by Mr. Arvind Jain,
Managing Director – Pride Group
One of the main factors
that drive demand for housing in a particular locality is employment growth.
An
area where a number of companies are opening up job opportunities for the
population becomes a magnet for residential property demand. This makes such
locations of high interest to residential property developers.
However, they are
not targeting only end-users, but also investors.
People who are employed
in these companies want homes near to their places of work. If the area has only
just begun emerging as a workplace nexus, property rates will be lower than in
the more established areas of the city.
This means that a significant number of
these people will choose to buy their homes there, but those who do not will
still be on the market for rental homes. Real estate investors depend on rental
demand, and tend to snap up a lot of new inventory in order to cater
to it.
Developers do a lot of
research before they decide to launch a residential project in areas which are
seeing growth in employment opportunities.
Apart from the number of jobs being
created, they are also interested in the nature of these jobs – specifically the
salary ranges that are being offered. For example, support or back-office
category jobs will not offer large salaries, meaning that developers will need
to focus on launching budget housing.
On the other hand,
large IT companies and other corporate firms will create high-level C-suite jobs
offering higher salaries, as well as middle management jobs. Residential
developers will therefore be able to launch budget and middle-income housing as
well as luxury home projects.
This phenomenon is amply illustrated by the real
estate development in and around areas like Pune's Nagar Road.
Viman Nagar, the first
areas to come into prominence on Nagar Road, was aptly named for its proximity
to the city's airport. Today, it is known as a high-end housing location, but
initially it catered primarily to the demand from BPO employees.
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| Arvind Jain, Managing Director – Pride Group |
For this
reason, the first housing projects in this area were targeted at mid-income
buyers.
However, when Pune's
Information technology sector began taking off seriously, software companies
began spawning high-salaried jobs along Nagar Road, which led to the emergence
of Kalyani Nagar.
This led to considerable demand for luxury homes, which
developers could cater to while land supply lasted.
Today, Viman Nagar and
Kalyani Nagar have almost exhausted their potential to host new projects,
and developers in Pune have focused on the new adjoining growth
corridors.
Areas like Charoli in close proximity to the airport along Nagar Road
have sufficient land availability, which has made large township projects
possible. This location is now catering to the IT-driven demand from Kalyani
Nagar and Magarpatta, as well as the demand from Pimpri-Chinchwad's
manufacturing belt.
In a growing country
like India, the phenomenon of employment driving real estate will remain a
constant for several decades to come.
As the country's economy picks up speed,
we will see more and more pockets of real estate growth cropping up alongside
the costlier established areas of our cities. In most cases, these pockets will
initially grow on the back of demand for budget and mid-income
housing.
It can take anything
between 5-10 years after the initial burst of development for the area to become
an ‘established’ location, after which demand for housing gradually evolves and
begins to encompass luxury housing as well.
About
The Author..!
Mr. Arvind Jain is
Managing Director of The Pride Group, a world-class property development
conglomerate that is changing the cityscapes of Pune, Mumbai and Bangalore.
Established in 1996, Pride Group has built and delivered over 10 million sq.ft.
of constructed area. Pride Group has recently launched Pride World City, the 400-acre luxury mega-township at
Charoli, Pune.
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