Real estate footprint on the rise in South India
The three cities of Hyderabad, Bangalore and Chennai together account for nearly 45 per cent of country’s office stock and southern cities represent 56 per cent of the country’s mall supply between 2012 and 2016 and for residential estate, on average, these cities record nearly one-third of the country’s new launches in the past five quarters.
The Jones Lang Lasalle report ‘Estate South 2012 – Accelerating Growth’ that sought to analyse the real estate footprint of South India ends up noting that ‘Southern India has for long been the silent crusader, building and strengthening its real estate development as one of the most sought destination in the country’.
Towards this, the report cites new milestones as commercial advantage of Bangalore, infrastructural progress of Hyderabad, industrial and residential highlights of Chennai or the emergence of upcoming cities such as Kochi, Coimbatore, Visakhapatnam and Mysore.
In terms of transparency levels across 20 major cities during last year, Andhra Pradesh, Tamil Nadu and Karnataka featured in the top ten ranks for five parameters that included availability of market information, reforms in Urban Local Bodies, progressive business environment, inclusive and sustainable development and protection of Property Rights.
On the office real estate front, the Jones Lang Lasalle report noted that it is primarily driven by the IT/ITES sector as it offers large office spaces at affordable rents providing lower operational costs to occupiers. “Over 64 per cent of the country’s IT SEZs were housed in the Southern cities,” it observed.
Also, with a total stock of nearly 140 million sft in the major cities here, the vacancy rate by the end-2012 was expected to be 16 per cent, considerably lower than the pan-India vacancy rate of over 20 per cent.
For the retail real estate, Jones Lang Lasalle initiative documented that with 59 malls in pipeline, Hyderabad, Bangalore and Chennai represent 56 per cent of the country’s mall supply in coming years. Most of the mall stock here are Grade ‘A’ as opposed to those in Northern and Western regions and the retail stock is set to breach 40 million sft by end-2016 as it increases its share to 36 per cent of the pan-India stock.
The region does not lag behind others even for residential estate and the launches in southern cities during past few quarters were at par with the western region. New launches in the price range of Rs.4,000 per sft or below continue to dominate the residential market here, the report said.
According to Jones Lang Lasalle, residential markets here remained resilient in the past few quarters relative to the significant decline recorded in the sales volume of Mumbai and NCR. Always a price sensitive market with buyers focussed on affordability, these cities had developers adopting a strategy to lure potential buyers by offering right products at right price band.