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“KOCHI”
India’s Emerging Real Estate Hub
04 08 12 14
KERALA ~ AT A KOCHI’S THE EVOLUTION EXPLORING
16 18 20
WHAT’S A COMPARATIVE IS KOCHI SET
GLANCE BACKBONE – OF KOCHI’S THE CITY’S HAPPENING ANALYSIS OF KEY TO BECOME
ITS LANDMARK OFFICE MARKET COMMERCIAL ACROSS THE COMMERCIAL THE NEXT COST
INFRASTRUCTURE OFFICE OTHER REAL DESTINATIONS EFFECTIVE IT/ITES
INITIATIVES LANDSCAPE ESTATE IN KOCHI DESTINATION?
SEGMENTS?
EVOLUTION OF KOCHI
FROM THE ORIGINAL DESTINATION OF SPICE
TRADERS TO A NEW TECHNOLOGY HUB
21st
century
Arrival of global
corporates
1500 AD
ARRIVAL OF
EUROPEAN
AND ARABIC
SPICE
TRADERS
erala (2nd largest in Kerala) (Highest Literacy Rate in India) (Most Urbanized City in Kerala)
2nd Largest in K
CBRE RESEARCH
This report was prepared by the CBRE [REGION] Research Team, which forms part of CBRE Research – a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real estate.
© 2017 CBRE, Inc. Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness.
This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
GOD’S OWN COUNTRY KOCHI | INDIA
highways passing through the city include NH-17 (to Mumbai), NH-47 (to Coimbatore) and NH-49
(to Madurai). Kochi International Airport at Nedumbassery (the first international airport developed
through public-private partnership model in India) connects the city to various national and international
destinations (such as Dubai, Doha, Colombo, Abu Dhabi, Malaysia and Singapore).
KERALA ~ In consonance with other major cities in the country, Kochi witnessed significant activity in the IT/ ITeS
AT A GLANCE
sector over the past decade. The state government played a pivotal role in promoting the IT sector by
establishing technology parks in Thiruvananthapuram (Technopark) in 1990, Kochi (Infopark) in 2004
and Calicut (Cyber Park) in 2016. Further, to promote private sector participation, the government has
been constantly reviewing the state level IT and Industrial Policy, which has led to the development of
large scale private/public IT/SEZ developments such as KINFRA, SmartCity. INKEL and Cyber City.
The state of Kerala, also known as “God’s Own Country”, was formed in the year
1956, when Travancore-Cochin state was merged with Malabar district of Madras and
Kasaragod Taluk of South Canara district. As per the Census of India 2011, the state has
a population of 33.4 million people (12th largest state in India in terms of population)
with an area of 38,863 Km2 (as per the Kerala Economic Review 2015). It is divided
into 14 districts; Thiruvananthapuram being the administrative capital and Kochi being
the commercial capital of the state. The GDP of the state during FY 14/15 stood at
INR 4,32, 876 crores at constant prices 2011-12, with a growth rate of 7.46%1. In
terms of its socio-economic indicators, Kerala is one of the most developed states of
India, with the lowest population growth rate, highest Human Development Index,
highest literacy rate and highest life expectancy .
NH
10 17
PRESENT
NH VENGOLA
VYPIN 47
INFRASTRUCTURE AND 7
FUTURE PLANS
PUKKATTUPADY
13
11
6
KAKKANAD
1 ERNAKULAM JUNCTION
4
2 VYTILLA JUNCTION SBD
1
3 KOCHI METRO PHASE I 8 9
14 PUTHENKURISH 15
4 KOCHI METRO PHASE II 2
OFF CBD
5 KOCHI WATER METRO
6 KOCHI INFOPARK 3
KOCHI
PORT 12
7 ASTER MED CITY CBD &
EXT CBD
8 LNG TERMINAL
ARAKKUNNAM
9 KOCHI INTERNATIONAL TRANSHIPMENT TERMINAL
10 INDUSTRIAL CORRIDORS
MANAKUNNAM
11 VYPIN-MUNAPPAM ROAD
17
12 MG ROAD 16
14 AIRPORT-SEAPORT ROAD
PERUMPALAM
15 KOCHI-MADURAI ROAD CHELLANAM
16 ETTAMANOOR-ERNAKULAM ROAD
NH
47 5
17 ALAPPUZHA-KOCHI ROAD
6|
GOD’S OWN COUNTRY KOCHI | INDIA
INITIATIVES • Construction of the T3 terminal with an estimated investment of INR 800 crore was initiated in 2011
• The terminal with a passenger handling capacity of 10 million per annum became operational in
2017. This is the world’s first airport to be completely operational on the basis of solar energy
KOCHI INFOPARK PHASE I • Located in close proximity to MG road and Marine Drive, the entire development is expected to have
540 beds in Phase I and 500 beds in Phase II coupled with a 4-star hotel and serviced apartments
• Located in Kakkanad village, spread over 108 acres; built up area is estimated at 4.5 million sq. ft. • Phase 1 constituting of 250 beds became operational in 2014
• Land parcels were allocated to private developers such as Brigade Group and Carnival Group to Implications for real estate
develop IT parks
Improvement in social infrastructure is expected to spur medical tourism, thereby aiding growth in
Implications for real estate the residential and hospitality segments.
Inaugurated in 2004, the park has attracted investment from IT majors such as IBS Software, US
Technologies and Tata Consultancy Services (TCS).
Inaugurated in 2016, the development has seen take-up by corporates such as Baker Hughes, etc.
• Phase II of the metro corridor received approval from KMRL and the construction activity is expected to • The first phase would cover a distance of approximately 25 kms. The network will extend from Aluva
start post the successful completion of Phase I in the North to Petta in the South
• It will be an extension from Aluva to Angamally via the Cochin International Airport, from Petta to • Construction commenced in 2013, expected to be completed by 2017
Tripunithura, and from Palarivattom to Infopark via Kakkanad
Implications for real estate
Implications for real estate
With an improvement in connectivity, development of commercial real estate along the
This will further improve connectivity from the CBD to the IT corridor (East Kochi). stretch to be positively impacted.
• Kochi will be the first Indian city where water connectivity will be developed as a feeder service for
Metro Rail • Infopark Phase II, with an earmarked land of 160 acres, consists of both SEZ and Non SEZ clusters
• The total project cost is estimated at INR 747 crores shared between State government and German • The initial block (Jyothirmaya) with a built-up area of about 4,00,000 sq. ft. became operational
Development Bank recently
Implications for real estate
Implications for real estate
This is expected to improve intercity commute by providing last mile connectivity.
Quality commercial office supply is expected to support the expansion activity of various corporates
and generate employment opportunities.
• Kochi is the only city in Kerala selected under the Central Government’s SmartCity mission for urban
rejuvenation
• Kochi ranks 5th in the Top 20 list and is likely to garner an investment of INR 2,076 crores
• The government has also earmarked INR 500 crores from the state’s budget towards implementation
of the SmartCity project
Implications for real estate
Improved physical and social infrastructure of the city and Kochi SmartCity – Kerala’s signature IT
project expected to help the city gain branding and more visibility.
THE EVOLUTION OF
80
70
60
In order to revive the sector, the State government came out with a comprehensive Information
Technology Policy in 2012 with an objective to make Kerala the most preferred IT destination in
India. The incentives provided in the policy included single window clearance and industrial status,
concessional power tariff, maximum FAR (up to 5 for IT developments) and incentives for green
buildings. These initiatives coupled with a sustained increase in occupancy costs in Bangalore, Chennai
and Hyderabad has resulted in resurgence of the IT sector in the city. Various prominent developers
such as the Brigade Group and the Lulu Group have initiated development plans in the city. Prominent
corporates such as US Technology, IBS Software, E&Y, KPMG, TCS, CTS, Wipro, etc. have established
their footprint in the city.
0 5.0 10 15 20
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VYPIN
EXPLORING
NH
2 PUTHENKURISH D
ROA
ADURAI
THE CITY’S
VY HI-M
PIN KOC
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UN
AP 1
COMMERCIAL
PA
M
RO
AD ARAKKUNNAM
OFFICE
LANDSCAPE KOCHI PORT
MANAKUNNAM
ETT
AM
AN
OO
R-E
RN
AK
UL
AM
RO
AL AD
AP
1 2 PU
ZH
A-
KO
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I
CBD & EXT CBD OFF CBD RO
AD
RO
Prominent Locations: MG Road, Kaloor, Kadavanthura, etc. Prominent Locations: Vytilla, Palarivattom, Edappally, etc. AD
Office Stock: 1.04 mn sq. ft. (Grade A/B) Office Stock: 2.86 mn sq. ft. (Grade A/B)
Supply Pipeline: 0.12 mn sq. ft. Supply Pipeline: NA
Average Rental Value: Approx. INR 65 – 85/ sq. ft. / month Average Rental Value: Approx. INR 55 – 70/ sq. ft. / month
N
Average Capital Value: Approx. 10,000 – 15,000/ sq. ft. Average Capital Value: Approx. 7,000 – 10,000/ sq. ft. H-
47
CHELLANAM
Key Tenant Sectors: BFSI, Retail and Trading Key Tenant Sectors: BFSI, Media, Quasi Retail, Research &
Prominent Commercial Developments: Alapatt Heritage, Consulting, Telecommunication, etc.
Imperial Trade Centre, CUC Ventures and Muthoot Tech Tower. Prominent Commercial Developments: Syama Dynamic,
Leasing Activity Trends: Leasing activity is driven by smaller Jamer Symphony, Q1 Infra, Genesis, etc.
sized office space take up (up to 10,000 sq. ft.). Most of the space is Leasing Activity Trends: Leasing activity is driven by smaller
utilized for front office operations by corporates from sectors such as sized office space take up (5,000 to 20,000 sq. ft.). Most of the space
BFSI, Manufacturing, etc. is utilized for front office and quasi retail operations.
SBD
Prominent Locations: Kakkanad, Seaport-Airport Road
Office Stock: 6.05 mn sq. ft. (Grade A/B)
Supply Pipeline: 5.6 mn sq. ft. (Grade A/B)
Average Rental Value: Approx. 34 – 37/ sq. ft./ month (Non SEZ),
34 – 42/ sq. ft./ month (SEZ) CBD & EXT CBD
Average Capital Value: Approx. 4,000 – 7,000/ sq. ft. Central Business District (CBD) and Extended Central Business District
Key Tenant Sectors: IT/ITeS, BFSI, Research & Consulting OFF CBD
Prominent Commercial Developments: Brigade WTC, Smart Off Central Business Districts
City Kochi, Lulu Cyber Tower, Carnival Infopark, Geo Infopark
SBD
Leasing Activity Trends: The Most active IT micro-market, most of Suburban Business Districts
the space is utilized for back office operations across IT/ITeS and BFSI
sectors
GOD’S OWN COUNTRY KOCHI | INDIA
ESTATE SEGMENTS?
Cinemas, Pantaloons,
Drive, MG Road, these malls are positioned 90 - 140
Spencers, Central,
Vytilla, Maradu as mid-high end retail
Pepe Jeans, Burger
developments and house
King, Subway, Pizza
several prominent brands.
Hut, Big Bazaar
Hamleys, Jack &
RESIDENTIAL Jones, Josco, Joy
Alukkas, Marks &
Residential activity in Kochi was primarily concentrated in areas such as Kadavanthara, Thevara, Spencers, GAS, Steve
The micro-market houses
Panampilly Nagar, Tripunithura, Kaloor and Palarivattom, all in close proximity to the CBD. These areas one of the largest malls of
Madden, Crocs, PVR 125 - 175 (Organized
India (Lulu Mall ~ 1.7 mn
command a premium on account of their location. The emergence of IT/ITeS development in East Kochi East – Edappally, Cinemas, Tommy Developments)
sq. ft.). Vicinity to residential
has catalysed residential development activity in the Northern and Eastern peripheral locations of the city. Palarivattom Hilfiger, Vero Moda,
catchments has spurred the 80 – 120 (High Streets)
Westside, Lulu Fashion
retail development in these
Store, Costa Coffee,
areas.
KEY RESIDENTIAL CAPITAL VALUES (INR/ Wow Momo, Mc
MICRO MARKET OVERVIEW Donald’s, Bloomsbury
PROJECTS SQ. FT.)
Café
Locations such as
Central - Kadavanthara, Thevara,
Marine Drive, Tata Tritvam, Purva Panampilly Nagar, HOSPITALITY
Thirupunithura, Grand bay, Confident Tripunithura, Kaloor,
Kochi is an attractive tourist destination and serves as a transit point for travellers visiting other tourist
Kadavanthura, Avior, Dewa Pier, Palarivattom are
4,000 - 7,000 destinations such as Munnar, Alappuzha, Kottayam and Palakkad. With the establishment of the IT/ ITeS
Palarivattom, 24 Carat, Galaxy characterized by unorganized
Kaloor, Emerald, Prestige, individual dwelling units, industry in Kochi, the hospitality sector has also witnessed a surge in the number of business travellers to
Panampilly Neptune retail high streets, and the city.
Nagar premium sea-facing
residential apartments.
KEY HOSPITALITY AVERAGE ROOM RENT
Predominantly characterized MICRO MARKET OVERVIEW
DEVELOPMENTS (INR/DAY)
North - Aluva, by residential apartments
Amity Landmark, Asset Bolgatty Palace & The hospitality sector in
Angamally, and plotted development.
Green Ford, Orion, Island Resorts, Ramada Central Kochi is dominated
Kalamassery, Demand is driven by the 3,000 - 4,500
PVS Iris, Terracore 22, Central - Kochi, The Gateway by business and leisure
Nedumbassery, presence of small scale
Synergy Kumbalam, Hotel, Vivanta By hotels; largely catering to
Cheranallur industries and proximity to
the airport. Tagore Nagar, Taj, Trident Hotel, Le tourists. In addition, the 4,500 - 6,000
Wellington Meridian, Raddison region also has unorganized
Prakriti, Jain Tufnell, Island, Fort Kochi Blu, Keys, Grand hospitality developments,
Majorly characterized by
East - Kakkanad, Purva Eternity, Ivy Hyatt, IBIS, Crowne homes stays and serviced
residential apartments and
Edappally, league, Trinity Mercury, Plaza apartments.
plotted development from 3,000 - 6,000
Vazhakalla, Astern Campus Court,
local developers, largely Sheraton, Taj Gateway, Limited availability of
Pallimuku ABAD Celebration East - Kakkanad,
catering to the IT populace. Park Residency, Hotel hospitality infrastructure as
Tower Edapally, 4,000 - 7,500
hill View, Marriott travelers prefer to stay either
Vennala
Hotel, Holiday Inn in the city or near the airport.
RETAIL
North -
Majority of the existing retail development in the city is primarily concentrated within the existing Courtyard by Marriott, The micro-market largely
Nedumbassery,
Flora, Diana Heights, caters to the requirements of 3,000 - 4,500
CBD locations (i.e. MG road, Chittoor road, Shanmugam road). These regions are predominantly Airport Road, NH
Airlink Castle business travellers.
characterized by the presence of single brand/multi-brand retail outlets. Limited land availability for 47
large-scale retail developments has led to the development of retail in East Kochi. The city currently has
more than 3 mn sq. ft. of organised retail stock.
A COMPARATIVE ANALYSIS
OF KEY COMMERCIAL
DESTINATIONS IN KOCHI
Similar to other Indian cities, the centralized
CBD EXT CBD OFF CBD SBD
locations of Kochi are also endowed with
a developed fabric of social and physical
AVAILABILITY OF INVESTMENT infrastructure, besides excellent connectivity to
GRADE OFFICE SPACE all major locations and landmarks in the city.
However, lack of availability of developable
FUTURE SUPPLY OF INVESTMENT land parcels has ensured limited availability of
GRADE OFFICE SPACE investment grade office space for corporates.
These factors, along with comparatively higher
rental values, have resulted in limited office
OFFICE RENTAL
VALUES leasing activity in the CBD and Extended CBD
micro-markets of the city. Consequently, the
entire development thrust for commercial
PRESENCE OF ORGANIZED spaces in Kochi in recent years has been on
RETAIL the emerging micro-markets of Off-CBD and
SBD; the presence of residential clusters in
RESIDENTIAL these locations has further encouraged the
AFFORDABILITY development of their commercial base.
Availability of Talent: Presence of more than 35 colleges (Professional and Arts & Science) and
proximity to other Tier II cites of South India such as Coimbatore, Kozhikode, Madurai provides a large
talent pool, especially to the IT/ITeS sector.
IS KOCHI SET TO BECOME Infrastructure: Kochi enjoys excellent connectivity via road, rail, air and sea. Upcoming infrastructure
IT/ITES DESTINATION? Policy Initiatives: Development incentives, land allocation by the State government, single window
clearance, etc. will attract more corporates and developers to set up their operations in the city. Most
policies have been devised recently and factor in the incentives critical for sustaining corporates in the
Kochi has been fast emerging as an alternative IT destination over the past few years. The major driver city.
for IT growth has been the government’s initiative to earmark land parcels and develop SEZ parks
in the city. In addition, the city has also received the much needed impetus in terms of an improving
Availability of Space: With limited vacancy levels impacting the availability of mid to large-sized
physical infrastructure. Other infrastructure initiatives such as expansion of the airport, metro connectivity,
investment grade office space in the core micro-markets of Bangalore, Chennai and Hyderabad
proposal for developing Vytilla as a mobility hub, expansion of internal roads as well as SmartCity Kochi
(coupled with sustained increase in rental values), corporates have been exploring locations outside the
– Kerala’s signature IT project have positively impacted the growth of the commercial office space.
three cities. From a business continuity perspective, Kochi with ready availability of large scale office
space, is a major expansion destination.
Destination Kochi - Opportunities for Developers and Corporates:
Stable Political, Natural and Operating Environment: Kochi has a stable political environment when
WHAT IN FOR DEVELOPERS? compared to the other Southern Cities which have witnessed some political (Hyderabad) and natural
Established Basic Infrastructure: Large scale SEZ developments such as KINFRA, SmartCity Kochi, (Chennai) unrest in the past. Bangalore has also been witnessing issues with the NGT over storm water
Infopark, etc. provide basic infrastructure amenities such as roads, power, high speed internet drains, lake buffer zones and flyovers developments; which have been hindering development over the
connectivity, etc. to developers. past couple of years.
Proactive Policy Initiatives: The government has taken several steps to boost the IT ecosystem in the
State such as providing Single Window Clearance, attractive FSI options, infrastructure benefit for the IT
developments, etc.
Availability of Land Parcels: Compared to other metro cities of India, land parcels in Kochi are
relatively cost effective and more readily available.
Thriving Start-Up Culture: The State government has come up with start-up policy which provides
young entrepreneurs with facilities such as innovation labs, incubator space, mentorships, etc.; thereby
promoting the talent ecosystem of the city.
Availability of support infrastructure: The availability of quality residential developments and good
social infrastructure such as schools, colleges, retail destinations, etc. in and around the IT corridor
provide a holistic operating ecosystem for employees.
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This report was prepared by the CBRE [REGION] Research Team, which forms part of CBRE Research—a network of preeminent researchers who collaborate to
provide real estate market research and econometric forecasting to real estate.
All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein,
including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we
have not verified it and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy,
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CIN - U74140DL1999PTC100244