CHENNAI: Strong English speaking skills and a wide mix of
industries that promotes cross pollination of work culture has made Chennai one
of the top 12 cities in the world for real estate investments. This is the
first global recognition the city has received; it is also the lone Indian city
on the list.
The Candy GPS Report, published on Friday, identifies 12
cities around the globe with the potential to show strong residential property
price growth in the next few years. The report — produced by Candy & Candy,
Savills World Research and Deutsche Asset & Wealth Management — said,
“Prices in these rising cities are generally much lower than in the world
cities, which make them more accessible and attractive to yield seeking real
estate investors.” The list ranges from well established cities such as
Melbourne, Australia, to centres in developing economies such as Jakarta and
Chennai, that have a high number of ultra-high-net-worth residents, it said.
“While all of us acknowledge Chennai as an English speaking
work zone, it is also a traditional banking domain speciality location driving
inbound BFSI (banking financial services and insurance) businesses, which is a
key differentiator to Bangalore and Hyderabad. Apart from these, Chennai has
tremendous strengths in high quality healthcare and education systems, a key
ingredient for future growth,” S Ramaswamy, chief consultant RECS Group, a real
estate consultancy said.
Yolande Barnes, Director, Savills World Research, who
conducted the analysis said: “As prime real estate in many premier cities has
become more fully valued, emboldened investors are now spreading their wings
and looking for high yielding secondary properties in those cities and
(properties) in second-tier cities in countries with strengthening economies.”
For example, a two bedroom apartment in prime selling areas
is priced at $1.60 lakh or Rs 96 lakh and in secondary ones they sell at
$40,000 or nearly Rs 24 lakh.”This more adventurous approach is likely to not
only provide higher income returns but also an opportunity for significant
capital growth. Real estate values will grow as new cities all over the globe
rise on fortune’s wheel. Property rents and values will rise in line with new
and growing economic strength,” the report said.
Real estate developers in Chennai offer around 20% internal
rate of return or IRR for equity investments in residential projects. While,
commercial properties yield about 8-10% rental returns. Residential rental
returns are 3 to 5% in the city.
“Chennai is typically an end user market which has a great
mix of businesses. Its top tier medical facilities add zing to the city as an
investment destination. More importantly, it is not seen as a luxury market
like Mumbai, which means there exists tremendous scope for improvement of city
skyline,” S Neelakantan, senior partner, CNGSN, a firm which has actively
structured real estate investments said.
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