Choosing where to buy real-estate in India is not a question of the most and the biggest. It is more the matter of what do you aim for. What are your goals? Some cities offer more opportunities for long term investment and future value growth, while some are perfect to buy an apartment that will be rented out immediately.
Jobs, traffic, infrastructure, and rent appeal dictate the value of the real-estate and this article tells you what to know about the cities that are popular with the investors. All the key factors are reviewed to help you understand what makes a city attractive from the perspective of a buyer. Let’s go through them one by one.
What Makes a City Ideal for Home Investment?
Before comparing cities, understand what actually creates demand for homes.
- Employment. Offices create tenants and buyers. A city adding employers has real demand behind it, not just sentiment.
- Infrastructure. Metro lines, expressways, ring roads and airports change how a locality is valued. Sanctioned and funded projects matter; announced ones may not happen.
- Connectivity. Travel time to the main work hubs decides rent more than the size of the flat.
- Rental demand. Some cities have deep tenant markets. Others do not, however fast prices move.
- Supply. If hundreds of flats are launching in the same pocket, both price and rent take longer to rise.
- Affordability. Your entry price decides your return as much as the city does.
- Legal clarity. RERA registration, clear title and approved plans protect the investment.
- Quality of life. Schools, hospitals, safety and green space keep families in a locality for years.
Bengaluru: India's Technology and Investment Hub
Bengaluru continues to remain the first preference for any investor and the prime reason is employment. The pull of the technology industry and the rising number of global capability centres are resulting in people renting before they buy, which in turn is helping in demand generation as well as resale.
The investor sentiment is skewed towards the eastern and southern tech belts - Whitefield, Sarjapur Road and Electronic City - and the northern belt around the airport that has opened up on account of road and metro connectivity.
At the same time, affordability is a big concern as Bengaluru is no longer an option for value-for-money purchases. Commuting has become a big factor as it directly impacts the desirability of a location. Thus, a flat located away from employment centres can stay vacant.
Hyderabad: Strong Infrastructure and Affordable Growth
Hyderabad has emerged as a preferred destination on account of planned development and affordability vis-a-vis Bengaluru and the National Capital Region. The outer ring road, metro and orderly developments in the western corridor have provided a fillip to expansion.
Investors are focusing their attention on the western belt-HITEC City, Gachibowli, Kondapur, Financial District and Kokapet-being prime locations which offer residential and commercial spaces in close proximity. Proximity is what tenants are paying a premium for.
Two issues merit caution. Supply glut in the western belt could temporarily keep prices discounted. Also, buyers need to be wary of long gestation period for projects located far off the ORR.
Pune: High Rental Demand and IT Expansion
The main advantage of Pune is the depth of the rental market. It has a strong IT industry, a developed manufacturing sector, and a large pool of students, which helps flats to rent out quickly. They are also a good investment since Pune is significantly cheaper than Mumbai but at the same time develops right next to it.
Hinjewadi, Kharadi, Wakad, and Baner are the areas where demand is driven by the development of IT parks and infrastructure, including road transportation and metro.
Pune is suitable for making a long-term investment, however, the growth of the value of real estate is usually more stable than in the case of Mumbai. Buying property outside the developed transportation hubs will bring fewer profits but still be a safe investment.
Chennai: Stable Real Estate with Long-Term Potential
Chennai has been a safe haven. Its manufacturing and automobile base along with IT and education sector make it a demand driven market which does not fluctuate with change in sentiments.
OMR is the preferred belt for investment along with Guindy, Porur and the surrounding industrial areas to the south and west.
Investors need to have a long term view on Chennai. It is not a market to make quick profits, but then it has proven to be a consistent performer in the past, standing by its reputation as an emerging realty hotspot.
Ahmedabad: Emerging Investment Destination
Ahmedabad is appealing to investors due to affordability, business environment, and infrastructure. Properties are lower than in the western cities, the state is business-friendly, and investment in the region has been consistent.
The areas of Vastrapur, Prahlad Nagar, and the SG Highway belt are established investor magnets, as is the GIFT City corridor, which has been fueled by the rise of financial services.
Think of it as an emerging market. The value of a rental purchase depends on your criteria, but there are fewer options than in a developed tech sector.
Delhi NCR: Premium Residential Opportunities
The National Capital Region (NCR) has got the maximum diversity in terms of products ranging from affordable to luxury homes. The development of expressways, metro, and the new airport in the Jewar belt has influenced the choice of location of homebuyers.
Gurugram is witnessing demand from investors on the Dwarka Expressway and Golf Course Extension Road, while Noida, Greater Noida West, and the Yamuna Expressway belt are preferred by first-time buyers.
One problem that stands out in this region, as compared to other real estate markets, is the NCR’s history of delayed or stalled projects. Therefore, it is important to look at the credibility of the builder, RERA compliance, and project completion report among others.
Mumbai: High Value and Strong Appreciation Potential
Mumbai is India's biggest and most liquid residential market. Plots are in demand, and the city's scarce land is always in question; in other words, there is always a buyer.
The only problem is the price. Mumbai delivers low yields on capital outlaid, and the very high prices of the island make all but the richest investors non-resident.
So people buy property in the Mumbai suburbs, the most sought-after areas being Thane, Navi Mumbai and the Panvel belt around the new airport. A smaller but growing number have their eye on Powai.
So for most Indian investors, the main opportunity in Mumbai lies outside the city.
Things to Consider Before Investing in Any City
The city is only the beginning. These are the factors that matter.
- The locality, and not the city, determines the returns. Within a city, different localities can witness highly varying returns. The reputation of the city can only give a vague idea about the returns from a specific flat.
- Comprising on current rent. Ask about the current rent of a similar flat in the same building or lane. There is no point considering projected rents.
- The total cost. You need to consider stamp duty, registration charges, GST on under-construction flats, brokerage, interest on the loan, and maintenance charges. All these factors eat into your returns.
- The developer's track record. Ask about their past projects and check the completion status of their previous projects. Also, enquire about whether the previous buyers have received the occupancy certificate.
- The legal formalities. Ensure that the builder has submitted the title deed, Encumbrance Certificate, approved plan, and occupancy certificate. Also, ask about the RERA registration and get these documents verified by a property lawyer.
- The holding period. The property is not a liquid asset, and you may have to wait for an extended period before selling it. Additionally, you may have to sell it at a loss if you are in a hurry.
- Your financial needs. A house for residence is a different consideration than an investment in real estate. The two should not be mixed up as an erroneous decision in either will impact your returns from the other.
Final Thoughts
Among the best cities for home investment in India, every city has its own USP (Unique Selling Proposition). Bengaluru and Hyderabad offer jobs in the technology sector, Pune offers rental income, Chennai offers stability, Ahmedabad offers affordability, the NCR offers scale and infrastructure, Mumbai offers value and liquidity at a higher price range.
First decide what the property you are buying is for, is it for capital appreciation, rental income, or family and then shortlist the cities for your requirement and then zoom into the localities and then look at projects.
Disclaimer: The information contained herein is a collation of publicly available information and should not be relied upon as investment, financial or legal advice. The returns on immersion in real estate depend on a variety of factors, including the specific location, time of purchase, developer, and market conditions, and the past performance of any particular city is not necessarily indicative of future results; therefore, readers are urged to conduct their due diligence on the projects and consult with their financial adviser or property lawyer before investing.
