Buy in suburbia

Investing in property within city limits could prove prohibitively expensive. Here are some suburbs where real estate is still affordable and the returns are promising, so you can bank on both long-term price appreciation and steady rental returns.

     Print Edition: October 2009

Investing in property within city limits could prove prohibitively expensive. Here are some suburbs where real estate is still affordable and the returns are promising, so you can bank on both long-term price appreciation and steady rental returns.

Delhi NCR

Invest in: Noida (Sectors 93 A & B, Sectors 119, 137, 151); Faridabad (Sectors 70-88)

What works for them: Faridabad has seen some of the most affordable project launches recently. However, apart from price, what makes them a good investment is the fact that these are not as far from Delhi as those in suburbs like Gurgaon and Greater Noida (in the same price range). Similarly, what works for Noida, despite cheaper options like Ghaziabad and Greater Noida, is its infrastructure, connectivity and proximity to Delhi. While Greater Noida also has good infrastructure, the distance from Delhi has resulted in very low occupancy and, therefore, the time frame for appreciation in property price or rental returns is higher.

Property rates

  • Noida: Rs 2,000-2,800 per sq ft
  • Faridabad: Rs 1,800-2,300 per sq ft

Monthly rental income

  • Noida: Rs 5,000-8,000
  • Faridabad: Rs 3,000-5,000 (1,000 sq ft/2-BHK)

Other options

  • Gurgaon (Sushant Lok, Sohna Rd); Ghaziabad (Indirapuram, Vaishali); Greater Noida, Kundli

Pune

Invest in: Kharadi, Viman Nagar, Wakad, Kondhawa

What works for them: Pune had seen one of the steepest price rises in property during the boom, so the rates in some locations have corrected sharply. This, coupled with the focus on affordable housing, makes the Pune realty market attractive. Eastern locations in the city like Kharadi and Kondhawa are preferred housing destinations primarily due to their proximity to established commercial hubs and developed residential locations. Viman Nagar is also an affordable destination due to its closeness to the airport. Towards the west, Wakad and Hinjewadi are generating interest due to the development of IT/ITeS in these areas and their easy access to the Mumbai-Pune Expressway.

Property rates

  • Rs 2,100-3,300 per sq ft

Monthly rental income

  • Rs 4,500-6,500 (1,000 sq ft/2-BHK)

Other options

  • Aundh, Kothrud, Magarpatta, Bavdhan, Pashan (Rs 2,500-3,200 per sq ft)

Mumbai

Invest in: Navi Mumbai (Vashi, Nerul, Airoli, Kharghar)

What works for them: Residential demand has gradually shifted from south Mumbai to north Mumbai because of fresh realty supply and comparatively lower prices. Developments like widening of the Mumbai-Pune highway and expansion of the IT and BPO sectors towards Navi Mumbai have led to extensive development along this corridor. Another trend has been the creation of townships in places like Thane, Vasai and Virar. From an investment point of view, Navi Mumbai has the advantage of better infrastructure and quality housing projects. With a new airport recently sanctioned in the area, the potential for further price appreciation has increased significantly.

Property rates

  • Rs 2,400-3,400 per sq ft

Monthly rental income

  • Rs 6,000-7,500 (750 sq ft/2-BHK)

Other options

  • Western suburbs (Mira Road, Kandivali, Borivali); extended suburbs (Naigaon, Vasai, Virar); central suburbs (Rs 2,500-3,500 per sq ft)

Chennai

Invest in: Velachery, Rajiv Gandhi Salai, Tambaram

What works for them: Residential property rates in Chennai have witnessed a more stable growth because the demand was primarily from end-users. Locations like Rajiv Gandhi Salai and Velachery are being preferred by the middle-income segment because of better infrastructure and good connectivity (monorail) to the city. This means future rental returns from these locations will be good. The development of Rajiv Gandhi Salai as the IT corridor, Sriperumbudur as the electronic corridor, and the proposed Outer Ring Road, which will connect the western and southern locations, bodes well for an appreciation in property prices.

Property rates

  • Rs 2,200-3,400 per sq ft

Monthly rental income

  • Rs 4,000-5,000 (1,000 sq ft/2-BHK)

Other options

  • Chitlapakkam, Mogappair, Guindy, Vadapalani, Adyar (Rs 2,000-3,600 per sq ft)

Bengaluru

Invest in: Whitefield, Bannerghatta Road, Hebbal

What works for them: A typical home buyer in the city is a salaried professional working in the services sector (such a clear-cut buyer profile does not exist for most other real estate markets). This means looking for locations with good connectivity, strong development potential and relatively low cost. Given the increase in prices in the past, affordability is a very important factor. Most such projects are being developed in the southern and eastern parts of the city like Hebbal and Whitefield. The development of the NICE corridor towards Mysore, the Peripheral Ring Road and the elevated highway at Electronic City are expected to give a major boost to connectivity.

Property rates

  • Rs 2,100-2,600 per sq ft

Monthly rental income

  • Rs 5,000-7,000 (1,000 sq ft/2-BHK)

Other options

  • Banswadi, BTM, Old Airport Road, Old Madras Road, Jayanagar, J.P. Nagar (Rs 2,000-2,500 per sq ft)

Hyderabad

Invest in: Uppal, Nacharam, Begumpet

What works for them: Uppal and Nacharam score in terms of investment potential because of the low rates and appreciation potential. This is because of the large number of IT companies and upcoming SEZs in the vicinity. Begumpet is one of the few central locations where prices are still affordable. With the city limits expanding rapidly (after the creation of Greater Hyderabad Municipal Corporation) and infrastructure developments like Outer Ring Road and the proposed mass rapid transit system, these locations have scope for future price appreciation. The presence of IT companies makes them a good area for rental returns too.

Property rates

  • Rs 2,200-2,700 per sq ft

Monthly rental income

  • Rs 3,000-4,500 (1,000 sq ft/2-BHK)

Other options

  • Kukatpally, Miyapur and Madhapur, Dilshuknagar and LB Nagar (Rs 2,000-2,800 per sq ft)

Kolkata

Invest in: EM Bypass, Rajarhat

What works for them: The congestion in residential locations in and around the main city is pushing more and more buyers towards the suburbs. Proximity to the airport and good road connectivity make Rajarhat and Jessore Road preferred locations. With the construction of the road connecting Jessore Road to the Airport Road, connectivity will improve further. Similarly, locations along the EM Bypass have a good potential for rental returns because of proximity to work and educational institutes. However, appreciation in property prices will be gradual because of the availability of land in these locations and the steady launch of new projects. The total planned area to be developed within Rajarhat is about 35.52 sq km.

Property rates

  • Rs 1,800–2,400 per sq ft

Monthly rental income

  • Rs 4,000-5,000 (1000 sq ft/2-BHK)

Other options

  • Garia, Behala, Salt Lake, Santoshpur, Tollygunge (Rs 2,000-2,500 per sq ft)

Ahmedabad

Invest in: Bopal

What works for them: After the correction in property prices, developers in the city have fallen back on the tried-and-tested strategy of ‘soft launches’. This has resulted in good deals for long-term investors. A significant number of these launches were in the eastern part of the city, especially at Bopal. The cost advantage of this suburb is proving to be its biggest strength. The growth of social infrastructure facilities such as banks, schools, markets and hospitals have worked as a catalyst to the growth of this neighbourhood.

Property rates

  • Rs 1,800–2,200 per sq ft

Monthly rental income

  • Rs 2,500–3,500 (1000 sq ft/2-BHK)

Other options

  • Ambali, Shilaj, Paldi Memnagar, Vastrapur and Vasna (Rs 1,700-2,300 per sq ft)

Kochi

Invest in: Kakkanad, Edapally

What works for them: Infrastructure development, including the building of the new ring road, coastal highway and the new airport-seaport road, is the main factor in favour of long-term investment in a locality like Kakkanad. The location is also turning out to be the information technology hub in the region and rental returns are likely to be good once the IT sector revives. Similarly, Edappally, because of its central location, where three national highways meet, and Vyttila, the state’s largest traffic intersection, are increasingly popular with builders. The location also gains from its proximity to the city centre.

Property rates

  • Rs 1,800-2,300 per sq ft

Monthly rental income

  • Rs 3,000-4,000 (1,000 sq ft/2-BHK)

Other options

  • Thripunithura, Marine Drive (Rs 2,200-4,500 per sq ft)

Nagpur

Invest in: Wardha Road

What works for them: Currently, the most talked-about project in Nagpur is the cargo hub that’s coming up. Wardha Road, which connects the city to the project site, saw a tremendous increase in property prices between 2005 and 2007. However, after the slowdown in the real estate market, it is offering some of the best priced new launches which can be ideal for a long-term investor. Apart from the good connectivity to the main city, Wardha Road also connects to another upcoming industrial area. While the location and planned projects guarantee price appreciation, an upcoming IT hub in the region offers good long-term rental prospects.

Property rates

  • Rs 1,400-2,000 per sq ft

Monthly rental income

  • Rs 3,000-4,000 (1,000 sq ft/2-BHK)

Other options

  • Amravati Road, Kamptee Road, Katol Road (Rs 1,700-2,500 per sq ft)

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close