Star on the ascendant

As seen in all south Indian cities in which the service sector dominates the economy, Kochi's real estate market has sub-segmentation of its micro-markets. These can broadly be classified as prime CBD, secondary and peripheral sub-markets.

Kochi's prime CBD comprises Marine Drive, MG Road and its extensions, Kadavanthara, Jawahar Nagar, Panampally Nagar, and so on. These areas have a mix of premium and upper mid-segment residential projects wherein the capital values of residential apartments are above Rs 5,000 per sq ft.

The secondary (Kaloor, Maradu, Edapally) and peripheral sub-markets have a mix of mid-segment and upper mid-segment projects. There is no significant price difference in apartments in the secondary and peripheral sub-markets, thanks to the fact that there is a robust demand in the latter, driven by IT-ITeS developments.

In 2012, Kochi's residential real estate market witnessed price appreciation in the range of 10-15 per cent over a year across all micro-markets. Notably, high appreciation in capital values was seen in the peripheral sub-markets, more specifically in the Kakkanad region. These trends are likely to prevail over the medium term, as there are significant activities in the SmartCity Kochi Project.

Upper mid-segment and higher segment residential apartments in Kakkanad are priced at Rs 3,500-4,000 per sq. ft, which is comparable to or marginally lower than residential prices in the peripheral sub-markets of Bangalore, Chennai and Hyderabad.

Generally, apartments having frontage along water bodies and the city's backwaters command a substantial premium that can range from 30 t0 40 per cent over that of apartments without this feature. The key demand drivers for Kochi's residential property market are primarily non-resident Indians hailing from Kerala.

Spotlight On Marine Drive
In recent times, areas such as Thevara have seen premium projects priced at about Rs 8,000 per sqft. Some of the peripheral sub-markets such as Kakkanad are also witnessing upper-segment projects over the last two to three quarters.

However, Marine Drive — part of Kochi's prime city CBD — remains the most sought-after and upmarket area for residential development in the city. Most of the large land parcels in this area feature frontage along backwaters, which makes both land and apartments developed on this land command a rather high premium.

The price range of residential apartments at Marine Drive is between Rs 5,000 and Rs 6,000 per sqft, with apartments having partial and full visibility of the backwater commanding a premium of 25-40 per cent over the average price. The Marine Drive area has been able to sustain high prices over the past four to five years.

The writer is MD- Bangalore & Kochi, Jones Lang LaSalle India