Kochi emerges top real estate destination among tier II cities

Kochi is now the top real estate destination among Tier-II cities, according to a study.

Nashik is next, followed by Visakhapatnam, Vadodara, Thiruvananthapuram, Jaipur, Mangaluru, Indore, Goa and Coimbatore, says analytics firm PropEquity.

The research was based on prices of property, supply, demand, sales, inventory of unsold houses and implementation delays over the past two years.

Cities in the south dominate the list. There’s only one from the north, Jaipur at number six, in the league. Agra, Lucknow, Bhiwadi and Mohali, all from the north, were the worst performers among the 19 Tier-II cities surveyed.

Kochi, along with Indore, scored high on the volume of sales and number of project launches. Kochi, one of the proposed smart cities, is also home for several emerging software companies, says the study.

While all southern Tier-II cities in this list, except Coimbatore, showed inventory in the range of 15 to 22 months (within the comfortable level of 24 months), Gujarat stood out for several reasons.  For instance, Gandhinagar (capital of Gujarat) experienced the lowest delays in execution of projects, at eight months. This is almost half of the average delay of 15 months of all the Tier-II cities. Also, Vadodara is ahead of all other Tier-II cities in absorption, with an average of 12,500 units or 16 per cent of the overall absorption in Tier-II cities. In contrast, three of the four cities in the north showed a high level of inventory overhang, with the worst performance by Mohali at 50 months.

No city could come on top in more than two advanced parameters. And, most of those doing extremely well on some parameters fared poorly on others. “A case in point is Dehradun, which is top on two and last in the other four. Hence, it has fallen in overall ranking.’’ As an earlier study on Tier-I cities had shown, real estate in the north is marred by project delays, expensive properties and a demand and supply mismatch, PropEquity said. “Although the Tier-II and Tier-III cities have performed better in India, they have been adversely affected in this current slowdown, which has severely impact the Tier-II cities,” said Samir Jasuja, founder and managing director of PropEquity.

The 19 Tier-II cities (consolidated) have annual primary sales of Rs 32,600 crore annually. This is lower than that of Bengaluru ( Rs 36,100 crore) and Mumbai (Rs 34,100 crore).

Overall, the new residential supply in the top 19 Tier-II cities has fallen by 64 per cent in the past two years, as against a fall of 40 per cent in the top 14 Tier-I cities, in the same period. Absorption across these cities fell 17 per cent in the past two years, as against a fall of 32 per cent in the top 14 Tier-I cities in the same period.

As for launch prices of Tier-11 cites, these have increased at an annual nine per cent over two years, compared to 10 per cent for Tier-I cities. The Tier-II markets are seen as end user-driven than investor-driven.

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