Identifying the right markets for property investments becomes easier if one looks for certain key market triggers. Some of the critical factors that highlight the potential of any property are existing infrastructure, execution timelines for new infrastructure initiatives, the demand for commercial space (leading to job creation), social infrastructure like eateries or multiplexes, and finally price trends. If you factor these five aspects in and consider them against the prevailing market, the top cities for residential property investment today are Hyderabad, Bangalore, Chennai, Pune, Noida and Navi Mumbai. To a large extent, the above growth drivers are clearly visible in varying degrees in these cities. There is a healthy demand for Grade A commercial spaces in cities like Hyderabad, Bangalore and Pune, which exceeds the supply scheduled for the near and long term. In Noida and Navi Mumbai, there are market drivers over and above job creation at play, namely superior infrastructure and affordability. Navi Mumbai and Noida are absorbing investor demand from Mumbai and Delhi, where affordability plays an important role for investors.
In the case of Navi Mumbai, one can further extrapolate the investment potential to Kharghar, Kalamboli and Ulwe. For Noida, the extended growth corridors are Noida Extension and Noida Expressway. In all these cities, massive job creation will further fuel the demand for residential property for a while to come. As already mentioned, job creation is a major trigger for residential real estate demand.
Every individual employed by IT and related industries is eventually a buyer of a residential apartment.The current absorption pattern for residential apartments in Bangalore, Hyderabad, Pune and Chennai shows that the lion’s share of demand comes from IT/ITES and BFSI employees.
The average age of these buyers ranges from 27 to 33 years, with easy availability of mortgages and the desire for a self-owned home before marriage being the key drivers. The highest demand is for apartments whose price tags fall within the Rs. 40 lakh- Rs. 1 crore range. The Indian property market is not geared for property ‘flipping’ (buying and selling speculatively within very short periods). India's conservative banking system has been and will continue to be the country's most reliable insurance against the kind of boom-bust cycle that was the undoing of the US property market. Considering present market dynamics, your best investment period is four-five years. Such a horizon is a safe hedge against risks related to market vagaries, and ensures that the property will appreciate well regardless of short- and medium-term turbulence.
The author is CEO-Residential Services, Jones Lang LaSalle India