Kochi hits a six to become the next highly preferred real estate destination in India. All potential drivers such as IT development for employment generation, Metro rail for intra-city connectivity, the Smart City tag for basic infrastructure, port-based development for industry and commercial growth, airport terminal for international connectivity and foreign investment and tourism for the hospitality industry are emphasized in Kochi.
This will ultimately boosts demand for housing and make it one of the next highly-preferred real estate destinations in India. The 6 reasons why this will happen shortly:
1) Inclusion in the top 20 Smart Cities:
Recently, the Ministry of Urban Development, Government of India identified the top 20 candidates under the Smart City mission initiative through a competitive selection process. Kochi ranks 5th and expects an investment of INR 2,076 crore for pan city solutions and area-based development. E-Governance and water management are focus areas as part of pan city solutions which will help Kochi to access improved and planned infrastructure with assured water and power supply, sanitation and solid waste management, efficient urban mobility and public transport, IT connectivity, etc.
Kochi-Mattancherry-Central City, which is selected as the area for development, will witness intense development in the coming years. Numerous developers are trying to acquire land for real estate development in and around this area. The ‘Smart City’ tag is expected to boost prices exponentially.
2) The first Indian Tier-II city to a propose Metro Rail:
Metro rail connectivity in Kochi is under various stages of construction and is expected to be operational by 2017. In Phase I, the Kochi Metro Rail Corporation has proposed an elevated route spanning approximately 25.25 km from Aluva to Pettah. Once completed, the metro will improve connectivity and reduce travel time from Aluva to the key micro-markets of Kochi. Real estate will be greatly influenced once the metro becomes operational. Areas like Companypady, Ambattukavu, Kalamassery, Edapally, Palarivatom, Ernakulam South, Elamkulam, Vytilla, Panampilly Nagar and Kadavanthara will be the main beneficiaries and some of them have already started to witness increased development.
The future expansion of the metro will also benefit areas like Menaka, Kakkanad and West Kochi. Metro rail stations exert influence up to a buffer of 1 km radius, with maximum influence in the areas within a 500 m radius. Land prices along metro rail corridors have increased by 10%-15% after announcement, and are expected to increase further after operations.
3) New international airport terminal to cater growing demand:
Cochin International Airport Ltd (CIAL) is constructing a INR 1,100 crore international terminal with a built-up space of 15,00,000 sq ft. It is designed to handle 4,000 passengers per hour and will be commissioned by 2016. Once operational, the new international terminal will have a very positive economic impact and uplift the real estate market in the whole region. The catchment will witness development of new retail and commercial spaces along with a good supply of residential and hospitality developments to cater to the increasing demand.
The increased international connectivity will also pave the way for global companies and cargo-based businesses to deploy and expand operations nearby. The completion of the international terminal, along an operational metro, will give significantly boost the city’s real estate market – and the catchment itself is expected to witness 15-20% rise in property prices.
4) Venue for one of two submarine cable landings in India:
Kochi is one of the venues for ‘SEA-ME-WE-3’ (South-East Asia – Middle East – Western Europe 3) and ‘SAFE’ submarine cable landings, and is the second Indian location along with Mumbai to have two submarine cable landings. This fact highlights Kochi as an important destination for IT enabled services. Presently, the Government of Kochi is keen on developing IT/ITeS, as the entire Kerala state is promoting this sector heavily.
The major thrust on IT/ITeS development will eventually boost real estate development in the city, as it creates demand for residential properties, Grade A office spaces and retail developments.
5) Home to India’s first global hub terminal:
Kochi is among India’s leading cities for strong port infrastructure and has the largest (and India’s first) global hub terminal – the International Container Transshipment Terminal (ICTT) at Vallarpadam. This makes Kochi the premier port gateway to South India. Warehouses and other port-based industrial developments will see growth in these areas and lead to vastly increased port-related activities.
6) Continued tourism growth:
Kochi is known for its high heritage value, and contributes significantly to Kerala’s tourism industry. It sees an annual tourism influx that equals about four times its population, of which 14% accounts for foreign tourists, and reflects an annual increase of about 6%. The city’s vision of transforming itself into a tourist hub paves the way for steadily increasing demand for the hospitality sector and its allied industries.
In short, Kochi – which was earlier struggling to recover from an oversupply scenario – will see a massive revival due to creation of demand from these initiatives. Sustainable growth in real estate prices is now assured in the city, and this has incited new interests from numerous real estate developers from all over India who are keen to launch residential, commercial and hospitality projects there.
A. Shankar, National Director & Head of Operations – Strategic Consulting, JLL India