The Confederation of Real Estate Developers’ Associations of India (CREDAI) Kerala along with its knowledge partner Cushman & Wakefield, released a report “Destination Kerala: The next big real estate growth story” at the 7th Statecon in Kochi.
The report puts a spotlight on the real estate potential of Kerala, highlighting the development that has taken place so far and analysing in detail the various factors that are likely to drive the sector’s growth in the state in the coming years especially in the key cities of Kochi and Trivandrum.
Even though Kerala is the only state in the South region that does not have a major real estate market featuring in the top -8 real estate markets of India, the report suggests that the next phase of commercial real estate growth in India will bring in a good amount of focus on the state of Kerala.
According to the report, Kerala’s real estate growth will be driven by several factors including:
- High urbanisation rate – In the 2011 population census, Kerala recorded an urbanisation rate of 48% which stands much higher than the India average urbanisation rate of 31%. In about 10-12 years, Kerala is likely to become the first state of India to reach near complete urbanisation.
- Large diaspora of qualified out-migrants – Kerala has a large contingent of non-residential Keralites working in higher income countries which is driving consumer spending and thereby attracting several retail brands and mall developers into the state. According to recent NSSO survey, Kerala’s average monthly household expenditure not only surpassed the national average but also exceeded that of most industrialised states, including Andhra Pradesh, Karnataka, and Tamil Nadu.
- Strong infrastructure & connectivity: Kerala has a well-developed infrastructure network, with good roads, railways, airports and new age transportation systems such as the metro rail and water metro.
This makes the state an attractive destination for businesses and individuals.
In addition to these factors, Kerala’s real estate sector is also benefiting from a number of government initiatives. The government offers incentives and investment subsidies to start-ups providing impetus for young enterprises to set-up base in Kochi. For instance, the government is offering seed funding through the Kerala start-up mission; creating quality IT parks that suit the needs of global IT companies – Technopark, Infopark and cyberpark in cities such as Kochi, Trivandrum and Thrissur, to list a few.
Kerala’s policy environment has also improved considerably over the last few years, although there is scope to enhance the framework further. With area of improvements in the development and FSI regulations, e-governance at ULB levels, more targeted initiatives for IT/ITES etc., the government could catapult a more comprehensive and transparent ecosystem that can help the real estate industry grow further.
The report goes on to analyse in detail the prominent cities in Kerala and gives an overview of the office, residential and retail markets in the prominent urban areas of the state, including the established cities like Kochi and Trivandrum. In a recently released Cushman & Wakefield India and CREDAI joint research report, Kerala was the only state with two of its cities featuring in the list of the next 10 most emerging real estate cities in India – Kochi and Trivandrum. The two cities showed enormous potential by scoring decently well across most parameters, but more significantly on indices such as infrastructure (air, travel, metro development), income levels, and housing affordability.
Apart from Kochi and Trivandrum, the report also highlights cities such as Kozhikode, Thrissur and Palakkad that have made significant strides and are gradually marking its ground in the city.
The report observes that in the coming years, Kerala could be well-positioned to come across as a leading destination for office occupiers looking at alternatives for setting up operational base in tier-II cities.
VS Sridhar, MD, Tamil Nadu, Kerala, Cushman and Wakefield India, said, “In our recently released report on India’s 10 emerging markets, Kochi and Trivandrum were the only two cities which had a city stock of over 7 MSF Grade A office space, highlighting the immense opportunity that the state presents in terms of real estate growth. With favourable government policies, a large diaspora of skilled Non-Resident Keralites, qualified and skilled talent pool and improved infrastructure, we anticipate Kerala to be an attractive destination for corporate occupiers and developers exploring alternative locations beyond the top 8 real estate markets.”
While unveiling the report, Dr Najeeb Zackeria, Conference Chairman, CREDAI Kerala Statecon said, “The real estate sector in Kerala has been on an upswing across different asset classes. As one of the most literate and skilled states in India, Kerala provides ample opportunities for growth of the sector. With this report, we want to highlight the growth areas and development potential of the key cities in Kerala”.
