South Indian Real Estate

Delhi and Mumbai witnessed a boom in real estate followed by a slump. Prices of property skyrocketed putting them beyond the reach of most and high loan interest rates further dampened the demand. Down south real estate prices are more reasonable. As compared to an increase of 20 to 40% in property prices in Mumbai and NCR, prices in Bangalore, Chennai and Hyderabad have only seen a reasonable increase of up to 35% since 2009. Local builders in the South are cautious about pricing that is in the region of Rs. 4000 per sq. ft. Sales of property in Bangalore and Chennai are stable with lesser inventory of unsold property. Whereas retail home loans have slowed down in Mumbai and Delhi regions, Chennai, Pune, Kolkata and Hyderabad lead the demand, accounting for nearly 40% of the nationwide disbursals. It is not only housing that is stable and going strong down South. Commercial property segment sales in these three southern cities are equally strong. Demand is mostly from the IT sector as these three cities have about 64% of the IT SEZs here. Office space in South Indian cities is projected to grow at 8% for the period 2012 to 2016, pointing to selective quality development. The vacancy rate is projected to be at 16%, much lower than the national average of 20%. The real estate stock in South India has gone up to 13.2 million sq. ft in the first quarter of 2012, a sizeable jump from 1.6 million sq. ft in 2003. Overall, the commercial and residential markets down South are saner and show a healthy growth and the focus is now shifting to smaller cities like Kochi, Visakhapatnam, Mysore and Coimbatore.