Gulf NRIs driving Kerala property price bubble

Middle East-based Keralites are on a property buying spree in Kochi, pushing prices to as high as those in the National Capital Region, according to India’s realtor association.

“By and large, Kerala is a non-resident Keralites (NRK)-driven market. I find the real estate prices of Kochi as high as that of National Capital Region. Solely because of NRKs, the prices here are up by 30 per cent, whereas, it should have been as low as that of Nagpur, Coimbatore, Bhopal or Jabalpur,” PSN Rao, chairman of National Association of Realtors-India (NAR-India), told an Indian daily, The Times of India.

NAR-India is a national federation association of real estate agents in 25 cities of the country.

Average price of residential properties in the above towns stood at Rs3,000 to Rs3,500 per square feet, while prices in Kochi were hovering at Rs4,500 per square feet for Kakkanad and Rs12,000 square feet for the plush Marine Drive area.

“All the pre-launch functions of Kochi-based projects are done in the Middle East, whereas builders or realtors in other parts of the country prefer local events," said Abjo Joy, president, Kerala Realtors Association (KRA).

“Brokers in Kochi need online tools as they are dealing mainly with Middle East-based clients. Also, after the purchase, these clients won't live here and hence the agent should also have skills in property management," he added.

A new survey done by IIM Bangalore and real estate portal Magicbricks found home-buyers in India were expecting property prices to rise over the next six months.

“Most cities witnessed a marginal increase in sentiment and this guarded optimism is in line with the new government stepping in at the centre with a clear majority during the quarter,” said IIMB-Century Real Estate Research Initiative Lead Researcher Uma Sitaraman.

“People seem to be waiting to understand the effects of this new government before taking any major decisions. With the stellar performance of the equity markets, real estate is bound to witness healthy demand in the near future due to re-allocation of profits from equities into housing,” he added.