Top 5 Real Estate Movers in South India
Essentially, this quote captures the trajectory of the Indian real estate sector in recent times. The Indian real estate sector is one of the fastest growing sectors in the country. The sector saw a sea change in 2020-2022 when the start-up problems posed by the pandemic presented dynamic challenges like never before. However, it made a quick recovery with demand accelerating. According to an industry report, the real estate market is expected to grow to a market size of $1 trillion by 2030 and will contribute 13% to GDP by 2025. While the real estate market in every Indian state has its own character, the South remains the largest market, and it will continue to set trends across India.
Real estate markets in the South are robust, dynamic and driven by end-user demand. Unlike other key markets, cities in the south have been able to limit the extent of the market downturn in the recent past by decreasing the number of new launches and focusing on completing their projects on time. There is also plenty of land available for development in the area. Some key cities in South India such as Bengaluru, Hyderabad and Chennai have emerged as one of the best performing and highly valued real estate markets in the country.
Factors such as the availability of well-planned infrastructure and the presence of strong employment opportunities led by the IT/ITeS sector and manufacturing industry have increased the attractiveness of Southern markets. Additional factors like good connectivity, excellent health care facilities and pleasant climate in southern cities have increased the sale of properties in outlying areas as buyers have shifted their preference towards affordability and connectivity. The region has also seen a large chunk of investment from Non-Resident Indians (NRIs) in the recent past, who are attracted to this part of the country due to the stability the market has shown over the years.
Some of the key wheels driving the real estate market in South India are as follows.
Efficient Infrastructure: As mentioned earlier, the public infrastructure and available transportation facilities play a vital role in the economic growth of this particular market. In the southern part of India, these facilities are continuously evolving with more and more people and companies making this part of the country their new base. This priority given to infrastructure in the South has forced consumers to reconsider where they live. For example – Bengaluru has new infrastructure projects underway, ranging from the metro linking the whole city to the airport, to inland regions, to rail networks linking the suburbs.
Additionally, Chennai has emerging projects supporting road infrastructure to reduce traffic on express highways. Similarly, even Hyderabad is in charge of developing systems to promote easy and accessible connectivity. The pace of work that happens in these cities is truly amazing. With all these emerging and current robust infrastructure projects, South India makes real estate investment very attractive.
Strong growth in IT and startups: the South has been at the forefront of creating a breeding ground for innovation and creativity. Bengaluru, the startup capital of India, has been the birthplace of many big companies like Ola and Flipkart. Along with Chennai and Hyderabad, these 3 cities are among the top 10 start-ups in the country. This is the main reason for the increased demand for corporate and commercial real estate in the south, which is growing and on an upward trajectory. Hyderabad has emerged as one of the major hotspots for business outsourcing for the US, UK and European markets. As more foreign investors seek to establish their IT bases in the best locations in South India, opportunities for corporate real estate are booming.
NRI Investments: The combination of vast infrastructure presence, strong capital appreciation and established developer brands makes South India an attractive destination for offshore investment. NRI investors have always been interested in investing in the Indian property market, which helps them reconnect to their roots. It is up to developers and marketplaces to make the most of this incoming opportunity. Moreover, the exchange of the dollar against the rupee is at levels which allow the NRIs to continue their investment.
Availability of land: Land prices in the south are reasonable compared to the western and northern regions of the country. The cities in the south are less saturated and therefore offer a large availability of land at reasonable prices, in different growth zones. This makes these markets all the more affordable and therefore explains the strong increase in demand for housing in these regions.
Strong retail growth: Major markets in South India have witnessed a surge in retail and commercial growth in recent years. Well-known chains of shopping malls, supermarkets and large retail stores have opened to meet the growing demand. To cater to today’s on-the-go generation with immaculate tastes, international and high-end Indian brands, among others, have made their presence felt in the South.
To conclude, the above factors acted as a catalyst to boost the growth of real estate in the southern part of India. South Indian cities like Bengaluru, Hyderabad and Chennai are growing at a rapid pace with the presence of a vibrant professional class and a well-developed business ecosystem. The rapid rise of the coworking segment has also put more emphasis on real estate in South India and it will only flourish more in the coming years. In the “new normal” that has emerged, homebuyers are consciously seeking smart flexi-homes in verdant green spaces, resulting in two real estate segments: outlying suburbs and self-contained townships. The next few years look promising for real estate players in South India, especially those who have diversified their portfolios and have the expertise to add value and capitalize on opportunities both in booming and in difficult times.
(The author is Strategy Advisor, Sattva Group)