends and local brokers whom they turn to for advice. Decisions are based on limited information, gut feel or some tip about possible returns. Basing one’s decision on such supposedly time-tested strategies could result in a bad investment.

    As an investor, one should remember that the realty sector is no different from any other investment avenue, and professional guideposts can help one identify good investments and also give a framework to base one’s decision.

    The Demand Drivers

    The demand for residential units in India has surpassed the limited supply a decade ago. This continued shortfall has translated into property prices going out of reach of the average buyers in most metros. However, demand keeps increasing. As a result, two trends have surfaced over the last several months. One, due to non-affordability, significant demands have shifted to Tier-II and Tier-III cities, which has turned them into locations that could potentially yield good returns. Second, prices began to stabilise at the higher level in metros but with a strong basis for further appreciation in some pockets due to high demand.

    These cities also have other demand-raising and hence price-hiking drivers such as on going and planned projects in infrastructure, a growing service sector, manufacturing base, huge business investments and employment-generating opportunities.

    The heightened economic activity in these regions could make them hot-spots for for the next wave of real estate investment. Compared to the ever-ballooning demand the supply is marginal at present. This widening gap that is not being filled fast enough, explains the slow but steady rise in property prices across all segments.

    According to a report by the Ministry of Housing and Urban Poverty Alleviation, the current estimated shortage inclusive of existing and future demand is of 18.78 million urban houses. This total demand is expected to increase at a compounded annual growth rate (CAGR) of 2.8 per cent across India.

    The HOT SPOTS

    In one such study, the global real estate consultancy Cushman & Wakefield (C&W) India has reported that the new, future demand (not factoring in the existing demand) for residential dwellings in the period 2012 – 16 will be 11.8 million units across India.

    The firm has identified the top eight cities, which will constitute 18 per cent or 2.1 million units of the total demand across categories. Of the total additional demand in these locations, the mid-priced segment is estimated to be highest at approximately 59 per cent or 1.3 million units, followed by demand in the high-end segment which is 4.51 lakh units.

    “The demand creation in such cities is a reflective of the economic strength that these cities have, and that it attracts new settlers as well as creates conducive environment for natural population growth.” says Sanjay Dutt, executive managing director, C&W, India.

    The low-end segment is expected to see fresh demand of approximately 3.62 lakh units in these cities in the next five years. The top on the list of eight regions is Ahmedabad followed by Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, National Capital Region (NCR) and Pune.

    This data indicates not just the possible demand-driven profit locations but also the segments to invest in and is calculated on the basis of past trends for population, household growth and income classification. This does not take into consideration the existing unfulfilled demand by those without homes, living in congested or dilapidated structures, living in rental houses, demand from NRIs or those wishing to purchase second or holiday homes for use or investment.

    Jones Lang LaSalle India (JLLI), has adopted another framework and has put together a list of non-metros and emerging cities. In western India, Ahmedabad, Jaipur and Jodhpur are suggested while in the north, Chandigarh is favoured. In the south, it suggests Kochi and Coimbatore and Visakhapatnam in the east as one of the emerging and non-metro locations for significant appreciation in future. These locations require low capital investment as compared to the highly developed metros.

    Their demand drivers are interesting. Ashutosh Limaye, head of research, JLLI, says that Ahmedabad, the commercial capital of Gujarat has one of the highest per-capita incomes in the country. Due to the ultra-progressive policies, well planned industries and infrastructure, high investment and intelligent development, it has become one of the most exciting destinations in India.

    Kochi is the commercial capital of Kerala and a major tourist destination. Besides, it is witnessing a boom in the IT/ITeS sector as well. Coimbatore the big industrial centre in Tamil Nadu is becoming preferred location for the IT/ITeS industry. It offers excellent infrastructure, quality of life, highly skilled workforce and low cost of living.

    Jaipur and Jodhpur — the major international tourist attractions — have an excellent connectivity to Delhi and other cities in the region, Jaipur is identified as a very promising city for BPO and IT industries. Visakhapatnam is a major port and industrial centre, and the hub for petroleum, steel and fertiliser industries. In addition to the biotech SEZ, it also hosts an IT SEZ.

    Chandigarh, the capital of Punjab and Haryana is one of the most well-planned cities of India with very high per-capita income. The Technology Park has put it on national IT and international outsourcing sector map, says Limaye.

    Another real estate consultancy Knight Frank India has drawn up an advisory report, which claims to address the need of the home buyer from an investment point of view over the next five years i.e. 2013-17. The report suggests 13 local areas in 5 major well-known regions across the country — Mumbai, Delhi-NCR, Bengaluru, Chennai and Pune.

    “With property options ranging from Rs 3,200 per sq ft to Rs15,000 per sq ft and investor returns in the range of 18.6- 29 per cent annually, the residential real estate will emerge as a promising asset class for the next five years,” says Gulam Zia, executive director, Knight Frank India.

    The final call

    Various studies by real estate professionals and consultancies, both global and local, show that different drivers would impact the demand-supply gap and hence the appreciation. These reports can only suggest the possibility of an outcome but by no means can it guarantee one.

    Over the next couple of years, development in these hot-spots would increase, which in turn would reduce the gap between local demand and supply resulting in slower appreciation or even stagnancy of prices. One may end up missing the investment bus then. There is, however, no foolproof way to predict the behaviour of the real estate markets. Professionals can only give a potential investor a framework, with whose help a decision can be arrived at.









    Hot spots for residential realty - Indian Express
    CommentQuote
  • Why isn't there a Coimbatore listed on the tier 2 city index on the forum?
    CommentQuote
  • Originally Posted by MANOJa
    Several cities are seeing high growth turning them into the next investment destination for residential realty. Even as various studies point to their emergence, an investor would do well to carry out proper due diligence

    Home buyers are no longer content with a roof above their head, or a space they can call their own. They are approaching the entire purchase process with the mindset of an investor. Even as they are looking at comfort and other amenities, their sights are fixed on the appreciation potential.

    The country’s real estate market is also witnessing the rise of a new class of customers: double income couples who form a significant proportion of second home investors.

    Even as this new class has taken to calculating risks against returns, it is usually family elders, friends and local brokers whom they turn to for advice. Decisions are based on limited information, gut feel or some tip about possible returns. Basing one’s decision on such supposedly time-tested strategies could result in a bad investment.

    As an investor, one should remember that the realty sector is no different from any other investment avenue, and professional guideposts can help one identify good investments and also give a framework to base one’s decision.

    The Demand Drivers

    The demand for residential units in India has surpassed the limited supply a decade ago. This continued shortfall has translated into property prices going out of reach of the average buyers in most metros. However, demand keeps increasing. As a result, two trends have surfaced over the last several months. One, due to non-affordability, significant demands have shifted to Tier-II and Tier-III cities, which has turned them into locations that could potentially yield good returns. Second, prices began to stabilise at the higher level in metros but with a strong basis for further appreciation in some pockets due to high demand.

    These cities also have other demand-raising and hence price-hiking drivers such as on going and planned projects in infrastructure, a growing service sector, manufacturing base, huge business investments and employment-generating opportunities.

    The heightened economic activity in these regions could make them hot-spots for for the next wave of real estate investment. Compared to the ever-ballooning demand the supply is marginal at present. This widening gap that is not being filled fast enough, explains the slow but steady rise in property prices across all segments.

    According to a report by the Ministry of Housing and Urban Poverty Alleviation, the current estimated shortage inclusive of existing and future demand is of 18.78 million urban houses. This total demand is expected to increase at a compounded annual growth rate (CAGR) of 2.8 per cent across India.

    The HOT SPOTS

    In one such study, the global real estate consultancy Cushman & Wakefield (C&W) India has reported that the new, future demand (not factoring in the existing demand) for residential dwellings in the period 2012 – 16 will be 11.8 million units across India.

    The firm has identified the top eight cities, which will constitute 18 per cent or 2.1 million units of the total demand across categories. Of the total additional demand in these locations, the mid-priced segment is estimated to be highest at approximately 59 per cent or 1.3 million units, followed by demand in the high-end segment which is 4.51 lakh units.

    “The demand creation in such cities is a reflective of the economic strength that these cities have, and that it attracts new settlers as well as creates conducive environment for natural population growth.” says Sanjay Dutt, executive managing director, C&W, India.

    The low-end segment is expected to see fresh demand of approximately 3.62 lakh units in these cities in the next five years. The top on the list of eight regions is Ahmedabad followed by Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, National Capital Region (NCR) and Pune.

    This data indicates not just the possible demand-driven profit locations but also the segments to invest in and is calculated on the basis of past trends for population, household growth and income classification. This does not take into consideration the existing unfulfilled demand by those without homes, living in congested or dilapidated structures, living in rental houses, demand from NRIs or those wishing to purchase second or holiday homes for use or investment.

    Jones Lang LaSalle India (JLLI), has adopted another framework and has put together a list of non-metros and emerging cities. In western India, Ahmedabad, Jaipur and Jodhpur are suggested while in the north, Chandigarh is favoured. In the south, it suggests Kochi and Coimbatore and Visakhapatnam in the east as one of the emerging and non-metro locations for significant appreciation in future. These locations require low capital investment as compared to the highly developed metros.

    Their demand drivers are interesting. Ashutosh Limaye, head of research, JLLI, says that Ahmedabad, the commercial capital of Gujarat has one of the highest per-capita incomes in the country. Due to the ultra-progressive policies, well planned industries and infrastructure, high investment and intelligent development, it has become one of the most exciting destinations in India.

    Kochi is the commercial capital of Kerala and a major tourist destination. Besides, it is witnessing a boom in the IT/ITeS sector as well. Coimbatore the big industrial centre in Tamil Nadu is becoming preferred location for the IT/ITeS industry. It offers excellent infrastructure, quality of life, highly skilled workforce and low cost of living.

    Jaipur and Jodhpur — the major international tourist attractions — have an excellent connectivity to Delhi and other cities in the region, Jaipur is identified as a very promising city for BPO and IT industries. Visakhapatnam is a major port and industrial centre, and the hub for petroleum, steel and fertiliser industries. In addition to the biotech SEZ, it also hosts an IT SEZ.

    Chandigarh, the capital of Punjab and Haryana is one of the most well-planned cities of India with very high per-capita income. The Technology Park has put it on national IT and international outsourcing sector map, says Limaye.

    Another real estate consultancy Knight Frank India has drawn up an advisory report, which claims to address the need of the home buyer from an investment point of view over the next five years i.e. 2013-17. The report suggests 13 local areas in 5 major well-known regions across the country — Mumbai, Delhi-NCR, Bengaluru, Chennai and Pune.

    “With property options ranging from Rs 3,200 per sq ft to Rs15,000 per sq ft and investor returns in the range of 18.6- 29 per cent annually, the residential real estate will emerge as a promising asset class for the next five years,” says Gulam Zia, executive director, Knight Frank India.

    The final call

    Various studies by real estate professionals and consultancies, both global and local, show that different drivers would impact the demand-supply gap and hence the appreciation. These reports can only suggest the possibility of an outcome but by no means can it guarantee one.

    Over the next couple of years, development in these hot-spots would increase, which in turn would reduce the gap between local demand and supply resulting in slower appreciation or even stagnancy of prices. One may end up missing the investment bus then. There is, however, no foolproof way to predict the behaviour of the real estate markets. Professionals can only give a potential investor a framework, with whose help a decision can be arrived at.









    Hot spots for residential realty - Indian Express




    It's a good article by indianexpress and thanks ManojA for posting it.
    CommentQuote
  • ManojA and other senior members,

    I am interested in investing about 1 crore or may be little bit over this figure. I am from Punjab and my areas of interest are in the Punjab, Chadigarh Tri-City, and the Delhi NCR region.

    I may choose to i invest in one or more than one property, which I may buy within this amount.

    I can invest all this money in White.

    Can you suggest me few areas on interest where I may invest this money

    Firstly, considering short term time frame (upto 3 years).

    Secondly

    For long term investment perspective (5-7 yr+).

    I will be greatful for your suggestions.

    Regards,

    SJoshi
    CommentQuote
  • NCR has been appreciating much better compared to other locations listed by you
    CommentQuote
  • Originally Posted by Krazy Yuppie
    NCR has been appreciating much better compared to other locations listed by you


    So, Within NCR, which areas shall I shortlist.

    Areas Quite in discussion at the moment are Gurgaon and Noida area.

    Gurgaon has done great leaps and bounds, whereas Noida and especially greater Noida is much cheaper to buy at the moment but does it presents the fundamentals to mimic Gurgaon's progress ?? (in the long run)

    your thoughts please ??
    CommentQuote
  • Sector 80 to 95 Called New Gurgaon is progressing well.Second developing area is Dwarka Express Way.
    CommentQuote
  • New growth centres for residential realty

    As per the 2011 census, there are 53 urban areas with a population of more than a million each. The manufacturing, trading and services activities in these cities are the major contributors to the Indian economy.

    The top seven cities of Bangalore, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune play an extremely important role in the country's economic growth.

    However, these cities have reached saturation levels and hence many industries are moving to other cities which offer immense potential. These cities offer a number of attractions such as cheaper talent pool, sizeable and cheaper land and real estate options, relatively lower operating costs and conducive business environments created by state and local governments.

    Rapid industrialisation and increase in growth of services sector activities has resulted into increasing disposable income, favourable demographics, changing lifestyles and growth of population, which is becoming upwardly .

    Prominent tier-II and tier-III cities such as Ahmedabad, Jaipur, Visakhapatnam, Surat, Chandigarh, Vadodara, Indore, Lucknow, Coimbatore, Nagpur, Bhopal, Lucknow, Bhubaneswar, Kochi to name a few are witnessing increased interest by investors, particularly in the residential real estate market. A number of factors such as increased cosmopolitan population, increasing employment opportunities and improvement in infrastructure have primarily aided this growth.

    The growth in tier-II and III cities is well supported by government policies and initiatives that have over time encouraged developers to tap potential real estate demand. These cities have better infrastructure, more open spaces and greener areas unlike other congested metropolitan cities.

    With the growth of sectors such as manufacturing, IT/ITeS, banking and financial services industry, consumer goods, the demand for commercial real estate space in these cities has been increasing consistently over the last few years. This rise in demand for commercial properties has resulted in increased employment opportunities within the cities, which has further fuelled the demand for residential real estate.

    Many reputed developers have built and are coming up with residential projects in these cities that offer lifestyle facilities, comfort and security similar to those in tier-I cities. Also, since tier-II and III cities offer investment options that are relatively cheaper, individuals with limited risk appetite and investment size may opt for diversifying their investment portfolio.

    The risk factors with respect to such investments are relatively less as most markets are driven by fundamentals and speculative activity is limited. Therefore, these cities are likely to witness a stable and steady price appreciation and not volatile price movements over time. The growth in residential property prices in these cities portrays a promising future to the investors and end-users both.

    The offerings are also varied with residential properties such as apartments, plots and villas in both mid- and high-end segment at relatively affordable prices.

    Recreational options are also growing in these cities as several new malls, multiplexes, sports facilities such as stadiums, golf courses, etc are opening up to cater to the needs of change in resident population and rapid urbanization. Rising income levels, increase in quality and number of educational facilities, availability of bank loans, variety of supply of residential projects and improvement in economic conditions are collectively contributing to the increase in demand.

    These cities are also witnessing a rise in demand for homes from NRIs and individuals wanting to retire to smaller towns and cities due to better quality of life and greener environments available.

    A gradual increase in penetration of home loans in these cities along with shift in preference from independent houses to apartments will increase sales. It is important to realise that these markets are at a critical juncture, wherein they have attained sufficient scale. As emerging cities, they offer potentially lower costs, necessary and inexpensive infrastructure and suitable business environments for companies to take advantage of.

    There is scope for the residential sector to grow and even expand in these cities without the bottlenecks of scarcity or high costs of land, choked infrastructure, environmental restrictions, etc that are usually found in the top seven m. These cities are building a strong place in the residential market and have a rewarding future as well.













    New growth centres for residential realty - Indian Express
    CommentQuote
  • Originally Posted by MANOJa


    and what about Delhi NCR???:bab (59):
    CommentQuote