There is a major difference in the real estate market of north and south India. While North India is driven by volatile investment sentiment, the southern part of the country, especially the cities - of Chennai, Kochi, Bangalore, and Hyderabad are focused on job opportunities, economic growth, and positive home-buying sentiment. A great deal of the homebuying activity has also been driven by the IT/ITeS and e-commerce industries. The commercial and retail segments of the real estate sector have also witnessed intensified activity in Southern cities. The affordability of connectivity has pulled people to invest in real estate in South India. In the last decade, south India has grown 8% economically.

The factors that define a good real estate investment are qualitative aspects such as lifestyle, connectivity, and infrastructure, as well as quantitative elements such as market conditions and real estate performance. India's south encompasses all these aspects. What south India offers to its investors is the following:

Social infrastructure:

South India has always been at the forefront of healthcare and education. Bangalore, Hyderabad, and Chennai have some of the big names in the educational sector. The majority of students from across the country migrate here to avail quality education. Manipal institute of technology, National Institute of Technology, National Business school, IIT Hyderabad, IIT Madras, etc. In terms of healthcare, Manipal hospital in Bangalore, AIMS hospital in Kochi which has received awards from the Indian Council of Medical Research, and Wockhardt hospital in Chennai, etc.

Affordability in land prices-

Due to the presence of a large number of high net worth investors and urban professionals in southern cities, and many of them already residing there, affordable and readily available land has given a boost to the construction of luxury homes in those cities.

IT and startup growth-

These cities have a huge IT hub and budding startups that open doors to employment opportunities. Apart from that, these cities are the business outsourcing arm of the UK, US, and Europe. This fact makes these cities the hotspots of the real estate industry. With more foreign investors looking forward to establishing IT companies in the prime locations of South India, the scope for commercial real estate is very high. Bangalore, Hyderabad, and Chennai rank in the top 10 startup cities in India. The 3 cities currently have 20000 registered startups!

These were some of the common characteristics of the 4 to cities to invest in south India. Now, lets have a closer look at each city-

A) HYDERABAD:

Titled as the most dynamic city by the JLL city momentum index 2020, Hyderabad is close to the high-performing metropolitan cities in real estate, like Mumbai, Bangalore, and Chennai. Always at the forefront of affordability and superior connectivity, this city proves to be at the top list of the real estate investment market. And why not? A city that has great connectivity and accessibility gives an excellent appreciation in the future and stays in the market trend forever.

Fact check-

• Hyderabad is majorly dependent on the IT sector which accounts for approximately 65% of the city. In addition to pharmaceuticals, healthcare, education, manufacturing, and real estate, the city looks forward to expanding in other areas as well. It’s because of the diversification of industries and business growth, that the state is not dependent solely on its IT pillar.

• The city’s real estate market is upscaling due to Government initiatives. The Government has brought about many infrastructural projects like constructing international airports, metro connectivity of 58 km, etc.

• In the tough times of pandemics, the office space saw exponential growth with a supply of 13.2 million square. ft. Also, there was a 63% Y-O-Y growth in new residential project launches between 2020-2022.

Lifestyle and stability-

• Hyderabad has a stable governance. The IT hub here has set opportunities for the youth. The city has not even compromised on livability factors like water and electricity supply, which people like us look out for on priority in a residential or commercial property. </li>

• In the past years, the city has seen Rs. 2 lakh crore investments in the housing as well as commercial sector that speak for its security and stability. According to a 2017 media survey on women's safety in major cities across the country, Hyderabad is the safest town for women in India. It is also home to a highly trained and skilled workforce of female IT professionals who prefer to live within 5-10 kilometers of their work without worrying about commuting.</li>

• Also, the IT sector has seen Rs. 33 crores of gross investments, plus additional money invested by the multinational companies for business expansion.</li>

• Hyderabad is also a preferred destination for big MNCs that want to expand and diversify their branches in the Indian market. Investments to build data centers have also been done on a large scale in the past few years. Many big players like Google, Apple, TCS, Wipro, Infosys are expanding their operations in the city.</li>

Economical factors-

• Hyderabad is making immense progress in economic development. New infrastructure projects are making this city more attractive for real estate investments. The government's flagship program SRDP(Strategic Road Development Plan) is focused on better connectivity, resolving traffic issues, and reducing traveling time. 23 projects were planned under SRDP by Greater Hyderabad Municipal Corporation) AND Hyderabad Metropolitan Development Authority. Of which 19 were executed by GHMC while the rest were executed by HMDA.</li>

• Society Underpass, the first project completed under SRDP and inaugurated in January 2018, has helped in reducing traffic congestion on Shilparamam Road. Another project inaugurated the same year was the Mindspace Underpass which has come to help vehicles moving towards Gachibowli and other areas from Cyber Towers, Hitec City. Similarly, with Durgam Cheruvu Cable Stay Bridge and the connecting flyover at Road Number 45, Jubilee Hills, the commuting time to reach Jubilee Hills from Madhapur has drastically reduced.</li>

• Hyderabad’s metro rail project is India’s largest pub;ic-private-partnership project (PPP). As the Metro Rail Project nears completion, the city will become the preferred city for commuters in India with intermodal connectivity and skywalks which will redefine seamless commuting across all modes of transit in India</li>

• The Hyderabad Metro Rail Network will cover a total distance of around 69.2 Km across three corridors:</li>

Corridor I : Miyapur to LB Nagar

Corridor II : JBS to MGBS

Corridor III : Nagole to Raidurgam

• To ensure seamless and comfortable travel, the Project will integrate with existing railway stations, suburban railway networks (MMTS), and bus stations.</li>

B) CHENNAI-

Chennai has surging housing transactions due to the low-interest rates, and great facilities accompanied by low prices. The city added 4500 new housing units in Q1 2021. Additionally, there has been stable residential and commercial pricing despite the pandemic. This city has leading IT and ITES companies. Chennai is mainly focused on manufacturing units as it has always aimed at the end-user market. The city is also a favorite investment spot for NRIs.

Facts check-

• Chennai is the center of the automobile industry, and the leading auto companies are Hyundai, Caterpillar, BMW, Royal Enfield, Renault, Nissan, Yamaha, Mahindra & Mahindra. With Samsung, Motorola, and Sony as well as other leading companies in Chennai, this city is also a leading hub for electronic manufacturing. An investment of over $670 million has been made by Tata Electronics to build a manufacturing facility at Hosur/RMZ Corp. </li>

• Chennai's residential property sales increased by 8% in 2019, with the highest numbers recorded in south Chennai. Ready-to-move-in homes and nominal housing units were the primary demand in the Chennai market. In the year 2019, the office space rentals also showed prominent growth of 50% year-on-year sales.</li>

• Since the year 2000, IT companies in Chennai took a leap. Now, in Chennai Accenture, Infosys, and other e-commerce companies like Amazon, Flipkart, etc. have their offices.

Lifestyle and stability-

• Unlike other cities like Mumbai, Bangalore, Hyderabad, Delhi etc. Chennai has a dense crowd of buyers hovering in its real estate market. The city has stable housing rates and widespread commercial properties.

• The accessibility factor of Chennai has given a chance for startup ventures to grow in the city. Also, due to the political and communal peace in the city, MNCs and NRIs have the liberty to invest here. This adds to the city’s progress.

• The Chennai Metropolitan Development Authority is preparing the third master plan to be effective from 2026-2046. This plan will focus on increasing affordable housing, industrial scaling, trade, and commerce among the others.

• Rickshaws, taxis, trains, and airports are the city's most reliable transportation options for daily commuters. Since the year 2000, the number of non-Chennaities has grown in Chennai. Chennai has migrants from as far as Bihar and Punjab.

• The government is also actively taking initiatives to improvise connectivity for a better future for the city and its residents.

Economic factors-

• The infrastructural development of Chennai is highly focused on reducing traffic and providing ease of transport to the daily commuters. The crowd of investors in the city is increasing. To accommodate these many commuters and reduce the hassle of transportation, the Chennai Metropolitan Development Authority (CMDA) has taken initiatives to improve Chennai’s infrastructure by introducing many projects so as to keep its citizens at ease.

• The Kelambakkam bus terminus in the southern part of Chennai has been built to decongest Chennai's mofussil bus terminus in Koyambedu. It will handle the buses coming from Tamil Nadu to south Chennai.

• An area of 88 acres (3,58,200 square metres) is dedicated to the new bus terminal. The Kilambakkam KMBT is located in the Vandalur area of Chennai, in the southern suburb of Kilambakkam. A major ongoing infrastructure project in Chennai is, of course, Kilambakkam Bus Terminal.

• The arrival of the metro in the city is a big boon. The project will ease the daily traffic issue of the city. The metro project in Chennai is expected to be completed in 2025. Chennai metro will cover almost all important points including mofussil bus terminus.

• The city has also planned the construction of a pedestrian subway that will connect EastTambarrum to west Tambarrum and Madichur.

C) KOCHI:

In recent years, Kochi, Kerala’s economic capital, has become a preferred destination for home buyers. Due to the rapidly expanding real estate market and changing cityscapes, prospective home buyers have a wide range of choices. The city’s real estate market is growing rapidly and also ranks in the best tier 2 cities in India. As the gateway city to Kerala, Kochi has a lot to offer. It comes under India’s top 20 smart cities.

Fact check:

• The city is expected to receive real estate investments of upto INR 2076 crore in the next few years.

• Availability of skilled manpower, 60% lower rental rates as compared to other cities and 50% lower operational costs has given a boost to the real estate as well as residential sectors of the city.

• In fact, according to the JLL report 2020, Kochi is expected to be the 3rd city after Mumbai and Chennai to have big data centres.

• Kerala’s 25% employment vacancy rate is quite healthy and has benefited the Kochi commercial sectors as many commercial properties in Kochi attract job seekers who shift in the city for settling.

Lifestyle and stability-

• It won’t be wrong to say that Kochi is a commercial hub as well as an educational hub. Kerala has the highest literacy rate of 94% in India, and Kochi has a huge share of it. Many major institutes like the National Institute of fisheries, the Institute of Oceanography, top engineering colleges, the National University of advanced legal studies, and many more colleges are based here.

• Kochi, one of the most important cities of Kerala, excels in the literacy rate of the whole state. As far as preliminary education in Kochi is concerned, the schools here are affiliated to either Kerala State Education Board, Indian Certificate of Secondary Education, or Central Board of Secondary Education.

• The city of Kochi, a booming port city, provides thousands of jobs for newly graduated IT engineers because of the high demand for their services. Among the best places to live in Kochi are Edapally, Pachalam, Thripunithura, Mamangalam, Ponekkara, Kakkanad, and Fort Kochi. You can find entertainment areas that promote art and culture throughout the city at Changampuzha Park, Subhash Park, Cherai Beach, Fort Kochi, and Vypeen Island.

Economical factors-

• Cochin Aerotropolis is the largest project that Kochi has undertaken recently. Aerotropolis are airport cities and very few cities in the world are aerotropolicies. The international airport has planned to utilize the land under its hold to build an aerotropolis that will consist of an aviation school, IT park, Golf course, and hotels and malls.

• Kochi metro rail project is being undertaken by the Delhi metro rail corporation. The rail track will be 25km long. The rail extends from Aluva to Tripunithura and will halt at every kilometer.

• CIAL(Cochin International Airport Limited) IT park in Nedumbassery will be constructed over 4 million square feet of IT space.

D) BANGALORE:

With the increase in the influx of IT companies and industries from around the globe, Bangalore has been increasing its infrastructure investment year on year. The city also ranks high among startups. Additionally, it is the cheapest city in the country. Bangalore property prices rise steadily every year by about 20%, even during the worst economic conditions. An ideal scenario for real estate investment in Bangalore is a backdrop of glorious economic circumstances.

Fact check:

• In 2020 Bangalore witnessed a rise of 33% from 24,910 units in 2020 to 33,080 units in 2021in residential sales.

• Also, the real estate market in Bangalore was successful as it witnessed a 43% rise in new commercial launches.

• There was a significant rise in NRI investments too. Around 53% of NRIs are keen to invest in Bangalore’s CRE. Bangalore’s investment appetite is quite high, consisting of 5000 NRIs across 12 countries.

• In Bangalore, the residential market is gradually moving up. According to a report, there was an 18% increase in sales in the first half of 2022.

  Lifestyle and stability-

• Bengaluru city provides an array of transport options to ease commuters' intra-city and inter-city movements. Through major roads, railroads, and airports, Bangalore is connected to its immediate surroundings of Mysore, Hassan, and Tumkur, as well as to Chennai, Mumbai, and Kerala. Bangalore has the largest bus connectivity making it highly accessible to travel for its daily commuters. With the Peripheral Ring Road and Bellary Road coming into existence, the connectivity between North and South Bangalore is set to improve as well leading to more benefits for investing in real estate in the city.

• Known as the silicon valley of India, Bangalore has everything that a metropolitan city needs to have. Bangalore has more than 800 colleges which makes it a huge educational hub. Job opportunities and career prospects are many in this state as there are a lot of corporate firms and big MNCs occupying Bangalore’s commercial space, which expands employment opportunities and career development prospects.

Economic factors-

• The Bangalore Peripheral Ring Road (PRR) is a 74 km road owned and operated by the Bangalore Development Authority (BDA). It includes 8 lanes of access-controlled expressway with route alignments connecting Tumakuru and Hosur roads via Hessaraghatta Road, Doddaballapur Road, Ballari Road, Hennur Road, Old Madras Road, Hoskote Road, and Sarjapur Road.

• By combining it with the currently operational NICE Peripheral Ring Road, this 100m wide greenfield expressway will create a 116 km bypass around Bengaluru. Karnataka's state government approved the project in February 2022 for the public-private partnership design, build, finance, operate, and transfer (PPP-DBFOT) model. The concessionaire, after winning the bid, will be granted a 50-year lease on the highway, after which it will be transferred to the government.

• There are 6 elevated stations and 12 underground stations proposed along the Reach 6 to be developed by the Project, which stretches from Gottigere to Nagavara in Bangalore. There are four components to the Project.

(i) Construction of Elevated Viaduct and Stations: The component comprises 7.5 km of elevated metro section and 6 elevated stations.

(ii) Construction of the Underground Section Tunnel and Stations: This component includes 14.5 km of tunnel and 12 underground stations.

(iii) Depot: The component mainly consists of a maintenance depot for the Reach 6 at Kothanur.

(iv) Tunnel Ventilation System and Environment Control System

Be it residential real estate or commercial real estate, India has made significant progress in both sectors. Due to an array of options available, it might sometimes be confusing to spot a suitable location to make a real estate investment. Hence, a proper analysis is needed while finalizing the investment. Certain factors like financial metrics, the investment potential of the property, and a proper background check are important.

Real estate investments prove to be a smart decision, as it provides a concrete base for all future aspects like stability, high returns, and a great pillar to hold on to, in case of unpredictable situations.

We covered South India in this blog! To learn more about other hotspots of the country, read our blog on- Top 3 cities to invest in India!