Rapid real estate development bolstered by sprawling urban infrastructure

Shrinivas Rao, FRICS CEO, Vestian

Kochi, formerly known as Cochin, is the financial capital of Kerala. Located on the picturesque western coast, this coastal city is often referred to as the ‘Queen of the Arabian Sea’. It is widely known for its harmonious blend of cultural heritage, economic significance, and serene natural beauty.

According to Kochi Municipal Corporation, the city is spread across 94.88 sq km, providing home to over six lakh residents. Within its urban agglomeration, spanning approximately 632 sq km, the city is one of the densely populated regions with the highest GDP (Gross Domestic Product) per capita in the state. Strategic location, thriving businesses, and a bustling port along with skilled workforce enabled the city to grow multi-fold and become the largest contributor to the state’s GDP.

Robust urban infrastructure

Kochi has been included in the list of 100 smart cities of India with an objective to provide core infrastructure, decent quality of life to its citizens, and a clean and sustainable environment through the application of ‘Smart’ solutions. Physical infrastructure witnessed significant upgradation under the Smart Cities Mission to cater to the needs of a growing population. Furthermore, upcoming industrial corridor connecting Kochi to Bengaluru is poised to further strengthen road network and develop industrial areas in Ernakulam and Palakkad.

Cochin International Airport is one of the busiest international airports in the country, strategically located in north eastern region, a mere 32 km from central business district of MG Road in Kochi. The airport caters to large influx of domestic and international tourists to the state.

Cochin Port is included in the list of thirteen major ports of India, facilitating trade and commerce both domestically and internationally. Its strategic location turned the city into a major hub for export and import. Moreover, Cochin Shipyard is the largest shipbuilding, operation and maintenance company in the country.

The city also has an operational metro rail network, encompassing a fully elevated rail line spanning 25.2 km with 23 operational stations. It is the first Indian city to introduce an upcoming water metro project, which is set to include 15 stations and function as a feeder service for the metro rail.

The city’s connectivity through all modes of transport including metro rail, turned out to be an added advantage. Robust physical infrastructure enabled rapid commercial development across the city. The city has emerged as a prominent hub for IT parks, with four major operational IT Special Economic Zones (SEZs). In summary, Kochi’s real estate sector witnessed substantial growth in recent past, with a surge in ESG-certified buildings, commercial spaces, and shopping malls spread across the city which is supported by sprawling urban infrastructure.

Tourism and scope of real estate development

Kerala, which is widely known as the ‘God’s Own Country’ due to its natural beauty and ecological diversity, attracts a substantial influx of both international and domestic tourists throughout the year. According to statistical data from Kerala tourism, the state witnessed an inflow of 19.2 million domestic and international tourists in 2022. While the visits increased by 153% compared to the previous year, this substantial increase was due to fading impact of pandemic. International tourists accounted for only 2% of the total visitors in 2022 whereas domestic tourists contributed significantly to revenue from tourism. The tourism department recorded a revenue figure of over Rs 35,000 crore in 2022.

According to the same report, Kochi is the most frequented destination for tourists in the state, attracting the highest number of travellers. It is one of the popular tourist destinations in India with scenic natural beauty and cultural heritage. Fort Kochi, Mattancherry Palace, and St. Francis Church are some of the major tourist destinations in the city that provide a glimpse into the colonial era of yesteryears.

Significant influx of tourists in recent past provided the necessary impetus to the city’s hospitality industry. Moreover, various international retail brands set up their stores in the city to cater to the needs of international travellers which led to increased foreign investments. As tourism is the major source of income for the state, the government should emphasize developing it further by improving urban infrastructure.

Trends in commercial and residential real estate sectors

Kochi has grown by leaps and bounds in the past couple of years which attracted large conglomerates to establish their base. With well-developed infrastructure, sub-dollar rental rates, and cost advantage of being a tier-2 city, commercial real estate in the city is on an upswing. Rental rates for office spaces range from Rs 30/sq ft/month to Rs 70/sq ft/month depending upon the location and grade of commercial building.

The SEZs in the city offer tax incentives to businesses, making it an appealing destination for companies seeking cost-effective operations. It enabled rapid development of the IT-ITeS industry in the city. Moreover, co-working spaces have also gained popularity post-pandemic, fostering entrepreneurship and innovation.

In residential real estate, luxury apartments, retirement homes, and waterfront villas have become popular choices, catering to rising demand for upscale living. As per National Housing Bank RESIDEX, current market prices on carpet area for under-construction properties in the city remained over Rs 9,000/sq ft.

Outlook

The future of Kochi appears promising, with several initiatives and infrastructure projects in the pipeline. The proposed Goshree-Mamangalam Elevated Corridor and expansion of the Kochi Metro network will further alleviate traffic congestion. In terms of real estate, demand for commercial spaces is expected to grow as more companies recognize the advantages of setting up operations in the city. Additionally, residential market will continue to flourish as the city’s reputation as a desirable place to live grows.

The tourism sector is poised for expansion, with the government investing in infrastructure and marketing campaigns to attract tourists. Improved connectivity through Water Metro project will make it easier for tourists to explore various parts of the city and its scenic backwaters.

In conclusion, Kochi, stands at threshold of significant development and growth. A blend of historical charm, modern infrastructure, and economic opportunities makes it a city of immense potential. As the city continues to evolve, green and sustainable development may attract both domestic and foreign investments.