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Jul 11, 2013, 05.29 PM IST | Source: CNBC-TV18

Find out: 8 cities that give maximum returns on real estate

Real estate reckoner Prime Property showcases Jones Lang LaSalle's report of eight best cities in India which gives maximum returns on investment.

Recently, global real estate consulting firm Jones Lang LaSalle came up with a report which elaborated on eight locations in India that gave maximum returns on investment. Good connectivity to the city centres, big shopping malls, and an influx of residential project pipeline were the parameters to come up with the investment hotspots.

Here are the most preferred destinations chosen by the agency which were featured on CNBC-TV18’s weekly real estate show- Prime Property.

Noida and Greater Noida were the most preferred locations followed by Thane and Navi Mumbai. Whitefield area in Bangalore gave the fourth highest returns while the southern suburbs in Chennai were ranked at number five. Viman Nagar and Nagar Road in Pune was ranked sixth; followed by Gachibowli in Hyderabad and Rajarhat in Kolkata.

Also read: Mumbai's commercial space to cross 100 mn sqft in 2014

While Noida and Greater Noida have been touted as top investment hubs, it is Thane and Navi Mumbai that gave investors maximum returns in the past four years. Since the first half of 2009, prices in Navi Mumbai have increased by an estimated 85 percent. Prices in Thane saw a surge of 84 percent. This is followed by Whitefield in Bangalore and Viman Nagar and Nagar Road in Pune.

Chennai suburbs recorded an appreciation of 53 percent. Rajarhat in Kolkata had an increase of 46 percent while Gachibowli area saw prices rise by 43 percent.

Surprisingly, Noida and Greater Noida, the report's top picks, recorded the least price escalation in the timeframe.

While launches are currently tepid in the Noida and the Greater Noida markets, an estimated 78,000 units are forecasted by the end of this year. All the other micro markets put together is expected to ring in 67,000 units of supply.

According to experts however, the Noida and Greater Noida markets are also going through a change in occupancy profile.

Shveta Jain, executive director, Residential Services, Cushman & Wakefield India said, "The overall speculation in National Capital Region (NCR) which has been driving the activity will slow down; it has already slowed down. So, the markets will become healthier as there will be more end-user activity which continues to be strong. Developers will be more cautious on new launches. The velocity will be slower and that is where developers need to reconcile. Any other city in India, typically on the velocity of sales, is spread over two to three years. In NCR an absorption period is spread over six months. That realignment will be seen in the market."

"If the objective is to be retaining asset for anytime between five to seven years, then there is no reason to wait. It again depends if somebody is looking to flip the asset in six months to a year's timeframe. Then one should not go ahead with the purchase", she added.

Each of these peripheral suburban areas have been promised a new skyline by both real estate developers and respective state governments. However, their projected price appreciation will largely depend on two factors.

i. Whether developers can keep to their timelines

ii. If the infrastructural development can keep pace with housing development. These according to market analysts are the key risks that consumers must consider before parking funds.

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