5 Top Indian Cities For Property Investments

A general impression exists that Tier I cities in India (Delhi, Mumbai, Pune, Chennai, Kolkata, Bangalore, Ahmedabad, Hyderabad) are unaffordable for property purchase. However, some in-depth research may very well provide a different result. As more Indians move to urban areas, property prices across the country’s urban centres has skyrocketed and so has the demand for home loans.

Following are the top five Tier I Indian cities that are excellent for homebuyers with varying budgets, and also offer good long-term investment options bearing in mind the potential real estate price appreciation. The most promising localities in each of the cities have also been mentioned.

Chennai

Chennai according to many experts is a buyer-driven property market, therefore less vulnerable to speculations.
Based on the type of area and development activities therein, different parts of Chennai can be categorised as:

• Central Chennai: Highly developed with well-established residential and commercial markets
• West and South Chennai: Traditionally residential, now rapidly developing into commercial zones with a sizable number of financial services and IT firms setting up shop.
• North Chennai: Predominantly industrial

Popular investment areas:

• The overall development of Chennai’s popular suburbs like Siruseri, Perungudi, and Sholinganallur, along the GST Road coupled with the State Government’s focus on ensuring excellent road connectivity along these areas has boosted their popularity in terms of property investments.
• Chennai’s outer Ring Road has also emerged as one of the most sought-after upcoming investment market with massive townships being planned and built in the area. Outer Ring Road Phase II and Metro Rail Phase II are expected to become operational in the later part of 2016, which would give further connectivity boost to the area.
• The Guindy-Alandur cluster is currently undergoing an infrastructure push, making it likely for it to emerge as a strong property investment area in the near future.

Table1: Chennai’s Connectivity-based growth drivers

Driver	Salient Features
Chennai Monorail	Expected to have close to 36 stations The 57-kms Phase-I will comprise three elevated corridors – 1st – Vandalur to Velachery via Tambaram (E) 2nd – Between Poonamallee and Kathipara 3rd – Poonamallee to Vadapalani via Valasarawakkam
Outer Ring Road II	A six-lane highway that will connect NH-205 (Nemilichery) with NH-5 and Minjur’s TPP road
Mass Rapid Transit System	An elevated railway line that will enhance connectivity between the Metro and MRTS lines at St. Thomas Mount
Chennai Metro	Corridor-I, via Guindy, will strengthen connectivity between the international airport and central Chennai Corridor-II will strengthen connectivity in the heavy-traffic route between St. Thomas Mount and city centre

Pune

Proximity to Mumbai, the high-speed Mumbai-Pune Expressway, excellent education and employment opportunities, multitude of IT, engineering, and automobile firms and good weather have collectively contributed to the accelerated growth of the real estate sector in Pune.

In the last few years, Pune has witnessed impressive growth in the affordable housing segment. The residential projects located on the city’s periphery mostly offer small basic flats. Despite the rapid growth in Pune’s luxury housing segment, there has been a recent expansion in the city’s affordable/budget housing segment.

Pune has several suitable properties for investors as well as end users/homebuyers at varying price points:

• Affordable segment: Rs. 15-30 lakhs
• Premium segment: Starts at Rs. 1.3 crores
• Luxury segment: Could go as high as Rs. 2.5 crores

Some of Pune’s upcoming areas that look promising to invest in are Tathawade, Wakad, Ravet and Hinjewadi in the West; and Dhanori, Vishrantwadi, Whagoli and Kharadi in the East.

Over the last five years, Pune’s real estate market has graduated from just about average performance to one of the fastest growing in India. It has grown to become one of the best Indian cities to live in, promising further infrastructure development and a great standard of living.

Table2. Pune’s Connectivity-based growth drivers

Driver	Salient Features
International airport	Due to the Lohegaon airport not being able to serve international traffic beyond 3-4 flights per day, a new international airport is being developed 14 kms West of Rajgurunagar. It will be connected by the Metro system to other parts of Pune.
Pune Metro Rail	Corridor I will connect Pimpri-Chinchwad, Swargate, Shivajinagar, and also improve connectivity between the Southern and Northern parts of the city Corridor II will connect Pune Station, Ramwadi, and Vanaz, and take care of heavy traffic issues on the East-West route Both corridors are expected to be operational by 2020
Bus Rapid Transit System (BRTS)	600 special buses The two corridors, namely Sangamwadi-Vishrantwadi and Sangvi-Kiwale in Pimpri Chinchwad became operational in 2015 Connectivity between Wakad and Nashik Phata, Nigdi, Dapodi and Nagar Road will be complete this year From Kalewadi Phata to Dehu Alandi, the route will start operating in 2017

Ahmedabad

Ahmedabad is Gujarat’s biggest trading and business hub, and its economy is booming thanks to new investments, rapid development of infrastructure (GIFT Smart City, bullet trains, BRTS, Outer Ring Road), a stable and business-oriented Government, and an enterprising population.

The growth of Gujarat’s oil, energy, textile, engineering, petro-chemical and automobile industries has opened up major employment opportunities in the city, attracting people from all across India. This has converted Ahmedabad’s investor-driven real estate market to buyer-driven market. However, as the suburban areas of Ahmedabad continue to expand, many experts have pointed out that there is an oversupply of real estate in the city, which has exerted a downward pressure on the property prices.

In this scenario of an oversupply of real estate in Ahmedabad, buying a house for self-occupation is highly recommended. To buy a home in North, South, and East areas of Ahmedabad, a budget of Rs.50 lakhs should be quite sufficient. Houses in West Ahmedabad are slightly more expensive, costing approximately Rs. 75 lakhs.

If your budget is in the Rs. 30-50 lakh range, you can get a multitude of options along the SG Highway, and in Bopal, Satellite and Gota.

Homes in premium locations such as Nehru Nagar, Ambawadi, Shahibaug, and Navrangpura could cost as much as Rs. 1 crore.

However, buying property purely for investment purposes by taking a home loan is not advisable because no major price appreciation is foreseen in the next two or three years or till the real estate oversupply situation gets resolved.

Table 3. Ahmedabad’s Transportation-based growth drivers

Driver	Salient Features
Metro rail project	Construction work has begun on the initial phase of this project This phase will connect affordable residential locations in the eastern and western parts to the city centre, thereby lowering the effective travel time between more densely populated regions
GIFT Smart City	The Gujarat International Finance Tec-City, popularly known as GIFT, is an under-construction central business district between Gandhinagar and Ahmedabad 12 kms from the city’s International Airport GIFT promises world-class infrastructure and facilities, and superior quality of life with the integrated townships
Sardar Patel Outer Ring Road	This road has benefitted the following peripheral locations of Ahmedabad by enhancing connectivity: West Ahmedabad – Shilaj, Shela, Bopal, Science City Road East Ahmedabad – Nikol, Kathwada, Odhav North Ahmedabad – Tragad

Navi Mumbai

It may have become practically unaffordable to buy a house in Mumbai, but Navi Mumbai lets homebuyers take heart.

The real estate space in Navi Mumbai and its surrounding areas have demonstrated impressive growth over the last few years, primarily due to the planned approach taken towards this suburb’s development. Navi Mumbai has several residential properties on offer in the Rs. 30-50 lakh range, which may be suitable from both an investment and residential point of view.

Major economic growth drivers proposed for Navi Mumbai:

• Upcoming international airport at Panvel
• Government’s approval to the Mumbai Trans Harbour Link
• Proposed SEZs at Ulwe, Kalamboli and Dronagiri

The above drivers will be huge game changers in Navi Mumbai’s property market as they are expected to generate massive employment opportunities, open up new avenues for sustained development and boost the overall growth in this Mumbai suburb. Going forward, the above mentioned factors are expected to drive demand in Navi Mumbai’s property market- be it residential or commercial.

Hyderabad

Following a rather protracted slump collectively caused by the global recession and some political tumult, Hyderabad’s real estate market has finally started to witness an upturn, thanks to its resilient economy. Blessed with an enterprising workforce and a flourishing economy, the City of Pearls has started moving towards the top of the list in terms of the property investment destinations in India. . The city’s booming IT/ITeS industry has provided further momentum to the demand for all types of real estate – commercial, retail, and residential.

As compared to some other tier one cities namely Bengaluru and Chennai, Hyderabad is definitely more affordable as a result of the market’s previous slump. Sainikpuri, Kukatpally, Manikonda, and Miyapur are some of the city’s well-developed residential localities, where you can easily get a house in the Rs. 30-50 lakh range – making it clear that buying a house in Hyderabad is relatively more affordable than buying in other Tier I Indian cities.

In the near future, Hyderabad is expected to receive huge investments in its rapidly growing property market – thanks to the new Telangana state and stabilisation of the city’s volatile political situation.