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Top 3 cities to invest in real estate in India
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Top 3 cities to invest in real estate in India

By Akash Kotak·June 17th, 2022

In India, Real Estate is considered the most profitable investment asset class. It all depends, if you invest in the right property, at the right time, in the right location, and at the right price. But how do you know, when is the right time or the right place or the right time to invest?

In this article, we will walk you through India’s top 3 cities and evaluate data-backed factors that make these cities favorable for investors to purchase property. So, if you are someone who is looking forward to investing in Indian real estate, this article can be your reference guide to finding the best property.

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MUMBAI-

India’s ‘MAYANAGARI’ (city of dreams) - Mumbai is a highly potent city with almost all the amenities a person could think of. In fact, Mumbai is the most populated city with a crowd of 22 million people, yet more and more people land here to accomplish their dreams. Mumbai attracts all people from across the globe. This city is the financial capital of India and hence holds the highest value for commercial developments and investments. It has some of the top 10 financial centres - Bombay Stock Exchange, Reserve Bank, National stock exchange, etc.

In the first quarter of the year 2022, there were over 40.9% of rental housing searches in the city. This means that the investors who are thinking to invest in the residential property in Mumbai have a good scope to earn great rental income through the purchased asset.

Recently Mumbai has bagged a whopping 78% property registrations in the month of May, 2022. This is a sign that people are actually seeking long-term stability in the city as it holds great opportunities in every aspect.

Connectivity and ease of transport -

To cope with the population count, there are a lot of transport options with the best connectivity. Rail, water, and air are the main means of transport. The city hosts the largest bus transport network in India. 90% of its citizens use public transportation daily.

To increase efficiency of public transport, the MMRDA(Mumbai Metropolitan Region Development Authority) executed a master plan and introduced a monorail system in Mumbai’s metropolitan cities. Mumbai railway is the largest railway network in the world. It is divided into 3 sections- central, western, and harbour.

Other public transportations include auto-rickshaws, which are an integral part of the transportation hub of the city. If we talk about the airways of this city, CSIA (Chhatrapati Shivaji International Airport) is the second busiest airport in India.

Lifestyle and stability-

Mumbai is the home to big and famous educational and primary scientific and nuclear institutes. Bhabha Atomic research center, Tata institute of fundamental research, and VJTI(Veermata Jijabai Technological Institute) are some of the well-known ones. Healthcare facilities in the city are provided by private entities as well as the government. Mumbai offers an exclusive lifestyle and a serene neighborhood. People prefer living near railway stations as they spend most of their time daily commuting.

Economical factors-

Mumbai has a vast economy. While talking about real estate, and its infrastructural projects, there is a lot to come in the future, only to benefit the investors. Amongst the top infrastructural projects are-

Colaba-SEEPZ metro corridor-

-One of the most important metro corridors planned in the city, the Colaba-SEEPZ corridor, is expected to be completed by September 2022. Currently, the work is 70 percent complete.

-Aqua Line 3 of the Mumbai Metro, also known as the Colaba-Bandra-Seepz Line, is a part of the metro system under construction. When completed, the 33.5-km long line will be the first underground metro line in Mumbai and will be operated by MMRC.

-The SEEPZ line will connect the Cuffe Parade business district in the south of the city to SEEPZ in the north-central with 26 underground stations.

-Mumbai is upgrading its railway system and this will ensure more quality in the ease of transport by catering to the travel needs of the growing population.

The Mumbai-Delhi greenfield expressway

A time and the cost-effective end-to-end road that takes you from Mumbai to Delhi in mere 12 hours! The expressway is built at the rate of 30 km per day on average. This expressway will be India’s second-largest network in the world, fuelled by massive growth in the construction of expressways and highways.

Real estate performance

  • Mumbai’s real estate market is highly profitable. Acording to UBS, the megapolis contributes as much as 33 percent of profit margins--Rs 22,500 crore of Rs 69,100 crore; 23 percent or Rs 75,000 crore of Rs 3,24,200 crore in annual sales revenue; and around 10 percent or 38 million sq ft of 393 million sq ft of supply in 2021.
  • A report estimates that the regulatory authority might slash approval charges to 50% easing redevelopment policies, rehabilitation of lum and coastal norms can cause a surge in the supply in the metropolitan cities.
  • As compared to last year, Mumbai’s residential; sales saw a 25% Y-O-Y hike in the first quarter of the year. There was a demand for 1 BHK and 2 BHK houses of up to 60 lakhs.
  • The rental yield for residential property is around 3 % and has been in that range for the past five years. For commercial property it’s within 8-12% p.a. one of the highest in the country.

DELHI NCR -

The second most populated city in India after Mumbai is Delhi! The seamless connectivity and one after the other commercial developments make Delhi NCR the best place for real estate investments. This region of Delhi has tons of realty investment opportunities. Why? This area is highly affordable. Let’s discuss what all Delhi NCR offers in terms of real estate investments-

  • As the capital of the country, migrants and job seekers have always been attracted to Delhi. Delhi NCR provides a wide range of residential and commercial properties.
  • The booming IT industry, metro connectivity, and all the amenities that this city provides make it worth settling into.
  • Although overall sales declined by 50% in 2020 compared to 2019, the post-lockdown period gave the sector a boost with an increase of 43% QoQ in Q4 2020.

Connectivity and ease of transport-

Delhi is a well-connected city with all modes of transportation like buses, rickshaws, metros, etc. The buses in Delhi cater to almost 55% of the population. Moreover, these run on CNG owing to the increasing population of the city. Autorickshaws too contribute a lot to fulfill the requirements of daily commuters. The one thing that has played an important role in Delhi’s transport facility is the much-awaited Delhi metro link that will cover all points of Delhi including Noida. The metro link will provide a fast transport system to the public. A total of 78 stations connect the Metro's three lines, covering 90 km of track across the city.

Phase-I of Delhi Metro constitutes the first Line or Line-1 connecting Shahdara Metro Station with Rithala Metro Station, Line 2 connecting Central Secretariat Metro Station with Jahangirpuri Metro Station, and Line 3 connecting Noida City Centre Metro Station with Dwarka Sector 9 Metro Station. Phase-II will be completed by 2010, before the commencement of the Commonwealth Games with a line measuring 128 km in length, Phase-III will be completed by 2015, and Phase-IV by 2020 will connect over 414 km of Metro Link network termed larger than the London Underground Metro Link network.

Lifestyle and stability-

Delhi NCR has the best educational institutes like Indira Gandhi National open university, Indraprastha institute of information technology, National Institute of fashion technology, etc. There are 540 primary health centers in Delhi. From providing free medicines and lab tests to patients to a 24*7 emergency facilities, Delhi has strong medical coverage. Delhi has a great culture and tops in all entertainment options.

Economical Factors-

  • Delhi NCR is developing with regard to its infrastructural projects. The city is going to gain huge weight after the construction of Noida International Airport.
  • The Noida airport is being constructed near the town of Jewar in Gautam Buddh Nagar, Uttar Pradesh once completed, it is planned to be the country's largest airport. The Yamuna Expressway Industrial Development Authority (YEIDA) will be the implementing agency on behalf of the Government of Uttar Pradesh.
  • The PPP i.e Public-Private Partnership model will be followed in the construction of the airport. Zurich Airport Operator, Flughafen Zürich AG, won the bidding process to build and operate the airport for 40 years beginning in 2019.
  • By 2024, a two-runway airport will be built, and later expanded into a seven-runway airport on 7,200 acres (2,900 ha). After its expansion over a period of 30 years, the airport is expected to handle five million passengers per year at first and 60 to 120 MPA afterward.

Real estate performance-

  • Delhi NCR market is one of the most rewarding investment destinations in India. Even after the pandemic shock, the demand for the residential sector remained stable.
  • The residential market here witnessed a growth of 65 percent YoY in the CY2021 with 35,073 housing units sold during the year. With a 33 percent share of total residential sales in H2 2021, Gurgaon emerged as NCR's leading residential market.

  • The suburban rental market of Delhi NCR is highly cost-effective with around Rs.7000-Rs.1000 per seat every month, whereas, in the cybercity, it’s Rs.20000-Rs.50000. Making it a great deal for small startups and budding businesses.

There are a lot of commercial developments in the pipeline in this city, making it an opportunistic deal for people to reside, rent or sell their existing properties.

  • Noida saw a marginal increase in gross leasing of office space at 2.1 million square feet during the 2021 calendar year as against 1.9 million square feet in the previous year. In Delhi, the absorption of office space remained flat at 2,00,000 square feet. Delhi-NCR has a pipeline of around 5.1 million sq ft concentrated along Golf Course Extension Road, Noida Expressway.

  • There was a 50% rise in commercial leasing to 6.3 million square feet in 2021 from 4.2 million square feet in the previous year.

    BANGALORE:

  • With the increase in the influx of IT companies and industries from around the globe, Bangalore has been increasing its infrastructure investment year on year. The city also ranks high among startups. Bangalore property prices rise steadily every year by about 20%, even during the worst economic conditions. An ideal scenario for real estate investment in Bangalore is a backdrop of glorious economic circumstances.

Bangalore attracts a population from all over the globe. The city's pleasant climate and dynamic lifestyle have enabled it to become a popular residential destination.

The majority of immigrants travel to Bangalore to settle down and the city also attracts NRI attention.

Although the infrastructure, entertainment, and employment generation of the city are at par or even higher than other A-1 cities in India and the real estate prices of the city are strikingly much lower than Delhi, Gurgaon, or Mumbai making it the investors’ first choice.

Transport and connectivity-

Bengaluru city provides an array of transport options to ease commuters' intra-city and inter-city movements. Through major roads, railroads, and airports, Bangalore is connected to its immediate surroundings of Mysore, Hassan, and Tumkur, as well as to Chennai, Mumbai, and Kerala. Bangalore has the largest bus connectivity making it highly accessible to travel for its daily commuters.

With the Peripheral Ring Road and Bellary Road coming into existence, the connectivity between North and South Bangalore is set to improve as well leading to more benefits for investing in real estate in the city. A rapid transit system called Namma Metro runs across the city, thereby making it easy for the residents to use public transport. It encompasses a 42.3 km (26.3 mi) elevated and underground rail network, comprising 41 stations. The metro line between Sampige Road and Peenya Industrial Area was inaugurated on 1 March 2014. Once complete, it is expected to connect central locations in Bangalore to Devanahalli and Chikaballapur regions.

Lifestyle and stability-

Bangalore is very well-known for its charm, city life, and environment. It provides ease of living to its citizens. Known as the silicon valley of India, Bangalore has everything that a metropolitan city needs to have. Bangalore has more than 800 colleges which makes it a huge educational hub. Job opportunities and career prospects are many in this state as there are a lot of corporate firms and big MNCs occupying Bangore’s commercial space, which expands employment opportunities and career development prospects. Bangalore also has various government and private hospitals that cater to all kinds of healthcare needs.

Economical factors-

Bangalore is upgrading with regard to its infrastructural development.

74 km Bangalore Peripheral Ring Road:

  • The Bangalore Peripheral Ring Road (PRR) is a 74 km road owned and operated by the Bangalore Development Authority (BDA). It includes 8 lanes of access-controlled expressway with route alignments connecting Tumakuru and Hosur roads via Hessaraghatta Road, Doddaballapur Road, Ballari Road, Hennur Road, Old Madras Road, Hoskote Road, and Sarjapur Road.

  • By combining it with the currently operational NICE Peripheral Ring Road, this 100m wide greenfield expressway will create a 116 km bypass around Bengaluru. Karnataka's state government approved the project in February 2022 for the public-private partnership design, build, finance, operate, and transfer (PPP-DBFOT) model. The concessionaire, after winning the bid, will be granted a 50-year lease on the highway, after which it will be transferred to the government.

Bangalore Metro Rail Project Line R6:

  • There are 6 elevated stations and 12 underground stations proposed along the Reach 6 to be developed by the Project, which stretches from Gottigere to Nagavara in Bangalore. There are four components to the Project.
  • Construction of Elevated Viaduct and Stations: The component comprises 7.5 km of elevated metro section and 6 elevated stations.
  • Construction of the Underground Section Tunnel and Stations: This component includes 14.5 km of tunnel and 12 underground stations.
  • Depot: The component mainly consists of a maintenance depot for the Reach 6 at Kothanur.
  • Tunnel Ventilation System and Environment Control System

Real estate performance-

In 2020 Bangalore witnessed a rise of 33% from 24,910 units in 2020 to 33,080 units in 2021in residential sales. Also, the real estate market in Bangalore was successful as it witnessed a 43% rise in new commercial launches. There was a significant rise in NRI investments too. Around 53% of NRIs are keen to invest in Bangalore’s CRE. Bangalore’s investment appetite is quite high, consisting of 5000 NRIs across 12 countries.
In Bangalore, the residential market is gradually moving up. According to a report, there was an 18% increase in sales in the first half of 2022.

When making a real estate investment in Indian cities, there are a lot of factors to consider. Amongst them are the market trends, the ongoing price range of a particular location, how much appreciation a property provides, etc. Real estate investments in India come with their own set of advantages and flaws. Taking into consideration the risk factors is also very crucial. Some of the important fundamental parameters to look for, while buying any property are as follows-

  • Educational and healthcare facilities
  • Upcoming developments in the area
  • Water and electricity supply
  • Safety and Security
  • Transportation
  • Employment opportunities

To read more about the best cities to invest in India, stay tuned for our upcoming blog - Top 4 cities to invest in South India.

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Akash KotakFounding Member

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