Source: High Rise

 

Smaller cities and towns have the potential to become the boom towns of tomorrow. In the past 18 months, several tier II cities have witnessed a flurry of real estate activity. National level developers are picking up large land parcels, investors are rushing in to ride the upswing, and IT companies as well as BPOs are setting up base here to maintain cost efficiency.

 

So, which cities and towns will be next on the development and expansion radar for developers and investors?

 

According to the latest report by property consultants Knight Frank, Trivandrum, Mangalore, Nasik, Bhopal and Jhalandar are among the eight tier III and IV cities that will emerge as growth centres from this year on. But is it too early to consider an investment in these areas -- after all, have we seen tier II cities delivering what they promised?

 

"If I go just by the euphoria and say it still hasn't taken shape, then why am I talking about the second level of cities? The next level of cities also have tremendous potential. Investors want to put their money where there is good capital appreciation," says Gulam Zia, National Director, Advisory Services, Knight Frank.

 

Consultants add that with the government's initiative to ensure four lanes for all national highways, cities such as Dehradun, Raipur and Amritsar have become fresh targets for developers. Down south, Trivandrum and Mangalore already have established campuses of IT biggies like TCS and Infosys. Now realty majors are following suit.

 

Trivandrum

It made its mark as an IT destination with the completion of a 3.2 million square feet techno park. While IT giant TCS and 120 other IT/ ITES companies have already set up base here, the techno park is further expanding over an additional 600 acres to accommodate the campuses of Infosys, Larsen and Toubro, a biotechnology park and residential townships.

K Raheja Corp too has planned an IT park close by. Thanks to the IT penetration, traditional bungalows are giving way to a spate of high rises.

 

According to the Knight Frank report on emerging growth centres, Trivandrum will have 4 million square feet of residential space by 2010. And the bulk of this supply is coming up along the Kovalam-Kazhakuttam bypass, close to the techno park. Here, apartment prices in complexes such as SFS Homes, Cyber Palms, Heera Velmont and Skyline Wimbledon rose 30 per cent last year, ranging between Rs 2,600 - 3,000 per square feet.

 

At these levels, residential prices here are on par with traditional prime areas of Kowdiar and Jawahar Nagar. Following the residential activity, noted retailers like Future Group's Food Bazaar and Spencer's have set up shop in the vicinity of Pattom and Kesavadasapuam, with Reliance and Shopper's Stop also in the pipeline.

 

So, with the potential of 1,50,000 IT professionals working in the four phases of Trivandrum's techno park alone, consultants say there is enough real estate potential to be unleashed here.

 

Mangalore

Mangalore has already begun to witness the spill over demand from large IT companies in Bangalore. While Infosys has established its presence here, the company is setting up a 300-acre campus facility in the IT SEZ coming up on the outskirts in Konaje. Satyam and Wipro too have been allotted 200 acres in the export promotion park coming up in Ganjimutt.

Moreover, the proposed coastal Special Economic Zone where ONGC will invest $ 250 billion (Rs 9,856,249,809,275) has added to the real estate interest in Mangalore.

 

So, Bangalore-based developers like Nitesh Estates and Puravankara have recently acquired over 40 acres for IT park developments and townships. Residential complexes too are springing up on the outskirts and close to Bajpe where the new international airport is proposed.

Prices in apartment complexes on the airport road such as Blueberry Hills and Landlinks range between Rs 2,500-2,900 per square feet and are likely to rise further with the completion of the airport and IT SEZs. Mangalore also has six malls under construction, including a forum mall by Bangalore-based Prestige Group on MG Road. There seems to be an oversupply of retail space at the moment, but this may not last long.

 

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