India: Top residential property investment hotspots in 2017

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India: Top residential property investment hotspots in 2017
The regulatory environment turning pro-consumer on the back of RERA's imminent deployment - Ashwinder Raj Singh

NRIs looking for lucrative returns in new developments can expect handsome growth in capital values over the mid- to long-term

By Ashwinder Raj Singh

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Published: Thu 26 Jan 2017, 9:49 AM

Last updated: Mon 30 Jan 2017, 11:53 AM

The top five hotspots for residential property investment in the country to date are Mumbai, Bengaluru, Hyderabad, Ahmedabad and Chennai. ?These cities are more or less regulars on most hotspot lists, but there is a sound rationale behind their consistent performance year after year. Not only are these cities attracting new businesses and industries, but their respective governments are also investing resources in building adequate infrastructure to attract capital.
With local economies growing, the influx of talent and skilled workforce into these cities is inevitable, and this naturally results in increased demand for residential properties. Also, the earlier slowdown in the economy and glut in the real estate sector ensured that prices have come down. The developers active there have now invested in launching affordable housing projects that are in high demand. With the economy on a growth curve, more people will have money to invest in real estate, which remains a preferred asset investment for most Indians.
These cities boast an availability of basic infrastructure in terms of electricity, water and other amenities, as well as improvements in communication and commuting facilities such as metros and road development.
They also offer a better quality of life because they have a good saturation of leisure and entertainment options. This factor boosts the potential for outright sales and increased rentals.
While Hyderabad, Bengaluru and Chennai are IT hotspots, Mumbai sees Navi Mumbai's advancement as a growth corridor due to the increasing saturation of the mainland.
These cities are seeing a constant growth in employment opportunities, attracting people from all over the country. This has naturally led to a lot of new residential projects being launched, especially in the high-demand affordable segment.
As a result, NRIs looking for lucrative returns in new developments in these cities can expect handsome growth in capital values over the mid-to-long term, and steady rental income in the meantime. The regulatory environment turning pro-consumer on the back of RERA's imminent deployment, investing in residential property is all set to become even more attractive for NRIs.
Other cities as strong contenders
Since the time the government announced the list of Smart Cities in 2016, quite a few other cities have moved front and centre on the investment charts. They are particularly on the radar of NRIs focused on residential property investment. These cities include Pune, Kochi, Vishakhapatnam and Indore. The IT/ITeS sectors are strong and growing in these cities, and have the added attraction of being commercial hubs and educational hotspots of their respective regions. These cities will show a lot of potential for lucrative property investments in the future.

2017 - a Year of Change
By April 2017, the entire country will be covered by the revolutionary Real Estate Regulation and Development Act, which is designed for absolute consumer-friendliness. This Act will infuse a massive dose of transparency and efficiency into the entire Indian real estate sector. NRIs looking to invest in a residential property in 2017 should focus on states where RERA is already active. If they have other cities in mind, they will not have to think beyond May 2017, after which the real estate sector will uniformly level the playing field for everyone.
The recent currency demonetisation exercise may keep a certain segment of buyers and investors away from the market for a while, but for those planning to invest in projects developed by reputed builders using formal and legal channels of financing, this is the right time to invest.
A lot of developers will also be looking to achieve better liquidity for future projects, making the first one or two months of 2017 an ideal period for buyers to negotiate favourable terms.
It should be kept in mind that the expected nation-wide implementation of RERA by mid-2017 will bring with it a lot of compliance-related cost escalations for developers, forcing them to raise prices even if they do not wish to.

The writer is the CEO - Residential Services, JLL India.

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