Forget about the survival of the fittest. When it comes to real estate, the thumb-rule is simple -- survival beyond saturation. The idea is that once a tier-one city's emergency light goes red (indicating overload), start spreading into nearby tier-two cities.
While north India has already witnessed this phenomenon, it is now the south's turn to spring up architectural delights in the shape of housing projects which promise an entire city within a city. Topping the list of development and for investment, say experts, are Visakhapatnam (Vizag), Kochi, Mysore and Coimbatore.
Vizag's growth as an industrial metropolis has been rapid. One of the country's most important port cities, it witnessed an influx of industries ranging from an oil refinery to a fertiliser factory and is now poised to emerge as a significant IT/ITES destination. The last decade has seen the development of residential projects in locations along the city's coastline like RK Beach Road, Pandurang Puram, East Point Colony and MVP Colony.
Moving along the path charted by a proactive government, Vizag has attracted several national and international corporates while maintaining its charm of being a peaceful and calm city. "After Hyderabad, it is the largest city in Andhra Pradesh. Its serene beauty mingled with aggressive development is attracting a lot of investors," says PSN Raju, chairman, Visakhaptnam Urban Development Authority.
Reason enough for the authority to invest in nearly seven housing projects within the city and its vicinity. Many of VUDA's projects, in fact, are coming up in prime areas at an average rate of Rs 1,000 per sq ft for flats and row houses, and Raju promises that anyone investing in Vizag right now will reap benefits of an appreciation of almost 100 per cent in the next two years.
Recognised as the fifth-fastest growing "industrial metropolis" in the Asian subcontinent and the fastest growing industrial city on the East coast of India, Vizag is a market that even retailers are vying for and organised retail will soon make its foray into the city with Vizag Central and CMR Mall projects underway.
Owing to its proximity to the city centre, the New Central location is being touted as the hot bed for residential investments. Its peripheral areas such as Madhurawada, Rushikonda, Gajuwaka and Vizianagaram have a number of grade-A gated commercial integrated projects coming up with VUDA's mega housing projects and Balaji Associates and Jagjeevan Constructions' promoted Pallavi Constructions upcoming project Uplands Palace in Gagapur Palace Compound being the keenly awaited ones.
Close proximity to IT hub Bangalore has driven the residential real estate development in Mysore, with majors like Brigade Group and Sankalp moving in to capture the growing market. Brigade alone, having successfully completed several projects in the city, has six more in the pipeline at the rate of Rs 2,490 per sq ft, one of which is already sporting a 'house-full' tag.
The suburbs of the city like Jayalaxmipuram, Vontikoppal, Yadavgiri, Laxmipura, Vijaynagar, Gokulam, KRS Road in the north and Kuvempunagar, Lalith Mahal, Visweshwaranagar, Nanjungud, JP Nagar towards the south host a number of multi-storied apartments.
The enormity of development in Mysore is evident. Sankalp already has 12 completed projects in the city and five more in the waiting. Its Central Park project in Mysore will cover 18 acres and will be a self-contained residential-commercial complex. With only 22 per cent marked for construction, the complex ensures varied landscape along with entertainment areas and a mall. But the story doesn't end here.
Mysore is set to undergo drastic development in the near future with majors like Sobha Developers and Purvankara ready with designs for residential complexes. "We already have experience in corporate campus development for Mysore but now we're eyeing the growing residential market. We've bought the land and will start construction soon," reveals Jack Bastian Nazareth, executive director, Sobha Developers.
The second most preferred destination after Chennai, Coimbatore's independent houses are giving way to apartments owing to its growing populace. Estimates state that approximately 3,000 residential tenements are under construction from which 50 housing projects are under implementation by the organised players, according to the Emerging Growth Centres Report by Knight Frank.
In the upmarket areas like Race Course Road, there has been an overhaul of the bungalows that have been transformed to resemble apartments. The report predicts that Avinashi road will emerge as an important, high-end residential area in the city.
Chennai-based Deccan Estates and Constructions has ventured into the city with its ambitious project, called the All Seasons Luxury Apartments at Ramanathapuram. It expects to complete this project in two years for a price that ranges that will be between the price bracket of Rs 30 and 40 lakh (Rs 3 and 4 million).
The company has also bought land at the Race Course road to cater to the needs of luxury-seeking customers. Not far behind is Sriram Properties' enormous project worth Rs 120 crore (Rs 1.2 billion) -- Vijaya Hyde Park costing Rs 2,751 per sq ft for a three bedroom apartment and Rs 4,400 per sq ft for the villas.
Kochi may have taken a while to cash in on the real estate boom but it's finally here. With India's only operational private sector international airport and changing regulatory measures, the city's real estate market has become organised.
Among the enviable residential localities, at the top are MG Road and Marine Drive where sea facing apartments bring in the exclusivity. Newer locations include suburbs like Kakkanad, Edappally, Thripunithura, Alwaye, Ankamali and Kalamssery.
Majority of the investment is coming in from national players and even Dubai-based Emaar Group. On the list once again are players like Puravankara, Shobha and Brigade Group. What works in favour of Kochi is the retail boom with close to five malls in the offing including Aeren's Gold Souk and Lulu Centre. In fact, in the posh Marine Drive area, capital values last year ranged between Rs1,500-2,000 per sq ft and have now escalated to Rs 5,000-6,500 per sq ft, expected to appreciate further.
Interestingly, a lot of housing development activity in Kochi has spilled onto its ourskirts. Sobha Developers, for instance, are in the process of constructing a 55-acre integrated township, Sobha City in Thrissur.
The project is the company's first integrated township and is based on the "ying-yang" concept and a man-made lake covering 6.5 acres offers the ideal evening walk with its 10-mile walkway. At an investment of Rs 850 crore, the complex coasts of 25 villas 639 apartments.
"All the villas have been sold as have the first set of apartments. We are primarily targeting Indians from the Middle East who want to invest in their country," says Bastian.
Priced from Rs 2,722-2,822 per sq ft, the project's striking features include a clubhouse, commercial complex, business hotel, mall and entertainment centre, hospital and the Kerala trademark - an ayurvedic spa.
Moving beyond the obvious investment centres - Bangalore, Hyderabad and Chennai, these four cities of the south are being vigorously promoted by their development authorities. With improved, planned infrastructure and largely untouched southern beauty, they offer the ideal environment for growth and development.
Offers Gulam Zia, national director, research & advisory services, Knight Frank, "The appreciation in these cities will be handsome in the next few years." "However", he warns, "rental returns are minimalist."
The drivers of housing development in these cities is clearly the plethora of economic activity that is nudging developers to pump in more money into elaborate projects.
But if investment and return is your plan, it may be wise to note that the cities are still in their nascent stage of development and may require a little more patience. Explains Anshuman Magazine, MD, South Asia for CB Richard Ellis, "Invest in the these cities from a long-term perspective.
This is just the beginning of their evolution. I would advice a thorough research into the rules and regulations of the city and the builder, the location and the builder you buy from." He admits though that even at this stage, expecting a 100 per cent return in the next two years is not asking for too much.
Sounds like a success story already. Doesn't it?