Focus on Five Indian Cities

Implications: The development of the real estate sector in India is mainly combined with strong economic growth, rising income levels and urbanization. Ever since the liberalization of the Indian economy, the urban landscape of India has changed dramatically. Initially the advantages of a growing economy and subsequent real estate boom were localized to cities like Delhi, Mumbai, Bangalore and Chennai. Going forward as these tier-I real estate markets mature, there is now a progressive feel to tier-II and III cities such as Pune, Nagpur, Hyderabad, and Cochin.

Analysis: To begin with some Gyan on Indian Jargons:

The Indian Economics:
One Lakh = One hundred thousand , One Crore = 10 Million Rupees
One USD = Rupees 41/- , One Euro = Rupees 55/-

In my humble opinion I have set below where one should look into investing in India for development or through any other route, set in priority order with a brief synopsis for each city:

Hyderabad

A city synonymous with rich history, culture and architecture, Hyderabad is the fifth largest metropolis in India and the capital of the Indian state of Andhra Pradesh. Hyderabad is one of the most evolving cities today fuelled by the growth of information technology and biotech industries and is striving to take the mantle of the global city tag from Bangalore and mark my words it will succeed.

The development of a township with state-of-the-art facilities called HITEC (Hyderabad Information Technology Engineering Consultancy) has prompted several Information Technology (IT) and Information Technology Enabled Services (ITeS) companies to setup operations in the city. This area called Cyberabad in West Hyderabad covers 51.70 sq. kms, and is host to Infosys, Microsoft, Google, Wipro, Oracle, Bann Info, Satyam Computers, and Dell.

IT and ITeS sectors are the major contributors to employment growth in this region and will continue to drive the market along with Business Process Outsourcing (BPO) firms, back offices for financial institutions, Pharmaceuticals and Entertainment industries.

With readily available space in short in supply, the demand for it naturally goes up resulting in higher prices. Hyderabad's commercial real estate prices have increased substantially not only in and around HITEC city but in other pockets like Begumpet, Panjagutta, Ameerpet, Banjara Hillsand Jubilee Hills, the new Central Business Districts (CBDs) of Hyderabad.

Retail expansion has also added to the supply constraint pushing rates up further. Rental and capital values have increased with Ness from Israel, Citigroup TCS and Honeywell moving into the city. The Hyderabad residential property market has a choice of the best luxury apartments that Indian real estate can offer.

Hyderabad's growing market share will erode the National Capital Region (NCR) and the Mumbai market share of commercial property. By the end of 2007, Hyderabad will be having 12% of the property market in India, second only to Bangalore.

Malaysian property developer Sunway City Berhad has partnered with Hyderabad based Opus Developers and Builders to develop a Rs.800 crore township near Hitec City in Hyderabad. The projects, Sunway Opus Grand Residency and Sunway Prajay, will kick start the company's foray into India's real estate market.

The new international airport scheduled to be ready by 2008 along with the prestigious $3-billion, Fab (factory fabrication model) City project billed as India's first world-class wafer fabrication unit and first assembly and test manufacturing unit, proves that Hyderabad is the new face of globalization and modernity.

This is one city which is expanding and growing and simultaneously getting its infrastructure in place. The municipality too has its act together and is known to be the most efficient and public friendly from right of information point of view.

Mumbai (Re-christened from Bombay to Mumbai)

A modern cosmopolitan city of India, Mumbai and its suburbs comprise the second-biggest urban agglomeration in the world after Tokyo. Often referred to as the 'Manhattan of India’, It is also the Los Angeles from the Indian Television, Advertising and Film Industry point of view. Mumbai is ranked seventh among the most expensive cities in the world to do business and stay in.

Although the prices of premium properties in Mumbai differ from location to location, the city continues to attract maximum Non Resident Indians (NRI) and foreign investments as it is the business capital of the country. The preferred destination for many Fortune 500 companies to have their headquarters in the city, Mumbai has witnessed rapid growth in its financial, banking and IT sectors.

Mumbai’s extended suburbs have come up as excellent alternative to other high priced locations in the city. Around 5,00,000 acres of land is availableon the western route including areas beyond Vasai, Virar, Dombivali, along with Thane on the eastern belt, and Navi Mumbai and Panvel on the harbor route, but may be stuck under title dispute or Urban land Ceiling Act. We do now have International “Title Insurance” companies that we work with who offer ‘Title Indemnity.”

The Indian Supreme Court in March 2006 sanctioned the sale of 602 acres of prime land in the heart of the city occupied by 58 mills to private developers for remodeling the location into residential, entertainment and commercial complexes. In 2007, the Maharashtra Government invited a global tender for the Rs. 9, 300 Crore Dharavi Development Plan envisaging a complete transformation of ‘Asia’s Largest Slum’, in the heart of Mumbai.

India's largest private entity, Reliance Industries (RIL) is coming up with a 12,000-hectare SEZ project near Mumbai, which is the largest in terms of size. Among other SEZs which have got the final approval from the State Government are 12.59 hectare hub in Powai to be developed by Hiranandani Developers and a 12.14 hectare project at Mahul in Chembur to be developed by Bombay Industrial Corporation.

Mumbai seems poised for a leap as a property investment proposition, especially with a series of infrastructural initiatives such as the Mumbai Metro transit, Bandra-Worli Sea link, and the new airport at Navi Mumbai in the pipeline. One thing is for sure, it will be survival of the fittest in Mumbai!

Pune

Pune, about 160-km south-east of Mumbai is the engineering and automobile hub of western India and an emerging IT centre. An industrial centre with a global presence, Pune is home to one of the world's largest two-wheeler manufacturers - Bajaj Auto and the world's second largest forging company - Bharat Forge Ltd.

The evergreen city has a burgeoning software industry and most of India's major software giants like Wipro, Infosys, Satyam, Tata Technologies, TCS, Kanbay, Veritas, Cognizant, PCS and Mahindra British Telecom have their presence in Pune. It is also emerging as a prominent place for Business Process Outsourcing (BPO) companies.

Areas surrounding the city like Mundhwa, Kharadi, Baner and Hinjewadi are seeing growth as well and Pune will soon get a major face lift with re-development of its industrial townships Pimpri and Chinchwad into exclusive residential area for young professionals. Sufficient open spaces, good climactic conditions, upgraded infrastructure and a growing population has led to a demand for both residential and commercial spaces in the city.

With the announcement of several construction projects including the international airport and Reliance’s upcoming SEZ, Panvel, is gaining importance as an investment destination. Just 50km from Mumbai, the development of Panvel will bridge the Mumbai-Pune gap.

Amongst the various industries establishing projects in the Lonavala-Pune belt are POSCO, Raymond, and General Motors which has commenced work on it’s over Rs 1,300-crore Greenfield plant at Talegaon.

Nagpur

Also known as the 'Orange city' of India, Nagpur is the second largest city in Maharashtra. It is also the second greenest in India and is located almost equidistant from Kolkata, Chennai and New Delhi and Mumbai. Gearing up as the next destination for industries and service sectors like the IT, ITeS and the BPO sector, it is India's primary transport hub with the nation's main highways intersecting here.

The city of Nagpur is literally the centre of India and this strategic location is the reason why the Government of Maharashtra with the co-operation of the Government of India is developing the existing Nagpur airport as Multi-modal International Passenger and Cargo Hub Airport (MIHAN) Project. The project will be spread over 4,025 hectares and, when completed, it is going to be one of the biggest cargo hubs in Asia.

Global aviation major Boeing is setting up its $100 million regional maintenance, repair and overhaul (MRO) facility for its aircraft pertaining to its Asia operations to be developed in the Nagpur SEZ. This is expected to create up to 3,000 highly paid jobs and another 30,000 jobs indirectly.

Following the growth of job opportunities and due to congestion in the nearby cities of Mumbai and Pune consistent migration into the city has led to large demand for residential spaces in the city. The up market zones of the city include areas like Dharampeth, Ramdaspeth, Gokulpeth, Ramnagar, ShivajiNagar, Byramjee town, Gandhinagar and Ravi Nagar, while upcoming residential locations are on Kamptee Road in the north-east, Khamla and Hingna Road in the south-west and Besa and Wardha Road in the south.

There is demand for quality commercial space too across Nagpur. Infrastructural facilities, strategic location and connectivity to the financial capital, Mumbai are few of the many factors that have a major role to play in the transformation of Nagpur into one of the fastest growing cities in India.

Kochi/Cochin

This small town on the south-west coast of the Indian peninsula has triggered off a fresh rally in real estate prices in the central districts of Kerala, with the announcement of the Smart City project. The government has tied up with the Technology and Media Free Zone Authority of Dubai to set up Smart City, one of the largest IT infrastructure projects of India at Kakkanad, near Kochi city.

Other mega projects that include the Vallarpadam International Container Terminal and Petronet's LNG terminal together with the Smart City project are expected to create 200,000 jobs. There is also an international bunkering terminal, a ship repair facility, a CNG terminal as well as an international cruise ship terminal at Kochi port. It was also the first city in India to have an international airport built under public-private partnership.

Today, Kochi is a growing centre for information technology, tourism and international trade. All of these factors have fuelled the demand for more accommodation, office space, and retail space as well as hospitality services. The State Kerala has he highest literacy rate in India.

A large number of land deals are being done in Kochi localities like Vyttila bye pass (NH 47) and the Sea Port to Airport Road, extending in the north, up to Thrissur 80km away on NH 47, in the south, on the road to Cherthala including the south-eastern suburbs of the Thripunithura-Chottanikkara and the north-western areas of Varapuzha, North Parur and Vypin Island and on the reclaimed land near Goshree bridges connecting the city with Vypin island.

Each city has its own distinct advantages in the real estate market. With its FDI policies among the most liberal and attractive in emerging economies, India seems poised for a leap as a property investment proposition.