BANGALORE: For long, Mumbai and Delhi-NCR have always given property buyers the best capital value appreciation. After the downturn years, however, it's the IT-led cities of Bangalore and Pune that have surged ahead in capital appreciation in residential properties.
Data shared exclusively with TOI by international property consultants Cushman & Wakefield shows Bangalore clocked the highest average capital appreciation in the mid-income housing segment of 41% between the first six months of 2011 and the corresponding period this year. Pune followed with a 28% growth. In the same period, Pune reported a 39% growth in capital values for premium properties, the highest in the country in that market segment. Bangalore followed close behind with 37%.
Given the disparity that exists in comparing residential prices in each city, Cushman & Wakefield has broadly classified mid-income housing as any property below Rs 5,000 per sqft and high-end as above that price.
In both the segments, Delhi-NCR and Mumbai are at the bottom draw of India's top performing real estate markets. In the high-end segment, where traditionally Mumbai and Delhi-NCR have fared very well, they reported a capital appreciation of 24%, both trailing even Kolkata's property price rise of 26%.
"Markets like Bangalore and Pune that are end user driven are the ones to record the highest average increases in capital values, while investor-driven markets such as Delhi-NCR and Mumbai have not performed so well," said Shveta Jain, executive director of residential services in Cushman & Wakefield.
In the past three years, the Indian IT sector has been on a growth trajectory, resulting in job creation and salary increases. "In India, there is a distinct and logical correlation between IT and property price appreciation. Cities whose economies are to a large extent driven by the IT sector tend to see generous and fairly consistent demand for mid-income and premium housing," said Sanjay Bajaj, MD-Pune of real estate consultancy firm JLL India.
IT-driven cities are seen to be more evolved in the level of aspiration among home seekers, including in their purchasing power, greater exposure to international housing and luxury standards, and awareness about contemporary concepts like environmental sustainability.
Pankaj Kapoor, MD of real estate research firm Liases Foras, said that between 2008 and 2010, real estate prices in Bangalore and Pune had plateaued causing their respective residential real estate markets to report no growth. On the other hand, in Mumbai and Delhi-NCR, property prices were peaking at the same time.
"Bangalore and Pune have also benefited from the non-resident Indian segment and private equity funding, as Mumbai and Delhi-NCR became unproductive," said Kapoor, adding that India's top two metros are facing stagnant demand and price correction.