Kerala’s real estate market is experiencing rapid growth, driven by great infrastructure development, IT sectors, and start-up culture. Kerala is the third most prominent state in India in generating revenue and employment opportunities, as this is the first choice of NRIs and young professionals. Industry experts view 2024-25 as a boom year for the property market.
Kerala is one of the ever-booming sectors for real estate investment across India. From evolving buyer preferences to economic influences, the growth of tourism has also impacted the market. The state has emerged as a beacon of great opportunities for NRIs and HNIs seeking secure and promising investments.
The state’s real estate market has witnessed an enormous turnaround, attracting heightened interest in residential properties from NRIs. In 2022, the state witnessed a massive growth of 39.47% in new launches compared to the previous year. 159 new projects were registered last year according to Kerala Real Estate Regulatory Authority.
This article will delve into the real estate trends in Kerala for 2024, how to invest in real estate, recent regulatory changes, advantages, and the best places to consider while purchasing a property in Kerala.
Table of Contents
Current Kerala Real Estate Market
Kerala’s real estate market reflects a dynamic of challenges and opportunities. The state’s urban and suburban regions are witnessing a growing demand for commercial and residential properties. The growing IT sector of this state is one of the main reasons to draw millennials and consequently fuel growth in the real estate demand sector. Employment opportunities have soared to 21% this year and is expected to grow substantially in coming years.
Notably, international buyers and NRIs are pivotal investors in this state’s property market, necessitating real estate options that align with their expectations and standards. Urbanisation and a thriving economy contribute to this sustained demand.
Factors Influencing the Real Estate Landscape in Kerala
Four main factors impact real estate prices; let’s delve into the details –
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Changing Demographics:
Government data reflects that the composition of the population plays a vital role in urbanisation and rapid growth trends thereby steering demand in both commercial and residential sectors. Changing demographics can be understood as the influx of young professionals in IT hubs like Infopark in Kochi and Technopark in Thiruvananthapuram increasing the demand for modern and tech-enabled living spaces.
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Economy:
It is a crucial factor affecting real estate’s value, including GDP, price, and employment data. Economy and real estate market growth are directly proportional; if one goes down, it will take the other with it.
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Interest Rates:
Changing interest rates can impact a person’s ability to buy a residential property, as lower interest rates lower the mortgage cost.
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Government Policies:
Government policies significantly impact the real estate market of Kerala. Initiatives promoting sustainable development such as RERA implementation bring transparency and accountability. Also, schemes like the SmartCity project in Kochi boost the city’s economic growth.
Kerala Real Estate Market Trends 2024
While presenting the Kerala Budget 2023, Kerala’s Finance minister, Mr K N Balagopal, said,
“The land price value will be hiked, resulting in the current value of land being increased by 20% to bridge the gap between market value and fair value.”
In FY2024, the demand and supply of Kerala real estate shall witness a dynamic curve, as urban areas like Kochi and Thiruvananthapuram continue to experience a surge in demand for residential properties. There is also a parallel focus on enhancing infrastructure and connectivity.
In the anticipated landscape of Kerala’s real estate market in 2024, several trends are set to reshape the industry—urbanisation will be a noticeable move towards innovative and sustainable living spaces. Smart home features and energy-efficient designs are gaining prominence – reflecting a growing demand for modern amenities.
Factors Driving Kerala Real Estate Market Changes
Kerala – known as “God’s Own Country”- is known for its beautiful landscapes, therapeutic backwaters, and diverse culture. However, the real estate sector in Kerala is now experiencing a massive transformation of its own. Homes, that blend elegant architecture and seamless connectivity, has increased the demand for housing real estate.
What’s more, let’s look at the factors contributing to this transformation –
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Thriving Tourism –
Its pristine beaches, lush greenery, and serene backwaters attract tourists worldwide. Its charm captivates people who want to stay here for a lifetime, driving up the demand for residential property.
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Rise of Sustainable Luxury Homes –
Living is not just about leading a luxurious life but also includes sustainability – an eco-friendly life. Many homebuyers are shifting toward energy-efficient homes. This perfect blend of luxury and sustainability has fueled Kerala’s residential real estate market.
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Economic Factors –
Kerala’s real estate market in 2024 is poised for dynamic shifts driven by economic factors and policy changes. With states experiencing steady economic growth, a burgeoning middle class, and increased disposable income, the housing demand is expected to rise.
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Impact of RERA –
RERA was a game-changer for the Kerala real estate market. It encouraged the developers to complete their projects on time, maintain the quality of construction, provide clear information to buyers, and deliver on time, increasing the overall credibility of the Kerala real estate market.
Regional Analysis for the Kerala Real Estate Market
Kerala is well known for its vibrant culture, scenic views, and various properties. Many builders offer residential properties in some of the most sought-after destinations. Let’s look closer at the most popular destinations in the state for those looking for a new home.
- Being a coastal region and economic capital of Kerala, Kochi has something for everyone, from a thriving job market to growing residential properties, making it an appealing option for homebuyers. During the third quarter of last year, there was an annual price appreciation of about 28.8%, which was 8.5% initially, which makes it an excellent investment spot for NRIs and HNIs.With several infrastructure projects in the pipeline, Kochi Metro is also being expanded along with the Kochi Water Metro project. Undoubtedly, the improved road connectivity with the water metro will surge the demand for housing in upcoming years.
- Thiruvananthapuram – the capital city of Kerala is one of the state’s largest cities. It stands out as a significant growth hub and has fueled the demand for commercial and residential spaces. The growing Technopark of Trivandrum is one of the primary reasons for this city be on the top list of investors.
- Kottayam and Palakkad are the next, known for their excellent infrastructure and proximity to other parts of the state, making them one of the popular destinations for homebuying. Buyers looking for a mix of urban and suburban living can opt for these places. Investing in these areas will be worth every penny.
- In the northern Malabar region, cities like Kozhikode witness a high demand for homes due to its advanced infrastructure. Being a cultural hub and thriving economy, Kozhikode is the center of prestigious institutions, multispecialty hospitals, and high-end road networks, as NH-66 and NH-766 connect them to Mumbai and Bangalore, respectively.
Regional lens reveals a tapestry of vibrant real estate trends within the state. Understanding the unique dynamics of each area is imperative for investors and developers navigating the landscape of the state’s real estate market in the coming years.
Kerala Real Estate Market Future Projection – Upcoming 5 Years
- As per ICRA estimates, by 2040, the real estate market in India is projected to grow to Rs. 65,000 crore (US$ 9.30 billion), a substantial increase from Rs. 12,000 crore (US$ 1.72 billion) in 2019. The real estate sector’s anticipated growth is significant, with expectations to reach US$ 1 trillion in market size by 2030, contributing 13% to the country’s GDP by 2025, up from US$ 200 billion in 2021.
- Retail, hospitality, and commercial real estate are witnessing substantial growth, catering to India’s expanding needs. In the year 2023, the residential property market experienced a remarkable surge, recording a value of home sales at an all-time high of US$ 42 billion.
- According to a Reuters poll, property prices in Mumbai and Delhi-NCR are expected to rise between 4% to 5%, while in Kerala, Bangalore, and Chennai are expected to rise 5.5% to 6.5% over the next 2-5 years. Property prices in India are expected to grow to 7.5% in another five years.
- Reflecting the positive sentiment, the BSE index of real estate companies has surged by 21% in the past year, outperforming the broader Sensex’s 15% rise.
- By the end of the year, Indian real estate developers, particularly in major urban centres, are set to achieve a notable milestone as huge foreign investments in commercial real estate, totalled 10.3 US billion dollar during 2017-2021.
- India’s economy is poised for growth, with estimates from S&P Global indicating a 6.5% expansion in the fiscal year 2024-25, reaching 7% in 2026.
- The September quarter showcased a 7.6% year-on-year expansion in the Indian economy, reinforcing positive economic trends.
Investment Opportunities in Kerala Real Estate Market
Investors eyeing opportunities in the Kerala real estate market can explore several promising avenues for potential returns, such as –
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High Appreciation Value:
Currently, Kerala real estate proves to be a favorable destination for investors. Builders in Kerala understand how to appreciate the buyer’s investment value. Likewise, homes in Kerala promise ultra-luxurious amenities in prime locales with excellent infrastructure.
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Residential Developments:
With a growing population and rising urbanisation, places like Kochi, Thiruvananthapuram, and Kozhikode present substantial opportunities.
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Tourism-Linked Ventures:
Given Kerala’s status as a popular tourist destination, ventures like vacation rentals, boutique hotels, and resorts hold promise. The state’s natural beauty and cultural richness make it an attractive location for hospitality investments.
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Commercial Spaces:
The State’s expanding IT parks in cities like Kochi and Thiruvananthapuram make commercial real estate a lucrative opportunity. Investing in office spaces and business parks aligned with the demand generated by these industries could yield favorable returns.
Strategies for Maximum Returns
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Thorough Research:
Conduct in-depth research on local market trends, upcoming infrastructure projects, and economic indicators to make informed investment decisions.
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Diversification:
Diversifying the investment portfolio across different segments can help mitigate risks. Balancing residential, commercial, and hospitality investments can provide stability.
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Adaptability:
Stay attuned to regulatory changes, policy shifts, and emerging market trends. The ability to adapt quickly to evolving conditions is crucial for sustained success.
Challenges and Risks in Kerala Real Estate Sector
Investing in real estate, especially the promising landscape of Kerala, comes with its set of challenges and risks, demanding a strategic approach from the investors and stakeholders.
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Market Volatility:
Economic fluctuations and global events cause volatility, affecting property value and demand. Buyers need to adopt risk management strategies under such conditions.
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Regulatory Changes:
Buyers must remain vigilant about government policies and compliance standards, as frequent changes can impact the project timeline and costs.
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Infrastructure:
Dependencies on external factors make it crucial for buyers to monitor ongoing developments, boosting property value or disrupting expected returns.
What are the Mitigation Strategies for Buyers?
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Due Diligence:
Home buyers should conduct deep research on regulatory, legal, and market conditions before making investment decisions to anticipate the challenges.
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Diversification:
A diversified portfolio helps mitigate the impact of any consequences in a specific sector.
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Adaptive Strategy:
Buyers should be flexible in their market strategies in response to real estate dynamics and regulatory environments.
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Risk Hedging Instruments:
Explore risk hedging options such as insurance and financial derivatives to mitigate any loss due to unforeseen events.
Technology and Innovations in Kerala Real Estate
In today’s fast-paced environment, technology has woven itself into all aspects of our lives, extending even to luxury in the real estate industry. Kerala’s real estate market is primarily driven by cutting-edge technology and innovative solutions. These modern luxury apartments have evolved with technology.
Let’s explore how technological innovations are shaping the residential real estate market of Kerala –
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Smart Homes:
Advanced home automation is an integral part of the modern lifestyle, as homebuyers and owners can control different things in their homes, such as security features, temperature, lighting, and entertainment, with a simple touch, remote sensors or voice command. These homes are designed to help families with small children or older people.
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Virtual Reality (VR) & Augmented Reality (AR):
With the help of VR and AR, homebuyers can virtually tour properties comfortably from their homes, saving time and resources for both buyers and sellers.
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Smart Windows & High-Tech Appliances:
These bright windows automate blinds and offer privacy while contributing to the fantastic look of luxury apartments. Homeowners can also access Wi-Fi-enabled refrigerators, wine fridges, and intelligent coffee machines.
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IoT:
The Internet of Things (IoT) is enhancing property management efficiency. Smart home devices and sensors provide real-time data on energy usage, security, and maintenance needs.
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Enhanced Security:
Smart locks offer safety and convenience to doors and wardrobes, eliminating the need for many keys. This comprehensive integration of technology improves the lifestyle in modern luxury homes.
Sustainable Practices in Kerala Real Estate Market
The Kerala real estate market is transforming as sustainability takes centre stage, influencing developers and homebuyers. Builders are increasingly using the concept of green building and sustainable development in their projects, such as SOBHA Meadows-Whispering Hill in Trivandrum, and SOBHA Bela Encosta in Kozhikode.
Many residential projects now prioritise designs such as upgraded appliances, solar panels, and intelligent lighting systems. SOBHA Atlantis, Marina One in Kochi, SOBHA Silver Estate and Metropolis in Thrissur are one-of-a-kind residential apartments.
Importance of Eco-Friendly Properties
The Leadership in Energy and Environmental Design (LEED) and Indian Green Building Council (IGBC) certifications are becoming benchmarks for eco-conscious buyers. These certifications ensure a property meets the required environmental standards, emphasising conservation, waste reduction, and indoor air quality.
Beyond energy efficiency, sustainable landscaping, and water conservation measures are gaining prominence in real estate development. Rainwater harvesting systems, wastewater treatment plants, and green spaces are becoming integral to modern projects, contributing to a holistic and environmentally responsible approach.
With an increasing awareness of environmental issues, developers and homebuyers in Kerala are actively embracing eco-friendly practices, setting the stage for a greener and more sustainable real estate future in 2024 and beyond.
Final Thoughts on the Kerala Real Estate Market
As we peer into the future of the Kerala real estate market, the integration of AI, blockchain, and IoT is reshaping processes enhancing transparency, and the industry is witnessing a surge in eco-conscious developments, with green certifications becoming pivotal.
As the market pivots towards sustainability and embraces technological innovations, those who stay informed will be better positioned to navigate the evolving landscape. The synergy of technology and sustainability paints a promising picture for Kerala’s real estate market, beckoning stakeholders to witness and actively participate in this exciting journey ahead.
FAQs
1. Will 2024 be a good year for the Kerala real estate market?
In 2024, the Kerala real estate market appears promising with technological integration and sustainable practices. The industry's shift towards eco-friendly initiatives and innovative technologies positions it for growth, making 2024 an opportune year.
2. What is the future of real estate in Kerala?
Kerala's real estate market focuses on transparency, energy efficiency and technological innovations, showing a dynamic and environmentally conscious picture of Kerala. Integrating technology, sustainable practices, and eco-friendly developments mark the future.
3. What is the forecast for the real estate market in India for the next five years?
The future of India's real estate market is poised for robust growth in the next five years due to factors such as urbanisation and the burgeoning middle class. The future of this industry is likely to witness a high surge in the adoption of technology and sustainable building practices and the move towards an eco-friendly lifestyle.
4. How is the real estate market in Kerala now?
Currently, the real estate market in Kerala is undergoing various changes due to technology integration and focus on sustainability. The market is adapting to modern trends with developments featuring energy-efficient designs and eco-friendly certifications.
5. Is it reasonable to invest in real estate in Kerala?
Investing in Kerala can be a good decision as the real estate market trends grow. Sustainable practices and a focus on green certifications have improved its appeal. However, with the right strategy, investing in Kerala's real estate can offer growth opportunities and align with the increasing demand for eco-friendly homes.
