NRI Real Estate and Property Investment in India
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Kozhikode Ready to Buck the Realty Downtrend
Monday, August 4, 2008

Rising interest rates and slowing growth may have dampened spirits across the country but Kozhikode (formerly Calicut) realty market is gearing up for another round of boom. The Kozhikode property show, to be held early next month, would see the launch of around 15-20 projects in and around the city.

According to a building industry spokesperson, the industry has taken up projects after taking genuine demand into account. Nithyananda Kamath of Ace Structures says: "Supply in Kozhikode is just enough to meet demand." The demand is from actual customers whose housing needs are genuine and there is very little investment demand, he adds.

Builders say rising interest rates and slowing growth may not affect demand. Moreover, like elsewhere in the state, Kozhikode also gets a large inflow of NRI money into real estate. However, the focus of the builders is on domestic demand, growing at a healthy rate.

Builders in Kozhikode have placed their hope on the growing importance of the city as an IT destination. In fact, many companies have started looking at Kozhikode seriously while deciding on their future investment plans. A Hungarian company has already announced its plans to open a centre in Kozhikode employing almost 1,000 IT professionals initially.

To showcase Kozhikode to the IT investors, an organisation called Calicut IT Initiative is holding a IT Fair in the city. The fair would try to communicate the advantages of investing in Kozhikode to the investors. The city is also witnessing a boom in the IT infrastructure sector. While the state IT park, Cyber Park, is fast becoming a reality, the 350-acre IT park by the Aditya Birla Group is awaiting government clearance. The proposed Advanced Technology Park spread across 60 acres would be more of an incubation and R&D centre, sources said.

It is against this backdrop that the city is getting ready for the property show. The rates for residential apartments are now in the range of Rs 2,100 to Rs 3,500 per square feet and rates for premium apartments within the city, especially in places like Nadakkavu, have gone up to Rs 3,500 per sq ft.
Expansion of Kozhikode airport, the growth of tourism and the potential of the city to emerge as a new IT destination are the aspects on which the builders are pinning hopes on. Taking into account the all-round development of the city, the builders have launched new projects. Says Mr Mehaboob of Hilite Builders: "A shopping mall, Blue Diamond, is out new project in the city." Mr Mehaboob's first mall in the city was leased out in record time. The lease rental has gone up from Rs 110 per sq ft for the first project to Rs 150 per square feet in the second project, he said.

The growth in general business in the city has also led to a boom in commercial space construction. Hilite Builders are launching a residential project which will have 5 lakh square feet of commercial space. Rates for commercial space are now ruling between Rs 5000 per sq ft and Rs 6000 per sq ft, while for the premium category it would be over Rs 10,000 per sq feet.

There are about 40 builders in Kozhikode and its suburbs. They ensure that supply is kept in line with the demand. As a result, there has been a consistency in the rates for built-up space in both residential and commercial categories.

 

 

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