The Hindu Business Line : NRI money props up Kochi realty

While the global economic slowdown gripping most parts of the developed world has had a cascading impact on the economy and real-estate prices across major Indian cities, reports suggest that the southern port city of Kochi has been less affected by the crisis.

This is partly due to the huge dollar remittances flowing into the State, which have helped to arrest the erosion in realty prices significantly. Also, the rich and varied commercial crops being cultivated in the State continues to fetch a good price in the global markets, keeping the land prices attractive.

A report on World Winning Cities by Jones Lang LaSalle Meghraj (JLLM), one of the largest real estate money management and services firm in the country, “Kochi offers shining possibilities across all sectors due to a favourable combination of wealth, connectivity, infrastructure, labour skills, low operating costs and tourist appeal.”

World Winning Cities programme is a multi-year global research initiative designed to assess future city competitiveness and predict the rising urban stars among the world’s emerging markets in India, China, Central and Eastern Europe, Middle East, North Africa and Latin America.

Effect of remittances

But what stands out in the Kochi context has been the unabated stream of remittances into the State. In value terms, the flow has been further accentuated by the sharp erosion in the value of the rupee against the Gulf currencies as well as against the dollar, which have enhanced the clout and purchasing power in the hands of the huge NRI population that the State boasts of.

This has ensured that the value of the real estate in Kochi has not been as significantly dented as in some other important cities in India.

“Kochi would be unique among all other cities in the country since over 30 per cent of the demand for real estate emanates from the overseas NRI population. With the spurt in interest rates for NRI deposits and surge in value of the dollar, we expect the remittances into the State to increase by over 50 per cent this year. This huge inflow has helped to buttress any sharp fall in the value of real estate in the city,” says Mr Mohammed Saleem, Managing Director, Asset Homes.

This stands in sharp contrast to the national and international situation.

Demand for Kochi realty continues to come from the spurt in remittances from an estimated 2.5 million people from the State settled abroad. Almost 90 per cent of them work in West Asia.

There are other positives as far as the city is concerned: An enviable mix of highly educated population, low labour and operating costs, attractive real estate options and solid infrastructure. Based on real estate market transparency and overall volume of office, retail and hotel market activities, Kochi has been adjudged well ahead of other Indian tier III cities such as Jaipur, Nashik, Mangalore and is on a par with Chandigarh.

Potential being tapped

The economic potential of the city is beginning to be tapped. One of the largest malls in the country is being constructed by the Lulu Group. According to the JLLM report, India’s largest builder, DLF, has announced plans to invest Rs 4,000 crore in Kerala in the next five years.

The Dubai Technology and Media Free Zone Authority is constructing a Smart City in Kochi, which would offer thousands of jobs in the IT industry. DP World has commenced building operations for the Vallarpadam Container Transhipment Terminal, which is expected to transform the connectivity to Kochi.

More Stories on : Real Estate & Construction | NRIs | Kerala

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