Suburbs with better infrastructure are doing well, with demand driven by middle-income buyers.
As residential prices across cities go out of reach of most buyers, demand is shifting to the peripheries. But exactly where in the suburbs the demand builds up depends on connectivity and infrastructure development. Typically, in most metros, there are pockets of real estate development that do well, and some that have hit a dead end, at least for now.
It is this reason — high costs in large cities — that is driving demand in small towns, says Mr Ganesh Vasudevan, vice-president, Consim Info Pvt Ltd, which operates the property portal India Property.
As a market leader among property portals, with more than 450 new projects listed across major cities and towns, India Property has the largest offering of new properties on its site, and its analysis of the online traffic gives it a clear picture of the buyers' needs and market patterns, he says.
Sharing some of these facts, which also helps India Property decide on the layout of services it offers to drive its business, Mr Vasudevan said that despite the concerns on the economy, growing interest rates and local socio-political environment, that have had their impact on buyers, demand for residential properties is on the increase.
Across the metros, there has been a slowdown in new launches due to various reasons — if it is the Telangana issue and demand for carving out a new State from Andhra Pradesh that is an issue in Hyderabad, then it is the legal issues relating to land acquisition in Noida and Greater Noida in the NCR, and the spiralling prices and market resistance in Mumbai; in Chennai, clearances have been delayed, and there have been no new project launches in the last six months.
But buyers' interest is keenly felt in the suburbs in all these cities and suburbs that have benefitted from infrastructure development are doing well. To site a few examples, he says, that in Bangalore, the elevated road is driving demand in the areas linked by the Mysore Road. Bidadi, which is approximately 50 km from Electronic City, is just a 20-minute drive now, and prices are buoyant. But overvalued areas closer to the city, such as Whitefield, haven't lived up to their promise.
In Chennai, the Old Mahabalipuram Road and GST Road are the backbone on which the suburbs are growing, with demand particularly driven by the middle-income group.
Hence, it is inevitable that demand will shift to the suburbs, says Mr Vasudevan. In Chennai, a 15-year-old apartment commands around Rs 12,000 a square foot, which means an apartment of more than 1,500 square feet costs Rs 1.5 crore, he says, citing a recent handful of deals in Alwarpet, a major residential centre.
Those working in cities prefer to invest in their home towns, where capital outlay is lower and appreciation more rapid. Coimbatore, Tiruchi, Tuticorin and Madurai are all witnessing a certain level of buoyancy in real estate markets.
The rise in home loan rates have not yet proved a dampener, particularly for the first time home buyers, but deal closures in the latest quarter have been slow.
ONLINE SEARCH ON
On India Property, in the last three quarters, the number of visitors has tripled to an average of more than 2 million page views a day; buyer enquiries — visitors responding to an ad and seeking more information — ranges around 5,000 a day. This is a 100 per cent growth in the last one year, and enquiries for new properties range around 500 a day in Chennai, and more than 250 in Delhi. “India Property knows the new property seeker intimately,” and can differentiate between serious searches and random visitors, he says, when asked if online searches can be taken as an indicator of property demand.
More than 45,000 apartments are slated for delivery in Chennai in 2011, according to Mr Vasudevan. This will be a part of 3.8 lakh apartments to be delivered across all the metro cities. Nearly 55-60 per cent of these are in the Rs 3,000-4,000-a-square-foot category, with the final price of the apartment in the Rs 40-50 lakh category, depending on the city and the location — a segment that has come to be referred to as the ‘affordable' and upper-end.
These studies also help India Property add value to its online offering by handholding visitors during the course of their decision-making. The services offered online are being strengthened to provide the entire gamut of services a buyer will need, from identifying a property to concluding the deal.
For BlackBerry users, it recently launched an augmented realty service. A user only needs to upload a photo of a landmark in any locality, to get a list of properties on offer in the area. The company is also working on a property index to help buyers make an informed decision, he says.