Why buy property or apartment in prime residential area in Kerala?

If you look at property trends in the major IT cities in India, especially Bangalore or Hyderabad, you would notice a peculiar trend. Once the influx of IT companies and IT SEZ's come into the city, the first areas to appreciate in terms of capital values and rental incomes is the CBD (Central Business District or City Center). 

In an earlier article we had mentioned how different factors affect property appreciation. Amongst these the proximity to CBD was a critical criterion in property appreciation. In Bangalore as more people moved in to the city in the last decade, the space crunch near CBD meant developers looked for areas where IT SEZ's could spring up. The first of these was Electronic city in Hosur road, which saw steep appreciation in 2003-2007.

During this period however as companies could not get enough space in and around electronic city, more companies moved to Whitefield, Sarjapur Road and Domlur which sprang up during late 2000's as attractive destinations. Since Senior management of these companies wanted plush real estate, property prices in these areas saw a major upswing in this period. The point we are trying to make is that as new areas emerge property prices sees appreciations of 20 to 30% year on year for a particular period, and then seems to stagnate or grow slower with time.

When it comes to Trivandrum, due to fewer options available for land within the city limits at places like MG Road, Kowdiar, Statue, Vazhuthacaud, Pattom etc., builders and developers are more likely to come up with projects in the suburbs or new areas in and around Kazhakuttam which have land availability at relatively affordable rates.

Now going back to the Bangalore scenario, today areas like Hebbal which came up as hot destinations in the last 2 to 3 years due to the proximity to Manyata Embassy Tech Park, has property values from 4000 to 8000 per sq.ft. The advantage is two fold with these areas, as they offer the resident a place close to work and about 30 minutes from the CBD. While the apartments in the CBD itself in Bangalore record values of upto 30,000 per sq.ft, those in Mumbai come to close to 70,000 per sq.ft. especially in South Mumbai.

So what's the takeaway? The Kerala real estate development seems to be following a similar trend like Bangalore. The Info park in Kochi or the Technopark in Trivandrum are the hot IT destinations at the moment. As time passes, new areas would emerge, however MG road and posh residential areas within proximity to CBD would only appreciate faster. A prudent investor or home buyer should thus look for prime residential areas if they have availability to sufficient funds to go for such a property. Rental values from these properties might be similar to a property in the suburbs in the short term, however capital value of the property would be much higher in the longer term. 

Whether values will touch 30,000 per sq.ft like Bangalore? Only time will tell. But one can be reasonably sure that a decade or two down the line, the reality in Trivandrum may not be too different.