Commercial Real Estate is an Opportunity of the Future in Kerala

Commercial real estate is definitely an upcoming opportunity that is coming up in the near future in Kerala. As most Malayalees prioritize land, house and apartments in that order when it comes to investing in property, most often than not the predominant thought in mind is one of residential real estate. 

What our market research team is sensing of late is a growing demand and large number of enquiries coming our way for commercial real estate spaces in Trivandrum and other parts of Kerala. One of the customers we are working along with on property development has multiple pockets of land in locations like Sreekaryam and Kesavadasapuram. The objective here was to develop a land which is usually more than 20 cents in size for a commercial real estate development. 

So why is commercial real estate hot and happening? Starbucks coffee chain, one of the biggest known brands in the world entered India this week with the opening of its first coffee shop in Mumbai. Walmart is getting ready for its entry into India and looking into end 2013 or early 2014 for all pending issues in FDI in retail to be resolved. Sooner than later the entry of these big retail chains is going to become a reality.  Just a few days back US private equity firm Blackstone inked India's biggest commercial real estate acquisition deal, which will give it 50% stake in a Bangalore builder-owned portfolio of three business parks for $200 million. Blackstone bought stake in three commercial properties totalling over 10 million sq ft — Embassy Golf link and Manyata Embassy Business Park in Bangalore and Embassy Tech Zone in Pune.

What does this mean for Kerala? Although FDI in Retail would create a huge demand for retail space in large metros especially cities like Mumbai, NCR and Bangalore, there would be trickle down effect to Kochi , Thrissur, Trivandrum and other parts of Kerala given that Kerala is predominantly a consumption driven economy.  Kerala also has a big problem with scarcity of land for quality real estate. So while possession of land in good retail localities is a definite plus, you get better value for the land by developing a commercial property in the same location.

Majority of land owners in the state owning over 20 to 50 cents of land are not too sure how to proceed further due to the following reasons:

1) Building the commercial building 2) Marketing and Leasing 3) Ongoing Maintanence.

Today consultants like Nandanam help customers with all these 3 above aspects of property  management and development, making the land owner rest in peace and earn the recurring income on commercial real estate for years to come. In cities like Bangalore the commercial real estate sector has been giving annual returns of 10-15% p.a. compared to 18-20% growth in value for residential real estate. 

However where commercial real estate stands out is once a large retailer like Walmart opens shop in an area, the lease paid on a monthly basis along with the influx of new shopping outlets in the area leads to tremendous increment in land value and rentals.

For further questions on developing and promoting commercial real estate you can contact our team.

Buying flat in Kerala - New Trends, Buying patterns, Things to Consider

Change in the Home Buying Pattern, Things to Consider for Apartments in Trivandrum

In  the last decade or so, there has been a significant change in the home buying behavior and the demographic segment buying apartments in Trivandrum and Kerala in general. 

Today a typical person buying an apartment is not always in late 50's but more so in and around 30's. Most young couples or unmarried individual's who earn a handsome salary, consider a budget flat or a luxury apartment as a future investment and likewise a means of saving. The type of apartments in demand has also changed in the recent past with families looking for more compact accommodation and facilities like swimming pools, gym, security, CCTV etc. in additional to normal features. Young couples often do their research on the internet, visit model flats and form a mindset before buying a new apartment. 

New Trends witnessed in the Apartment sector in Kerala

One clearly visible trend is much more clarity of thought with apartment buyers. Most flats built today are designed keeping in mind a particular demographic section for e.g 40 year olds with 2 kids. In such a situation architects and designers would usually prioritize and cater to larger drawing rooms and spacious dining spaces. In addition there could be three or four bedrooms depending on the size of the family. Such apartments can have square feet sizes from 1800 to 2700 sq.ft. The other clear segment are young couples or singles who prefer single or two bedroom flats from 900 to 1400 sq.ft. A usual variation is a 2.5bhk with 3 beds and 2 bathrooms. Young couples also want swanky living spaces with jogging tracks, pools, gyms etc. irrespective of their use for them or not. These features serve the aspirational values of today's young generation and they are often ready to pay premium rates for these flats compared to those that dont have them.

What builders consider while choosing a plot of land for building flats

Builders usually consider four things while choosing a plot of land for building an apartment.  These are:

• Shape of Land
• Nature of Land
• General Amenities
• Utilities

Shape of the land includes verification if the shape of the site is fit for building construction or not. Nature of the land includes ground water availability, height of the water table, if it is wet land or not i.e. if it the land is prone to flooding, load bearing capacity of the mud in the land, height of the rock bottom etc. General amenities usually considered by builders include water front, sea view, greenery etc.  Utilities include availability of water, electricity, telephone at the project site. The design team of the builders usually consider all the above four factors before deciding on the plot of land. 

Things to Consider while Buying a Flat

Furnishing and Interior Design in Apartments 

Today even children have their own views about how they want their rooms and it's interiors within a flat. Furnishing homes has opened up a large opportunity not only for interior designers but also custom decor companies making their way into India. IKEA and other retailers waiting to enter today's market is just a inkling of the huge market potential available. In Kerala, unlike some other states wooden furnitures make way into most homes, villas and apartments. Besides the use of soft and hard wood in interior design two key aspects which are often overlooked are lighting and placements. Often the average home buyer is unaware of these nuances and a majority of the population even today does custom designs of homes  or flats employing craftsmen. An alternative could be to employ the design services of a builder which comes as a package deal or work with reputed consultants who bring all the experts from kitchen to wardrobe designers as well as lighting experts to the table. These approaches can ultimately make a huge difference to the way a home looks and feels and have a positive correlation on its selling price.

Availability of Water in your Apartment

Availability of good water is one of the most common questions buyers ask while buying an apartment. With some parts of Kerala affected by water shortage and scarcity it is not surprising that this is the case. Typically in a flat, water is provided from three different sources:  

Sources of Water in a Flat:

1. Ground Water - Wells or Borewells 
2. Rain Water Harvesting - This is facilitated by water stored underground in a tank to be used later
3. Kerala Water Authority water - This is the water supplied by the Kerala Water authority.

As per studies, the water requirement per person on a daily basis is around 100 to 120 litres of water. This water could be used in the flush, for gardening, for washing cars and for other purposes. In a well designed and architected building, the drinking water is provided through Kerala Water Authority or it is stored in Special Tanks from where it is supplied to all the apartment units. You must always check with the builder about the water supply in your apartment before buying your flat. As a benchmark, think about this. An apartment building in Trivandrum with 100 units will require about 12000 litres of water in a given day. If the apartment is equipped to handle water recycling and it avoids unnecessary wastage, then this could have a huge implication on water availability through out the building even in times of drought or water shortage. 

Documents to be verified while Buying a Flat

The following things are important to consider while buying a flat. Usually before constructing a flat the builder can operate in two ways - either as the land owner or as the developer. As a customer you must consider if the land ownership documents are available with the builder or not. Other items include the total built up area (Saleable area), Common area etc. which the builder should inform you about. The builder should also obtain approvals from the local body, the Pollution Control Board, Fire and Rescue department's Fire NOC (No objection certificate), Local body building permit etc. 

The land title will be in possession of the builder and the customer can ask the builder for it to ensure that the land owner does not create an issue later about encumbrances. You must also understand if the land tax receipts, building permit certificate, local body occupancy certificate, fire noc etc. has been obtained by the builder or not. 

Once you occupy your apartment you would need to get receipts for electricity and water deposits, building tax etc. and the builder would do an ownership change to you. The builders liability really ends only when the apartment owners association has been formed and the maintenance of the flat has been handed over to the association. The hand over usually happens 3 to 6 months after the flat becomes ready for possession.

Kerala Real Estate 2012 - Predicting the future and Investing Smartly

The year 2012 for Kerala and for India in general has been one filled with scams, news of corruption and fear of a brewing bubble among real estate investors. For Kerala home buyers, there was no way of checking the veracity of claims made by developers when it came to new projects, costs, fair value of land in Kerala. More than 50% of home buyers we spoke with during our surveys,  were tentative in their approach and unsure if they should invest in real estate at this time, when markets like Kochi were tanking. As projects got delayed, developers earned the wrath of families who had the dream of entering a new home.

When we clubbed together Kerala real estate investor concerns into major categories few of them stood out:

• Fair reviews about developers and projects - Whom should I believe before I buy a home? The marketing executives or the advertisements or the agents?
• Should I park my money in real estate or should I look at mutual funds or gold or some other avenues?
• What is the realistic appreciation for the property and which location should I buy my next property while investing in Kerala or Trivandrum?

A closer look at the above investing parameters will tell you that some are qualitative in nature and others are quantitative. When it comes to investing in real estate in Kerala in 2012 we believe it's a combination of science and art.

The Art - Like an expert artist sways his brush to make the perfect portrait, an experienced real estate investor knows from his empirical judgment whether a property is worth going for. And none have made it bigger than Donald Trump who earned millions by investing in real estate.Trump wrote a book called THINK BIG which is quite a motivator for not only real estate investors but all businesses and people alike. Many would say Donald Trump is like an artist who knows his art quite well. You can draw analogies of similar worldwide personalities from across different sections of society, like Warren Buffet who mastered investing in the stock market. 

The Science - When it comes to the science of investing in real estate, you need to be armed with data and information. Not only do you need information on historical sales values, trends and growth figures, but you also require information on the future i.e. predictive forecasting of property values considering macro and micro economic trends in the market. Human beings can do these predictions only to a limited extent. But today software has evolved to a considerable extent making such tasks much easier.

Which is why, some of our analytics guru's at Nandanam use tools like SPSS Statistics and SPSS Modeller and the like to do predictive modelling scenarios and come out with results which to a large extent accurately foretell the future.

So what does this mean to a real estate investor in Kerala? When we use historical data, spanning  many years in the past and draw realistic future estimates by considering interest rates, investments, projects, rentals, expat growth and many other inputs, we reach a point where technology tells us what the future might be like in 2014 or 2015. Of course predictions can be made as long as 10 or 20 years down the line, however these may not be as useful considering how fast things could change in today's real estate world in Kerala and in India.

A combination of art i.e. empirical judgement of our real estate agents coupled with science, which combines data and information to present a future scenario, is the right mix that one needs to accurately conclude whether a property is worth an investment or not.

With many setbacks which people have apprised us about while investing in real estate in the recent past, it is worth considering, whether you have all the information at your disposal to make a prudent investment. If not, a simple call to a reputed real estate consultant, might just be the right approach to take to ensure a secure future for you and your family. 

Trivandrum Real Estate 2012 - Apartments in Kazhakoottam, Kerala

Property, Projects, Real Estate Trends and Price analysis of Apartments in Kazhakoottam, Trivandrum, Kerala

A recent survey conducted by the market research team of Nandanam Consultants, across 64 locations in Trivandrum over a period of two months, analyzed the following trends in each of these small micro markets in Trivandrum. 

Our survey methodology included focus group discussions, email, telephonic interviews, questionnaires, and meetings with reputed developers who operate out of these micro real estate markets in Trivandrum. We used regression and statistical modeling methods to arrive at a cause effect relationship and understand the underplay between factors that affect property prices in the Kerala and specifically the Trivandrum real estate market. What follows below is an executive summary of the property trends at Kazhakuttam and areas surrounding Kazhoottam. For an indepth understanding of Flats on sale at Kazhakoottam, buyer feedback, price determinants in Kazhakoottam, builder reviews in Trivandrum, and apartments in Trivandrum, please reach out to the Nandanam team.

About Kazhakuttam - Source Wikipedia

Kazhakoottam (Malayalam: കഴക്കൂട്ടം) is a locality in Thiruvananthapuram city, the capital of Kerala, India. It is located on theNational Highway 47 on the way to Kollam from the city, and has gained in significance because of proximity to Vikram Sarabhai Space Centre, and, Technopark,the IT center which is the first and largest of its kind in the country. The Sainik School is also situated in this area. Kazhakoottam is the first ward of Thiruvananthapuram Corporation.

Our analysis of the Kazhakoottam, Trivandrum real estate market covered the following aspects: 

1) Evaluation of new and ongoing projects by developers and builders at Kazhakuttam in Trivandrum. 

2) Forecasting calculations on the number of units being created afresh and that are outstanding to be sold at Kazhakoottam based on available market data.

3) Survey of home buyers who purchased flats at Kazhakuttam or those who took houses on rent in the Kazhakoottam market in the past one year and their feedback on rents, price and overall living conditions at Kazhakoottam.

4) Analysis of Flats for Sale at Kazhakoottam and the average sales value of Flats in Kazhakootam per sq.ft.

5) Occupancy levels on apartments in Kazhakoottam area and factors affecting home rentals and occupancies.

Flats for Sale at Kazhakoottam, Trivandrum

Our team looked at existing and ongoing or recently announced projects at Kazhakootam with a focus on the 2011-2012 time frame. Of the total of over 250 projects which are under construction at the moment in Trivandrum, Kazhakoottam has a pie of 30 projects which is about 12.5% of the total construction activity in Trivandrum. That's a massive number for a small city like Trivandrum which means that out of a total of about 35,000 units which are under construction all over the city, approximately 4000 units are coming up at Kazhakuttam. 

Occupancy levels, Rentals and Sales Price of Flats at Kazhakoottam, Trivandrum

Our forecasts based on samples collected, showed that on an average, units which are within 1.5 to 2 km radius of Technopark or Infosys campus at Kazhakootam, recorded occupancies higher than 75% which means that there is a real demand for apartments in close proximity to the IT hubs. Results also showed that factors like amenities present, nearby schools, quality of homes also played a role in occupancy levels. Outside the zone of 2 Kms to the IT hubs, occupancies varied with a negative correlation to distance from the offices as well based on values of flats. Luxury flats above 1cr, showed less occupancy indicating that some where bought for investment purposes. Highest occupancies was usually for 1 or 2BHK apartments at Kazhakootam. Luxury housing was usually preferred by senior management of IT companies with employees at mid and junior levels going for 1 or 2BHK options. Employees from companies such as TCS, Infosys, Oracle and US Technologies formed the majority of occupants at flats near Kazhakootam, Trivandrum

Historical Sales values as per data collected by us for flat and home transactions from 2010 -2012 showed that, compared to earlier trends, currently Kazhakootam offered deals to home buyers in the 40-65 lacs range predominantly for apartments. The area had property values at 2500 per sq.ft in prime locations prior to 2008, but has crossed over to 4500 per sq.ft. for these properties as we enter 2011-2012.

Rentals varied with property and ranged from Rs.8,000 - Rs.17,000 for 1BHK or 2BHK apartments based on proximity to Technopark, area in sq.f.t, furnishing in the apartments, closeness to utilities and amenities offered.

Size of the Units of the Apartments on Sale at Kazhakoottam, Trivandrum

For a majority of 4000 units coming up at Kazhakootam, the average unit sizes are 2 Bedrooms ranging from 910 - 1100 sq.ft. with a median of 950 sq.ft. Most of the units tended to be over 1000 sq.ft. and developers  in Trivandrum seem to have gone for this as a benchmark when designing and architecting the units. Kazhakootam also offers units across the 1BHK and 3 and 4 BHK ranges, the former with single bedrooms and the latter catering primarily to the affluent sections with prices ranging from 60 lacs to 1cr+ for some apartments.

Developers and Builders at Kazhakoottam, Trivandrum

Interestingly over 19 builders out of the 56 builders (i.e. about 33%) in Trivandrum seem to having an eye on the pie at Kazhakoottam in the list of 30 projects coming up, showcasing that no one wanted to miss out on the real estate action there. The underlying effect seems to be a hungry scout for lands in the Kazhakootam region for these projects and price escalations of even 100% for lands in areas with close proximity to Infosys and Technopark in the last one or two years.Our survey also showed that no single developer was willing to put all eggs in one basket and barring a few, none of the developers had 3 or more projects underway at Kazhakootam, with most focussing on a single apartment or villa project at Kazhakoottam. 

Developers with projects underway at Kazhakottam (with respect to number of projects in descending order are): Oceanus, Favourite homes, SFS, Skyline, Cordial, Creations, Future, SRK, Vijaya, Asset Homes, Aswathy, Big Infra, Condor, Confident, Goel Ganga, Kristal, Nikunjam, Olive and RDS builders.

Luxury Real Estate - Villas and Apartments on Sale at Kazhakoottam, Trivandrum

Going by the true definition of luxury real estate at Kazhakootam, few of the projects completed and very few ongoing had amenities which could fit the bill to enter into the real luxury segment. SFS Cyber Palms project took the icing on the cake across all the projects, not only with CRISIL 7 star ratings, but with home buyers in the property expressing extreme satisfaction on their purchase, amenities offered and real estate appreciation.

The property also earned 8 out of 10 credits in our survey with existing lessee's in the project, interested in buying homes if available at reasonable prices in this project. Some projects like Heera Infocity, SFS Cyber Palms, Big  Infra and Asset Signature, seems to have earned significant mind-share of prospective home buyers who are looking for an investment in the area, and many were ready to pay extra to buy their next property if available at a good price in one of these four projects.

Assessing risk of buying projects in Kazhakoottam, Trivandrum

We are constantly faced with uncertainty, ambiguity, and variability especially for home and real estate investments. And even though we have access to information, we can’t accurately predict the future. Monte Carlo simulation (also known as the Monte Carlo Method) lets you see all the possible outcomes of your decisions and assess the impact of risk, allowing for better decision making under uncertainty.

We used Monte Carlo simulation and other techniques available with statistical tools to estimate risks to a home buyer based on property trends and price values in Kazhakoottam, Trivandrum and comparing it with the Trivandrum and Kerala real estate market. The risk quotient varied significantly based on timeliness, price ranges and depending on if the property was being bought for investment or stay purposes. Overall it showed that Kazhakootam may not be ideal for an investment in a second flat since projects were getting delayed due to lower number of transactions in the last year or so and also due to a slow growth phase in the IT sector. Our real estate agents and experts point to looking for value deals at Kazhakoottam, and making prudent decisions based on location, services, quality and delivery. You can also contact us for our comparable analysis which can help you compare projects across Trivandrum which might offer same value or appreciation like Kazhakootam at similar budgets.

Summary of our analysis for home buyers at Kazhakoottam, Trivandrum

For those home buyers who entered and bought properties at Kazhakootam, in the pre-2010 time especially 2006-2010 phase, seem to have got good value for money for their investments, especially if the projects were from reputed builders, and were completed in the stipulated time. Some buyers expressed their deep dissatisfaction with a few builders who handed over projects 2 to 3 years later than promised. Our advice would be to talk to a reputed real estate consultant, especially if you are keen on Kazhakootam and are looking at the existing inventory available there. For all you know, there might be a couple of great deals for you to invest in at Kazhakootam!

To remain updated on the trends in the Kerala and Trivandrum real estate market, connect with us on Facebook

Kerala Real Estate Trends - Developments and Property in Kochi, Trivandrum and Kozhikode

Some of our customers have been requesting us to write about the prevailing trends in the Kerala Real Estate market. So we thought we will discuss about it in this article. Since Real Estate is an area where trends of price, developments could change not only at a macro level but also at a micro market level, it is quite a difficult task to pick one amongst these developments as a trend.

By definition, "Trend is a change or a general direction in which something is moving for a given period of time". To summarize trends in the Kerala Real Estate market, let us take a look at the major markets of Kochi, Trivandrum and Calicut. As you might know, most realty developments in Kerala follow a hub and spoke model with these three cities, getting the major share of attention when it comes to real estate investments and new developments.

Kochi: 

Kochi really was the real estate hotspot in 2007-2008, with developers like DLF, Sobha Developers, Ansals, Purvankara, Confident Group, Oceanus, Unitech, Nitesh Estates, Housing Development and Infrastructure (HDIL), Prestige Group, Emaar MGF descending and announcing projects worth over $2.5 billion. Sobha announced the Hi-Tech city in Maraadu, DLF purchased close to 4 acres from the State Government and HDIL purchased a 70 acre plot for developing an IT park. The result - Property prices shot up by over 60% during this period and developers had the last laugh as bookings were plenty, especially from investors. A look at the RESIDEX of Kochi  clearly tells the story wherein with a base of 100, property prices shot up over 2010-2011 but crashed in the following quarters. We have analyzed the speculative nature and the bubble formation in our earlier article on Kochi.

Today after many quarters of decline, property prices in Kochi seem to have achieved some degree of stability. If announcements in Emerging Kerala go as planned, and Kochi metro is delivered within 4 years, there is scope for some happiness and real appreciation in a few years time. With a total length of 25 kilometres from Aluva to Pettah, the Kochi Metro would not only be the smallest of the metro-rail networks, but would also relieve the congestion in the city and pave the way for developments along the metro corridor. The other big development here is the Lulu shopping mall coming up with an area of 25 lakh sq.ft.

As far as micro market developments in Kochi are concerned, you need to divide the city into various zones and look at new project annoncements which are being made to get a pulse of the market. For further information, please contact our team at Nandanam and we will be happy to assist you with the same.

Kozhikode:

Kozhikode is not only the third largest city in Kerala but also the state’s second largest urban agglomeration with a metropolitan population of 20 lakh plus people. The major population of the city is employed in the Middle Eastern countries. Their remittances are the major source of economy of the region. The city has around 40 IT companies operating at the moment which is quite small compared to the number of companies in Kochi or Trivandrum. Given the proximity to Bangalore & Mysore (which are just 6 hours and 4 hours away respectively) and the presence of educational institutes like IIM Kozhikode, the city could prove to be a major IT hub in the coming decade.

Some interesting projects on the anvil at Calicut are the  HiLite City, a first of its kind urban integrated township with 32 lakh sq. ft. of residential, commercial and retail spaces awaiting completion by 2013. The total project cost of HiLite City is put at Rs.900 crore.  The other one is the mono rail project. As reported in the Hindu " The monorail project, envisaged by the Kerala Road Fund Board, has two components — the development of monorail for 12.60 km from Government Medical College Hospital to Meenchantha and the operation of exclusive buses to the Calicut International Airport. The estimated cost is Rs.1,018 crore." The Lulu group is also planning a convention center in Calicut once existing projects are completed.

Trivandrum:

As far as Trivandrum is concerned, majority of the developments have been happening in pockets like Vattiyoorkavu, Vazhuthacaud, Vellayambalam, Technopark etc. The influx of IT professionals to the city at Technopark, has given a major boost to the real estate developments in the city. You can read more about these developments here.

Trivandrum is also looking towards the monorail development to augment the growth in its micro markets, which might be located far away from the CBD or the IT hub. The development of international stadiums at Kazhakootam and Vattiyoorkavu have also increased real estate interest in these areas. When the 32 projects to be implemented in Thiruvananthapuram district were presented before the investors at the Emerging Kerala-2012 summit, only five project proposals were received by the government.The biggest project is the Engine Assembly Unit of Volkswagen at an estimated cost of Rs 2,000 crore which might be coming up at Trivandrum. Ravi Pillai, founder of the RP group plans to invest Rs.1,000 crore in Trivandrum to set up a world class convention center.

Trivandrum Real Estate Blog - News, Trends, Property, Prices

The Nandanam Consultant's blog about Trivandrum its real estate, apartments, and news serves one single  mission - "Disseminate the truth to as many people as possible who are looking to invest in real estate in the state."

We recall a story at the moment. A customer called us one day to tell about his disappointment regarding an apartment. This was a flat he purchased going by a full page news paper ad in one of the popular news papers in Kerala back in early 2000's. 

The news paper ad from the reputed builder claimed three things 1) Never before price for the property 2) Great amenities & Luxury 3) Great Location. Being far away from Kerala at the moment, the customer had no way to validate the advertisement, but believed in these promises. He bought the apartment.

When we reviewed this ad (going by the archives), we found few things of interest: 

1) There was no promise of on time delivery 

2) The offer price caveat was typical of most builders to attract new comers 

3) The distances were not correct. There was a discrepancy of about 2 Kms of the actual location from what was advertized.

The result - people had no way of validating the property and differentiate its real value from the promised one. Five years hence when the property was still not handed over to the customer, to his dismay he found that he had nothing in the sale agreement to go back to in terms of penalizing the builder if the hand over had got delayed. 

Through our posts on this blog we hope we will enable you to make better purchase decisions for your property. If you like what we write , please feel free to share your comments and feedback with us. Your encouragement would help us even more in informing our customers and the general public of what to pay attention to in buying and selling your property.

Luxury amenities in the apartment market. What do you aspire for?

Snapshot at Lodha Bellissimo Mumbai

In India the useful life of an apartment is about 30 to 40 years as per most studies by experts. This is primarily due to the climactic conditions prevailing like humidity, temperature fluctuations etc. which have a significant effect on the the reinforced concrete and steel, the building blocks of an apartment building. 

Take the case of Japan. Building regulations and new techniques, ensures that life of apartments there could run over a 100 years and stand the rigors of earthquakes, floods and other natural calamities. Today with green buildings and modern construction techniques coming into the fray, we can expect future apartments to last over 70 to 80 years, which would be the ideal scenario in India.

When it comes to apartments, most builders advertise their properties as luxury apartments.To demystify, what luxury could really mean , we try and segregate options that builders provide in apartments into 3 different categories. If you are a traveller, you might have heard of 3-star, 5-star, 7-star etc for hotels. However in the case of luxury properties, no real segregation is in place today.

We hope this categorization of Super Luxury, Essential Luxury and Basic Luxury, will help you understand what your luxury apartment should ideally be like:

Super Luxury

1. Design inspired by Worldwide designers e.g. Hiranandani Horizon, Bangalore
2. Prime Location overlooking a prime road or a business center e.g. MG Road
3. Premium concierge services like Quintessentially for apartments e.g. Lodha Bellissimo, Mumbai
4. Full Home automation

Essential Luxury

1. Internal and External Bar
2. BBQ Area
3. Golf Course
4. Lake or Sea Facing
5. Private Theatre
6. Yoga or Aerobic Studio


Basic Luxury
1. Gymnasium
2. Games Room
3. Swimming Pool
4. Squash and Tennis courts
5. Children's Play area
6. Landscaped Garden

So why would you invest in a super luxury apartment? While some of these super luxury apartments in Bangalore for example run into 3 or 5 crore rupees on launch, there have been examples where within a few years the square feet rate has run into 33,000 sq.ft after construction of the property is complete. This means a 3000 sq.ft. 4 bedroom flat runs into approximately 10 crore rupees. In Trivandrum or Kerala for that matter, apartments of the kind Super Luxury really do not exist at the moment. A vast majority would fall into the Basic Luxury or a handful in the Essential Luxury category.

When you choose a Luxury apartment where you aspire to live, do look for the credibility of the architects, designers and the builder and their track record of luxury apartments. After all you want the promises to be delivered as well.

Need for real estate regulator. Keeping home prices under check.

India badly needs a real estate regulator. The Maharashtra Housing Regulation and Development Bill passed by the Maharashtra state assembly in July is a step in the right direction. The objective of the bill is two fold: bring about transparency in the real estate sector and empower the home buyers.

Most home buyers all over India, especially in the Metros, are subject to huge fluctuations in property rates plus a complete lack of transparency into the prices decided by the builders. Not only are the agreements one sided in favour of the builders (the customer has no recourse even if the projects are unduly delayed, but the reverse does not apply), tactics like pre-launch price, bookings using sample flats and non disclosure if the project is under financial strain is often hidden from the view of the customer. The result - A high degree of mistrust that has crept in over the last decade amongst customers about the real estate developers.

As reported in the Mint, the Maharashtra bill makes it "mandatory for builders to make complete disclosure regarding housing schemes or projects they are developing, where they are required to provide details of ownership of land, number of flats going to be built, the floor space index (FSI) applicable for a particular housing project and how they are going to finance the project."

The bill is a model which the Kerala government could imitate and adapt and tailor make depending on the conditions in the state. It will go a long way in driving more transparency in the sector, keep home prices under check and instill confidence in buyers who invest their hard earned money in buying their dream home.

Property Prices in India and around the world - Economist. Fair Value and Trend Analysis.

The  Government of Kerala  has declared a fair value of land in all parts of kerala . From the link here you could see the fair value of your property provided you can provide some minimum details on the tool.

Recently the Economist magazine reported trends in property value across the countries in the world, which makes some interesting reading. Out of the 21 countries that economist tracks 12 of them dropped in prices, and 5 of them gained. As per Economist "Many markets are returing to “fair value”, defined as the long-run average ratio of house prices to disposable income and to rents. Housing is now around or below its fair value in eight countries."

If we look at the charts below which shows property value trends in developed countries, over the last 37 years from 1975 to 2012, property values has shown tremendous gains. In some countries like Australia, the values have sky rocketed in the last decade or so. So while the largest market, United States is now picking up after a huge drop, the more a market is closer to its fair value, the prices seem to rise from thereon. In Spain which is reeling under the Eurozone crisis, prices have fallen 23% from their peak in 2007 (A note: Kochi prices fell 32% over the last three quarters and we now believe it has stabilized).

In the Asian countries, Hong Kong prices which were sky rocketing at 28% growth yoy is now growing at 6% yoy. Hong Kong prices had increased by about 67% since 2007 and followed only by Austria which reported a 23% increase since 2007. The biggest casualty of the price drop, Ireland has seen prices drop by 49% in the last 5 years.

So from an investor perspective in India, what does one make out of these global trends?

1. For one, it is clear that, after years of dizzying ascents, it seems like a big bulldozer has hit residential-property markets around the world and stabilized them to a large extent.

2. If you take the case of United States for example the housing bubble threw out some interesting facts. For many middle- and lower-middle-income Americans their home made up nearly all of their wealth. They were largely invested in a single asset that did very poorly in this period. Richer Americans, who held other assets, did not see such large declines. This demonstrates how important it is to diversify your wealth, even when you don't have much of it. It appears that there seemed to be a mentality that you should buy as much housing as you can afford, not as much as you need. That may be because of the pervasive view during this period that housing is always a good investment.

3. The case is not too different in India. During times of rapid ascent in property prices and going by trends world over, it is good to stop short and take a closer look and not go blind foldedly and invest. A well diversified portfolio consisting of government bonds, MF's, FMPs, VPFs would help a youngster in mid 30's to earn a good retirement income even if property crashes or stabilizes in the next decade.

4. To reduce the risk from your property portfolio, it is very important to do your ground research well and choose the property. Tie up with a good property consultant, who understands your financial situation and then advices you on the right kind of property go for.

5. Keep a track of price trends, fair value and other market indices to understand if you are over paying for your purchase or under selling on the property value. Negotiate well and don't hurry into your decision.

6. Take a long term view into investments and avoid short term investments unless you are aware of market realities.

Realty growth is here to stay in India and in Kerala, especially with burgeoning population figures in our country. But speculative investments in property, often made due to impulse buying and hearsay, may not be a good idea, unless backed by a good understanding of the overall market. After all the objective behind buying real estate may not always be a wish to own your home, but to become wealthier in the longer run. A good portfolio of assets and knowledge of how to build it, would always come in handy compared to risk prone, myopic investments in a few assets.

Bangalore or Trivandrum. Where do you buy your next flat?

For most IT professionals who have been working in Bangalore for over 5 years, the decision quickly crops up whether to go for an investment in Bangalore or Kerala.They have enough disposable income and most want to go for a bank loan which they can pay off in another 15 to 20 years with their earnings.

Bangalore is one of the most significant real estate markets in the country. Not only is Bangalore retaining its popularity as the favoured IT destination but is also attracting many NRIs, HNIs and investors to invest in the real estate market.The city however faces a crumbling infrastructure primarily owing to the migration of people from across India and other states. The government of Karnataka is doing its bit in Bangalore by developing the 2nd phase of the Metro as well as developing stretches of Outer Ring Road and making it a signal free corridor.

As far as Kerala is concerned. over the last decade NRIs primarily residing in Gulf countries have invested in real estate. It would however confuse a relatively new home buyer as to why propery prices in cities like Trivandrum are much higher compared to places like Bangalore. Taking an example, a prime residential apartment in Vellayambalam or Kowdiar commands a square feet rate of approximately 6000, whereas some of the hot upcoming areas in Bangalore like Sarjapur Road or Hennur Road commands in the the range of 4000 - 4500 per sq.ft.

The reason behind this is quite simple - Scarcity of land in "God's own country" along with escalating prices due to land grabbing. In addition the Kerala building rules which prohibit construction beyond a certain number of floors unless the building has appropriate road frontage and other parameters met, has meant that real estate developers have to shell out a lot more to buy the appropriate amount of space to raise a building.

The case is different with Bangalore. The new areas which have developed had previously been marsh lands or un-utilised space which is now being used for gated communities or residential apartments. The city is now spreading out towards Yelahanka (near the Devanahalli airport) and Kanakapura road (due to the metro 2nd phase coming up there).

Given the scarcity of land in Kerala and considering an influx of about 200,000 software professionals who are likely to work in the state by 2017, the property prices are only likely to increase. The increases would be much more pronounced within the city limits of Kochi and Trivandrum and the IT hubs compared to other parts. So a prudent investor looking for returns in 6 to 7 years, could look for a good deal in Trivandrum compared to a similar investment in Bangalore.  In Bangalore, growth in rates are much likely to remain steady and not go into a spiral. Expected increase in the short term should be around 10-15% per annum, given that new residential areas are springing up on a regular basis and there is still a lot of inventory being created in the city.

Having said that for a long term investment, Bangalore would still offer equally good prospects considering it could become a large metro like Mumbai or Delhi in about 15 to 20 years time. The choice ultimately resides with the buyer in terms of preference towards managing the property, place where he or she would like to get settled etc.

Many houses lying vacant in Kerala! Who is to blame - real estate agents, builders or the government?

A recent report in the Hindu mentioned that there are a large number of unoccupied houses and flats in Kerala. Going by the report the statistics are staggering for a small state like Kerala with a limited population but a high density of population.

So why are the prices so high and why are so many houses lying idle, when the masses or the middle class can barely afford a budget apartment of their own?  One would wonder that with such low occupancy rates, the rentals or real estate prices should ideally be much lower. The empty houses are a result of speculative investments made in the last decade in Kerala plus a role played by the land grabbers or mafia as it is called. In a recent ruling,  the Kerala high court has ordered that loan defaulters should be given freedom to sell mortgaged land themselves at market prices and settle liabilities. This hopefully will avoid the mafia from lying hands on the mortgaged land at below market prices.

The builders point to the high land prices being the most critical cause behind the high costs of apartments. The implication being that budget apartments under 30 Lacs are no longer a realty in good locations in the state. Most of the real estate experts say that land prices in Kerala are predominantly controlled by the land mafia. This has lead to a steep rise in prices even in villages which has made agriculture unviable.

The total area under Paddy cultivation in Kerala has come down from 9 lac hectares in the past to just 2 Lac hectares today. That's a serious loss to the environment as paddy plays a significant role in replenishing ground water levels.

Kerala is the only state that has witnessed area under paddy farming falling continuously. Interestingly, this is happening at a time when paddy prices overall across the country is increasing. The economics and statistics department, government of Kerala, reveals that the area under paddy cultivation declined more than 74% in 32 years. Rice remains the staple food of Kerala and the annual consumption is estimated at 40 lakh tonne with more than 85% of the requirement coming from the neighboring states. Although cost of production is the main reason why many are giving up paddy cultivation, farmers are giving up paddy fields for non agricultural uses too.

Recommendation:

Budget Housing must be a priority - For the majority of the state populace, an affordable home remains a dream. The government should take proactive steps and bring in zoning norms like in other countries, which makes affordable housing a reality. Typically a house under 25 lakhs would be very affordable for a bulk of the population. Care must be taken while land allocations are done so that a certain percentage of government or cultivable land, converted into real estate or private land, is given to the budget housing sector.

Bring in Food Security and Self Sustainability - A huge overdependence on other states and reduction in agricultural land, does not augur well for the state in long run with regards to the environment and food stability. Kerala has had a dream run with funds from NRIs continuing to pour in to the state in the last two decades. However no one knows what is in store 30 years from now. To become sustainable and self sufficient in the long run, agriculture and food security are a must with industrial growth in the state. Hence farmers must be educated and given additional incentives so that their farm lands are not taken away and sold at exorbitant prices by land mafias, but instead are converted into thriving agricultural lands with high yields. Yields for agriculture in India are 3X to 4X lower compared to developed countries and their is huge scope for improvement with latest methods of farming. The real killer for Kerala would be if the masses have to shell out beyond their means to spend on food and housing, the two basic requirements of mankind.

Improve the Infrastructure and building rules - Current building rules in the state prohibit taller buildings unless access road and space requirements are met. In zones where a large section of the population stays, these rules must be revisited by the town planning committee. Vested interests of a few should not be kept in mind while making such rules. There is also a need to improve the road connectivity to villages and towns so that operating in a hub and spoke model, people can reside in towns and still work in the cities. This would bring down the burden on city land in Trivandrum, Trissur, Kochi and Kozhikode to a large extent.

Regulations on real estate agents and educating them - Real estate brokerage or agencies continue to be a lucrative field for people from all sections of society in the state. A real estate brokerage should ideally help in a transparent transaction while earning the confidence and trust of the buyer and a seller. Real estate brokerages in other countries is a very regulated and professional field. However same is the not the case with India. A person educated or uneducated could easily step in to this field overnight in the lure of money. The danger lurks when they try to make a quick buck as a middle man and trap the buyer into over paying for the property or the seller into under selling on the price.

If the negative trend of playing middlemen without ensuring transparency, goes unabated, it leads to land scams. The price of a property transaction has serious influence on near by properties. This harms customers and leads to a bubble in the overall market. The government should come out with better regulations and measures to educate brokerages so that the overall interests of the state and its people are kept in mind. It should also have standard reports which publish the ongoing rates of real estate transactions in a given area every quarter so that normal customers are not taken for a ride.

As is evident from this article, a slew of measures are required to contain the weed of exorbinant and unrealistic prices of land and housing in Kerala. A time will come soon, where there might be excess inventory and few takers for it. A much better thing would be for the state and its machinery to take control with proactive measures to ensure the common man has a house and a dream fulfilled!

The Kerala Real Estate Market Report - January to June 2012

We are happy to share with our readers the first edition of the Kerala Real Estate Market report from Jan - June 2012 by Nandanam Consultants. The report provides an overview of key developments, information, news and research on the Kerala Real Estate Market especially covering larger cities like Trivandrum and Kochi. The Kerala Real Estate Market Report is a compilation of our most read articles on real estate as well as tips and recommendations for investors and home buyers.

You can download the report and read it here.

For further details, advise on buying or selling property and information on hot property deals in Kerala, contact us at nandanamconsultants@gmail.com or visit us at www.nandanamconsultants.in

Gold or real estate in Kerala. Which is a better investment?

Gold has traditionally been a safe haven for investors over the past many years. Malayalees flock to buy gold for most festive occassions, marriages and religious functions. Gold buying in Kerala has had a meteoric rise over many years and so has the gold prices touching 3000 rs. per gram this quarter.

So do you invest in Gold or real estate if you have surplus funds in your hand.

If you look at all the asset classes for an investor over the last few years, you can easily make out that in India, equities have barely given returns of 5%. The appreciation in stock markets witnessed in 2003 - 2007 was quickly wiped off in 2009 and since then equities have had a tough time. The prospects also don't look bright for equities until end of 2013. Stock trading has become a game of choosing the right stocks or on the contrary a fall in earnings. This has lead many stock traders to instead invest in Gold coins, ETFs and for retail consumers to buy gold from the market. Gold ETFs as per market stats has given standard returns of about 25% over the last 3 years which makes them an attractive proposition.

Let's take a look at real estate. If you consider property appreciation in Kochi or Trivandrum from 2009-2012, there was a steep rise as is evident from the RESIDEX india from 2010 to 2011 end. However prices have stabilised over the short term in 2011-2012 and investors who clinched deals in 2009-2010 really got good appreciations of over 30% in their real estate investments. But markets like Kochi are likely to offer stable growth of 10-12% over the short term and Trivandrum is likely to offer 18-20% in the short term considering the huge influx of IT companies and working professionals into Trivandrum.

Recommendation:

If you don't have liquidity right now to invest in Real Estate, build a corpus with the right investments maturing in 2 to 3 years

Build up a good amount of funds via Gold ETFs, NCDs (Non convertible Debentures) and FMP (Fixed maturity plans) over the next 2- 3 years which offer annual returns of 15-20% per annum. This will enable you to just have enough to buy a good property after this time. For it is likely, that real estate prices might again shoot up after a few years, once the surplus inventory lying in Kochi is sold out and real demand kicks in Kerala due to the influx of software professionals. To give an example with 20% return annually and an investment of about Rs.30,000 per month in the right asset class you would have a corpus of approximately 13 Lacs in a span of 3 Years. This might just be enough to help you make a down payment for a bank loan for an investment in land or an apartment. Over the long run, real estate is likely to surpass gold in terms of real returns.

If you have enough liquidity, scout for the good deals in the market. Go for a trusted advisor or consultant.

An astute investor having sufficient amount of funds should keep a close watch for good deals in the prevailing real estate market and make profits when the market growth kicks in 3 years time. A good time to exit would be 6 to 7 years after the property investment (about 2018), if your need so dictates. Going with a good property consultant should help you sail through and pick the not so evident good deals in the market.

Kerala real estate bubble or boom? An exploration of truth behind the possibility of a bubble in Kochi

The rapid growth of the housing market in India and especially Kerala in the recent years has raised concerns about its sustainability and implications for financial and macroeconomic stability. As prices continue to spiral out of control in the Kerala property market, many an aspiring customer is beginning to wonder if this is a real estate trend or is it a bubble that is waiting to burst? The Nandanam Consultants team explores the nuances of this growth and we try and draw conclusions based on available information.

Short video clip (Hindi) on possible real estate bubble in India

The bursting of asset bubbles in the housing market has often been associated with severe economic crises, especially, recessions caused by sharp reduction in spending as a result of loss in the consumers’ power to leverage against capital gains. The OECD Economic Outlook uses two approaches to evaluating housing price bubbles. One is price-to rent ratio and the second is the user cost of housing. One of the most significant factor that drove the growth of housing market in India in the recent years was the easy availability of bank finance at affordable interest rates. As per RBI, the retail loan portfolios of banks including housing and real estate advances expanded at rates ranging between 22-41 per cent in the last decade. The RBI has also tightened the grip on investments by asking banks only to lend 80% thereby reducing scope of a bubble formation.

Observations

For Kochi and Kerala, the user cost of housing has gone up significantly over the last decade or so. As per the Residex which tracks residential property prices in Kochi and other cities, key indicators emerge:

1. The property market in Kochi corrected by 15% from 2008 to 2009 due to global recession.

2. The market bottomed out towards end of 2009, further falling by 12%. So in net the market fell by 27% over the period of 2008 - end of 2009

3. The year 2010 - mid 2011 saw property prices climb by 35% in Kochi

4. The property market tanks and falls by 32% is last three quarters in Kochi.

Inference

The growth recorded in point 3 above was not unique to Kochi. Chennai, Lucknow, Faridabad, Patna, Mumbai, Bangalore and Delhi also recorded significant property appreciation. Much of it was due to the flow of capital post recession and positive sentiments about the India economy and GDP growth. Speculative investments by customers and NRIs were at its heights and people felt there was no looking back. From the developers point of view, they wanted to cash in on the lows of 2009 and sell off most of their inventory at record profits - resulting in higher prices every quarter. 

Post mid 2011, no city in India, has recorded as significant a correction in property prices as Kochi. Clearly indicative of the fact that the price increase was a bit too much, a bit too soon in 2010 - 2011. As per CREDAI " A lot of excess inventory was created which did not sell off. Developers were announcing ten projects a month during that period. "

Key Ratios to consider

(1) Price-to-rent has been on a rising trend since 2003. So although prices have been increasing rents in Kochi have not kept pace. (2) House price to household disposable income also don't have a correlation as although disposable incomes have increased prices have run too fast.

In summary, the information available at our disposal for Kochi clearly points to a speculative real estate bubble which was created. However, in the back drop, the market has also corrected significantly over the last year with the real housing demand coming into picture today. The bubble which was created was predominantly in the luxury segment since most of it was speculative investment by NRIs, but it was not much in the budget segment.

To conclude, although ratios (1) and (2) above appear to be true, the prevailing correction in Kochi, gives hope that prices would stabilize. If they don't and prices continue to rise we could be in for an asset bubble break down in a year or two. If not we could be in for a stable future. But that would be talking too soon.

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Seaplane Services in Kochi, Kerala. Now you can fly out of water!

God's own country would now also offer its tourists and country men, a sea plane facility, so that you can take right off from water!
 
The Sea Plane services are being launched in Kochi, Kerala. The state government has decided to introduce this facility in September this year as part of the Emerging Kerala Global Connect program. The government has taken measures to identify the area needed for this project. Once introduced, the service is expected to boost the water tourism of the state.

Emerging Kerala 2012 is scheduled to be held later this year in Le Meridien Kochi from September 12 to 14, 2012. Kerala, expects to close down investments by business magnets in projects such as Kochi Metro, Mono Rail, NIMZ project, High Speed Rail corridor and others through this conference.

The water transport terminal and office complex of Goshree Islands Development Authority (GIDA) is coming up at the authority's land on Goshree- Chatiath road. The GIDA has proposed to utilise the inland water resource available and would introduce modern and fast boats that provide residents a cheap, fast and safe mode of transport.

The tender proceedings of the Rs 6.33 crore project was completed by KITCO and according to GIDA officials Aluva FIT would initiate the project. The project is slated to get completed within one year, by August 2013.

Kochi real estate market - Down but not Out. Fears of a bubble still strong.

If the statistics are to be believed, the real estate market in Kochi has seen a declining trend over the last 3 quarters starting June 2011. The drop itself is a staggering 32% over the quarters from Apr -Jun 2011 to Jan - March 2012 (data below) as per the RESIDEX index.  This also raises alarming noises amongst a section of the populace, who feel the real estate bubble in Kerala and specifically Kochi might be about to burst. The significant price correction along these lines in Kochi, can in no way be correlated with other 20 odd cities in India, some of whom have shown considerable growth over the same period for e.g. Chennai and Delhi.

NHB Residex is a housing index and first of its kind in India, provided by the National Housing Bank (which is wholly owned by RBI) on a quarterly basis. The objective of the index was to provide transparency to the real estate market in the medium to long term. The index tracks residential price movements and is currently available for 20 cities in India and is proposed to be expanded to 63 cities, covered by the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The index currently has a lag of about one quarter in providing data about the real estate market pertaining to a city.

As per the National Housing Bank "Actual transactions prices are considered for the study in order to arrive at an Index which will reflect the market trends. Primary data on housing prices is being collected from real estate agents by commissioning the services of private consultancy/research organisations of national repute; in addition data on housing prices is also being collected from the housing finance companies and bank, which is based on housing loans contracted by these institutions." 

In compilation of NHB RESIDEX the cities have been suitably stratified by administrative zones or municipal wards according to availability of the data. The sample size of price observations consists of 500-600 observations for each city. The index is computed by using Price Relative Method (Modified Laspeyre’s Approach). Under this method price relatives are calculated only once (at the basic stratified unit) and the weighted average of these price relatives leads to the index at next level. (Source: Hindu)

 Source: NHB Residex

 So how does one interpret the NHB Residex. The index is currently fixed with the year 2007 as the base and base index value as 100. If the value in Bengaluru was 100 in the previous quarter and 92 in the current quarter it shows an overall drop of 8% in real estate prices for the quarter.

DRILLING ONE LEVEL DEEPER INTO THE KOCHI REAL ESTATE DATA
 

A further drill down into the data provided by NHB on the Kochi market by locality is given below. As per the data, Fort Kochi Vili, Karugapalli, Vennala & Mammankalam has seen the biggest drop in real estate prices in the last quarter of around 23.75% (From 80 to 61) followed by Mattancherry, Chakkamadam, Cherralai; Panayapalli & Edakochi South which has seen a 20% drop in real estate prices.

Possible reasons that could be attributed to a slump in property values in Kochi are:

1. Slackening of demand due to high interest rates and inflation

2. Property rates hitting their peak from where they have started going downwards

3. Postponement of decision to purchase property on the part of the buyers

4. Oversupply of inventory and less sales velocity (number of units sold vs. number of units created)

5. Drop in speculative investments by HNIs and NRIs prompting a correction

CONCLUSIONS

Although the NHB data provides a good indication about the state of the market, it predominantly covers transactions which involve financing institutions. Thus a complete picture cannot be drawn from this data alone. Also since NHB looks at the overall market, there is no clear indication if specific segments like luxury apartments, villas have been more affected compared to budget properties which trade in the 30 - 60 Lacs bracket. 

Our recommendation for investors looking at Kochi as a property destination, would be to "not resort to speculative buying".  Since most fundamentals in Kerala for Kochi and Trivandrum are still strong, segments which have seen drop in property rates in Kochi, could further see a drop till the demand - supply mismatch is rectified.

Some protagonists also argue that the overall Kerala market is a real estate bubble waiting to burst. The NHB residex at present does not cover other cities in Kerala for us to compare if the Kochi phenomenon is something felt across Kerala. Going by the request of many of our customers, we are going to showcase an article about the so called housing bubble in Kerala and examine whether it is truly a reality or just a figment of somebody's imagination. 

You can write to us with your comments, suggestions or requests for any specific information on Kerala or Trivandrum real estate to nandanamconsultants@gmail.com

7 factors which determine the value for your property - Proven by research

Research studies conducted across the world, especially in developed economies, have used multiple methodologies to determine real estate values and the parameters determining it. The most popular among these is the hedonic model which ascertains value based on the distance from the central business district (also referred to as CBD), access to light rail transport and expressways amongst many other variables. The formula given below, shows the price function in the Hedonic regression model as a combination of factors like structural characteristics (s), neighbourhood characteristics (n), and environmental characteristics (e).

Price Function (P) = f (s1, s2, s3...sj; n1, n2, n3,...nj; e1, e2, e3,...ej)  Source:Wikipedia

Drawing from some of the best research worldwide, we list down seven critical attributes which have been proven to affect property values: 

1. Access to Light rail transport (LRT) - 'Al Mosaind, Dueker and Strathman' claimed a positive correlation between distance to LRT and property values. They argued that properties which were within 500 meters of the LRT got a much higher value, since it improved citizens accessibility to CBD and other job areas within the city. A perfect example is the monorail development within Trivandrum which could improve access to the CBD for the smaller suburbs and amplify real estate rates in areas which are in the vicinity of the proposed station. The correlation with accessibility seems to become void if the property is more than 1.5km away from the station of interest. 

2. Distance to CBD - A study done in Ohio (United States) for a period of five years and another done in Sydney (Australia) point out that distance to CBD is a critical determinant of real estate prices. Most researchers argue that this variable is more critical than accessibility mentioned above,although positive correlation does exist for the latter. However as cities become poly centric with multiple CBDs instead of being monocentric, real estate prices would be determined with respect to proximity to a particular CBD in the zone or the suburb. At present only MG road could be considered as the central business district within Trivandrum with a majority of banks, retail and business houses located in the area. With new retail and business hot spots emerging at Vellayambalam, Pattom and Kazhakuttam, new CBDs could emerge within the next decade in a poly centric model within the city and change the real estate pricing pattern. 

3.Clustering - As per the spatial distribution phenomenon, properties of a similar value appear clustered together than widely spread out. 

4. Promixity to Highways and Expressways - Properties located upto 2kms from major highways and expressways showed a much higher value and appreciation across many global studies. 

5. Proximity to Regional Shopping centers - Research has also shown than real estate which is in proximity to malls, and other regional shopping centers are more expensive than rest of the sample. At the same time, properties located too close to the shopping units saw a drop in real estate rates due to higher levels of noise, pollution and crowding on the streets. The buffer zone was usually about 2kms from the shopping area, within which, the prices seems to be lower due to above factors but increased incrementally after that. 

6. Comparable Sales Approach - 'Can and Megboulougbe' in their research proposed the comparable sales approach wherein they said that price history in the immediate neighborhood of the given property will have a spill over effect on the given property's market value. The lesser the distance between the anchor property (which got sold at a higher price) and the given property, the more the impact on the value. This correlation seems to nullify if the anchor transaction happened before six months or if the anchor property is more than 2kms away from the given property. 

7. Structural attributes - This refers to the size and type of the property. International research concludes that number of bedrooms and washrooms tends to have a positive effect on the property value given that all other factors are the same. Strucutral attributes by itself pales into insignificance if spatial parameters mentioned above are not favorable for the given property. Centralised air conditioning and even presence of senior citizens in a property tends to more propitious as per research. 

In summary a host of factors typically decide property rates and you can get a realistic approximation of value based on these. Since studies of a similar nature spread across many years have not yet been conducted in Kerala or for that matter Trivandrum, the true sense of if any of these seven factors have a particularly significant influence for real estate in the city is left to be ascertained. These 7 factors could act as guiding principles in helping you choose your dream home or property in the Trivandrum or Kerala market.