Kochi city is likely to witness a shortage of apartments in the near future.
"The growth in the construction of flats in and around Kochi city does not match with the development of the city in the next five-six years" says Dr. Najeeb Zacharia, treasurer of the Builders Forum.
The city and its suburbs requires flats to the tune of 20,000 -25,000 units by 2010, but the actual number being built may be as low as 4000 -5000 in two years.
This will lead to a crisis in one of the fastest-growing cities in India as far as residential complexes are concerned.
In the last two years, 2,500 flats were added, especially in the Kakkanad area, where the administrative headquarters of Ernakulam district is situated.
There was also similar construction in Edappally and Thripunithura. There had been a growth of around 25-50 per cent in the availability of flats in the last few years.
The mismatch between demand and supply has caused a steep rise in prices too. The average price per square feet (sq.ft.) has increased to Rs 1500 -2000 against Rs 750 -1000, two years back.
On the plus side, businesses in Kochi city in recent years had been gravitating towards luxury flats and location specific flats offering a waterside frontage.
A top-end flat in a green locality at Marine Drive or Kakkanad area will now cost Rs 3500-4000 per sq.ft..
In a recent development, Kochi has seen the entry of national players like Puravankara and Shobha Developers and this indicates the enormous opportunity that Kochi offers at present, say sources.
A host of proposed projects like Smart city and Vallarpadam International Container Terminal (VICT) will make a sea change in the residential character of Kochi city as more than 30,000 professionals are expected to shift into the city, often called the Queen of Arabian Sea.
There is a natural shift towards the interior of Ernakulam district as it offers comfortable accommodation.
Alwaye, Ankamali, Thrippunithura, Kalamssery and some other areas are now gearing up to accommodate the new entrants to Kochi.
A major chunk of buyers, almost half say some, are NRIs and there is good demand for flats at Kochi from buyers based in other cities like Mumbai and Delhi.
This is pushing up the minimum price for an average flat to Rs 20 lakh and those at top locations now cost around Rs 1 crore (Rs 10 miilion).
Average price of quality residential flat has now shot up to Rs 80 lakh, but there is growing demand even in this price range.
"Most of our customers are particular about amenities and ideal locations, not the price", a top official of a leading company says.
Zacharia says that the increase in production and land cost has moved ahead of construction cost and hence the increase in price.
The value of land has escalated by 50 to 100 per cent in the last two or three years. The major problem in the city is lack of land as there is not much land for sale at prime locations like MG Road and Marine Drive.
Around 40 acres of reclaimed land near High Court was awarded to a company at around Rs 350 crore (Rs 3.5 billion) recently.
MG Road prices of land has risen the fastest, depending to location, while land prices on Marine Drive has also risen sharply. The number of land deals in these areas is limited now as price is rising fast.
Additional demand is coming from the retail sector, say sources, as Kochi is slowly becoming one of the important shopping destinations in South India with around six shopping malls being built at present.
The Lulu group, a leading Persian Gulf-based chain of shopping malls, is coming up with a store at Edappally near Kochi.
Zacharia says that purely investment based purchase of flats is also on the increase although such deals represent only 5-8 per cent of total sales at present.