CRISIL, a leading, agile and innovative global analytics company, today hosted its Real Estate Conclave (CREC) in Kochi, Kerala, to strong response from participating developers and other industry stakeholders.

Takeaways from deliberations at the conclave underlined many of the findings of a sentiment survey conducted in the lead up - broadly indicating that developers are optimistic of continued growth in southern markets, particularly Kerala.

RERA statistics indicate that of ~1.35 lakh project registrations in India, Maharashtra leads with ~35%, followed by Tamil Nadu (~16%) and Gujarat (~11%). The southern states - Tamil Nadu, Andhra Pradesh, Kerala, Karnataka and Telangana - collectively hold ~34% share, underscoring their importance in the real estate ecosystem.

To be sure, the real estate sector has got much impetus in recent years from government policies and various market drivers amid rapid urbanisation, infrastructure development and industrialisation and strong economic growth. In the milieu, the real estate landscape in southern India has witnessed significant transformation, with markets such as Mysuru, Mangalore, Nellore, Vellore and Amaravati gaining traction even as bigger ones slow down.

Around two-thirds of the respondents in the survey are optimistic about the market in Kerala, which constitutes 3% of the total project registrations in southern states. Around half expect growth in Kerala to touch double digits in years to come.

Says Ashish Vora, President and Business Head, CRISIL Market Intelligence and Analytics, "The sentiments are driven by an optimistic outlook among homebuyers, supported by a steady stream of quality projects from trusted developers. Most developers anticipate continued growth in the residential and commercial real estate segments in the southern region. Additionally, Tier 2 and 3 cities in these states, particularly Kerala, are poised for growth, fuelled by rapid urbanisation and affordability."

Among other takeaways, as much as 60% of the developers see appetite for sustainable and green building properties growing, moving the industry towards a more environment-conscious approach. An overwhelming 80% of the developers plan to have sustainability as a cornerstone of their future luxury projects, paving the way for a greener future.

Senior citizen living communities and built-to-rent (rental housing) are two of the models gaining traction. Also, close to 75% of respondents envision a moderate expansion in demand for commercial properties in the Kerala real estate market in the next 2-3 years due to an anticipated increase in economic activities and infrastructure development.

Meanwhile, one in two developers (50%) believes there has been a ~25% decline in non-resident Indian (NRI) customers for last three years. The mix in Kerala has changed over the years to ~40% NRI and ~60% domestic from ~65% NRI and ~35% domestic, with second-generation NRIs increasingly opting for destinations other than Kerala because of better social infrastructure and growth opportunities there. The decline has prompted developers to shift focus to domestic customers.

That said, only 21% of developers are looking beyond Kerala for their projects in view of the growth prospects. Around 60% believe Thrissur has substantial growth potential, as do Pallakkad and Kollam. While Kochi and Trivandrum are experiencing steady growth, several of the micro markets have potential - Edappally, Pallikkara, Kalamassery, Vazhakkala and Vyttila in Kochi, Kowdiar and Kazhakoottam in Trivandrum, and Kuriachira and Punkunnam in Thrissur, to name some.

According to CRISIL, the real estate industry needs to shift its stance on several counts to overcome current challenges.

Says Binaifer Jehani, Business Head - Assessments, CRISIL Market Intelligence and Analytics, "Developers can drive growth by prioritising local market needs. Increasing the supply of affordable housing will help meet demand from local customers. Focusing on sustainable and eco-friendly housing solutions will attract environment-conscious buyers. Leveraging digital advancements will help improve efficiency, transparency, and customer experience. Exploring new models such as retirement and senior living communities will add revenue lines. Further, fostering partnerships and collaborations with international developers, investors and experts will bring in ideas, expertise and best practices."