A hotspot for investors and homebuyers

Anshuman Magazine

Chairman & CEO - India, South-East Asia, Middle East and Africa, CBRE

The real estate market in the southern part of the country has displayed remarkable resilience and growth despite a pandemic-driven temporary slowdown. The growth is a testament to the region's strong economic foundation and the strategic initiatives taken by various stakeholders. The surge in activity can be attributed to robust economic fundamentals, increased investments, and favourable government policies that have fostered a conducive business environment. Cities like Bengaluru and Hyderabad have been particularly witnessing a significant rise in real estate demand, highlighting the southern market's sustained potential and attractiveness to investors and end-users.

Both the commercial and residential real estate market has sustained momentum in terms of demand and supply. CBRE reports reveal impressive office sector performance in Bangalore, leading in overall office leasing with a notable absorption of 3.5 million sq ft during April-June 2023. Chennai also experienced a remarkable surge in office space leasing, recording a 107% year-on-year increase and achieving 2.5 million sq ft absorption during the same period. Hyderabad recorded 2.0 million sq ft absorption in office leasing during April-June 2023. However, Kochi's office leasing remained modest, with 0.1 million sq ft absorption during the same period. 

Regarding luxury housing, Hyderabad witnessed the highest percentage increase in sales on a year-on-year basis, experiencing nearly a 14-fold growth with a total of 1,400 units sold, while Chennai sustained the momentum. Demand for other segment of housing was sustained in Hyderabad, Chennai, and Bangalore.    

The southern region has become a hotspot for investors and homebuyers due to its robust infrastructure, favourable business environment, and rapid urbanisation. Additionally, there has been a surge in demand for commercial properties, fuelled by the expansion of IT and technology-related businesses in major metropolitan areas. Affordable housing projects have gained traction, catering to the growing needs of the aspirational middle-class segment, while luxury real estate offerings have seen increased demand from
high-net-worth individuals seeking premium living spaces.

Chennai's real estate has experienced consistent growth, with the establishment of TIDEL Park and the promotion of Old Mahabalipuram Road (OMR) as the 'IT Corridor.' The availability of land, talent, and favourable regulations led to the development of IT parks and SEZs by government and private developers. Given its diversified economic base, state-of-the-art infrastructure, favourable investment climate, adequate policy interventions, stable governance, and structural reforms, Chennai has emerged as an epicentre of real estate activity and is a preferred destination for industries and tech corporates looking to expand their operations in India. Moreover, tier II cities such as Coimbatore, Kochi, Thiruvananthapuram, and Visakhapatnam are witnessing increasing economic importance, infrastructure development, and improved connectivity, which is driving progress in the real estate sector.  

The outlook for the southern region's real estate market remains optimistic and poised for further growth. The trend of mixed-use developments, integrating residential, commercial, and retail spaces to create self-sustaining urban ecosystems, is expected to become prominent. Technological advancements will play a pivotal role in shaping the future of real estate, with a focus on smart buildings and sustainable practices to align with environmental goals. Furthermore, the co-working space trend is anticipated to witness substantial growth, driven by flexible work models and the changing dynamics of the modern workforce.

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