KOCHI: With a ready supply of skilled manpower and low rentals, Kochi is emerging as a preferred option for corporates, developers and investors looking to expand into tier 2 markets in the country, observes CBRE, an American real estate agency.
According to Ram Chandnani, MD-Advisory & Transaction Serves, India, CBRE South Asia, the overall absorption of office space in the city was more than 0.6 million sq ft.
“The real estate market in Southern India, especially Kochi is at the threshold of future development. Selected as one of the top 20 smart cities by the Government of India, Kochi is considered the commercial capital of Kerala and is expected to receive investment to the tune of Rs 2,076 crore over the next few years. This coupled with various other factors are making it a preferred destination for corporates to set up their operations here. Supporting these benefits is the existing and upcoming infrastructure development of the city which is helping boost the overall real estate market,“ said Chandnani in his paper ‘Kochi gateway for real estate in Southern India’.
Availability of skilled manpower, lower salary costs, lower attrition rates, 50% lower operational costs and rentals as low as 60% in comparison to other cities makes Kochi the leading tier 2 city for real estate development in the near future,“ Chandnani observed.
According to Chandnani, Kochi is the first tier-2 city in India to have a metro rail network. Airport’s new International terminal and India’s largest international container transshipment terminal are other major infrastructure projects of Kochi, he noted.
“Key sectors driving the commercial real estate market in the city include IT/ITeS Services and manufacturing.While in most tier 1 cities the Central Business District (CBD) witnessed the most activity , in Kochi the preferred micro-market for office development is the Suburban Business District of Kakkanad. This is primarily due to its proximity to the airport, connectivity via various forms of local transport and overall residential development. While supply and absorption continue to witness upward movement, lease rentals have also witnessed a steady increase because of public as well as private sector development undertaken here. Over the next 3 years, this micro-market alone is expected to witness close to 6 million sq ft of new supply coming in,“ Chandnani said. Over the next few years, under the smart cities mission, Kochi is set to emerge as a leading tier 2 city for real estate, he added.
CBRE figures also show that Kochi has close to10 million sq ft of office stock and it has over 3.0 mn sq. ft. of organized retail space split between developments such as Lulu, Oberon Mall, Central Square, Gold Souke Grande, etc. The city has 15 star hotels and over 40 hospitals.
National Realtors Association’s treasurer Abjo Joy commented that there is a growth potential for office space in Kochi. “Compared to Mumbai or Bengaluru, the commutation to the office is relatively easy. Also, though Kochi’s office space products are limited, whatever is available is of substantial quality.”
Credits ET Realty