Dec 2018

Unravelling Kerala Real Estate: A study on Kochi, Trivandrum and Thrissur

By Ramesh Nair, CEO, JLL India

The Southern states of India have witnessed tremendous growth over the last two decades owing to progressive government policies and faster urbanization. Bengaluru, Hyderabad and Chennai are already amongst the world’s known industrialized and IT-driven cities. As a state, Kerala has been relatively quiet for some time, banking merely on its strong consumerism, fuelled by remittances coming from Non-Resident Keralites in the Gulf countries, and from tourism. However, lately, the state government has been active in creating infrastructure and policy frameworks that are conducive for new-age services sectors in the IT-ITES and Industrial Revolution 4.0 spaces. Given the physical infrastructure that is underway in addition to the high literacy rates (94% as against national average of 74%) in the state, there is hope that it will soon match the success stories emulated by its neighbouring states in creating world-class cities. Within the state, three cities with the highest urbanization rate are Trivandrum, Kochi and Thrissur. While urbanization rate in Kerala is close to 48% (2011 census), the three cities range within 53% to 68%, as a result of which real estate activity in these cities has been thriving.

The state government has already built large commercial hubs in Trivandrum, Kochi and Thrissur, thereby encouraging new-age services sector and start-ups to establish and flourish. Given the high per-capita income of the state, consumerism in the state is higher than the national average. Organized retail penetration through malls and e-commerce is gradually making in-roads in markets that were traditionally dominated by high streets and locally popular brands. Residential supply in these three cities was traditionally dominated by unorganized developers, although over the last 10 years, organised players (registered CREDAI members) have made deeper in-roads in the market. Today, CREDAIregistered developers contribute a dominant share in the total residential supply generated in the three cities. Trivandrum, Kochi, and Thrissur have a plethora of opportunities in the alternatives real estate space, particularly in the hospitality and student accommodation sectors given the economy’s reliance on tourism and education.

I am excited to share this whitepaper with you that aims to share a comprehensive understanding of Kerala’s real estate market, both commercial and residential, across the three most industrialized cities of the state. It presents an interesting analysis of various factors such as the demand and supply situation in the prominent commercial and residential micro-markets, key tenants, applicable rentals, their growth prospects and much more. I hope you enjoy reading this as much as we enjoyed putting it together.

Kerala Economic Profile:

The economy of Kerala is a peculiar one with an annualised growth rate that is less than the Indian economy’s overall growth rate, despite its per-capita income exceeding the national average by a big margin. The state accounts for merely 2.8% of the national population, but its economy contributes close to 4% to the national GDP.

Major contributors to Kerala’s economy include the construction and real estate sectors, along with retail trade. Critical employment generating sectors such as manufacturing and services (transport, logistics, and communication) currently have a small contribution but has the potential to scale up given favourable government policies. The government has been contemplating investing heavily in the new-age sectors such as information technology, business process outsourcing (BPO) and industrial revolution 4.0, and trying to get the start-up economy booming. Remittance accounts for over one-third of Kerala’s economy and has a profound effect on people’s consumption spending, which is discussed in the retail section.

Commercial office: Trivandrum:

In Trivandrum, the most noteworthy commercial office development is the Technopark, a large IT park (touted to be the largest contiguous commercial IT development in Asia in terms of area). Technopark is developed by the Government of Kerala and is home to many large domestic and international IT companies. With a built-up area of 9.2 million sq. ft. The park also hosts a Technology Business Incubation Cell that nurtures start-up companies in Kerala, thereby promoting the Start-up India Mission of the central Government. While the park is owned and administered by the State Government, it’s day-to-day operations is the mandate of senior executives of major tenants. There are various buildings within the premises of the IT campus, with buildings ranging from 4 floors to 12 floors, and with built-up areas ranging from 45,000 sq. ft. to 850,000 sq. ft. Despite enjoying a higher FSI for IT-ITES of 5.0, large availability of land parcels has resulted in low-density developments. Besides the Technopark, there are no major commercial office districts in the city of Trivandrum. Fewclusterswithin the PBD (Periphery Business District) North areas such as Kazhakuttom, and CBD-SBD East (Central Business District-Secondary Business District) such as Vazhuthacaud, Vellayambalam, and Sasthamangalam does feature as commercial districts. However, commercial stock in these areas largely comprises stand-alone structures that are unorganized. Also, preference for office spaces in these areas is low from large IT firms with globalized business exposure. Most globalised IT firms prefer to lease space in Technopark owing to clear land titles and hassle-free transaction given that it is a government-promoted venture.

Commercial office: Kochi:

In the city of Kochi, the equivalent of Technopark is the 230-acre Info Park that is developed by the Government of Kerala, and the Smart City Kochi project (approximately 240-acres) jointly developed between the state government and the Dubai government-backed financial investment arm, Dubai Holdings. Info Park (phase I and phase II combined)will potentially have a total built-up area of 16 million sq. ft. of which 9 million sq. ft. is already completed (8 million sq. ft. in phase I). Tenants are largely from the IT-ITES sector, but the park also houses several telecom and consultancies among others. In the proposed phase II, an additional 7 million sq. ft. is expected to be completed by 2022. Info Park, located adjacent to Smart City Kochi, is expected to supersede Technopark in the near future due to the scale of development and also due to the availability of land for immediate construction.

Commercial office: Thrissur:

Unlike markets in Kochi and Trivandrum, Thrissur is far from developing large-scale Grade-A office spaces. For office space, options are largely available in the standalone buildings in and around the city centres. However, going by the state government’s initiatives of acquiring large land parcels in the outskirts of the city, expectations of “Grade-A developments in these areas” is high. The government has been planning industrial projects around the PBD micro-market, mainly alongside Shoranur Road. The PBD micro market shows potential for future growth given its excellent connectivity to the planned industrial zones as well as city centres. The commercial markets of Thrissur act as supporting infrastructure to the primary IT markets of Trivandrum (Techno Park) and Kochi (Info Park). While the primary markets house tenants who are in the high-value IT consulting space, Thrissur accommodates tenants who mostly operate in the ITES and BPOspaces looking for cheaper locations. The PBD micro-market in Thrissur also benefits from easy connectivity with the Info Park and Technopark projects via the NH Bypass.

Retail Markets: Trivandrum:

People prefer to shop in major high-streets in and around MG Road in the CBD micro-market. It has the presence of both, pan-India as well as international retailers, alongside prominent local retailers. The pattern of leasing observed in this market is such that the legacy retailers (major local brands) have taken space on a long-term lease and they have been paying lowest rentals in the range of INR 45-60 per sq. ft. On the other hand, national and international brands pay higher rentals in the range of INR 55-150 per sq. ft. depending upon the node, visibility, and store size.

Retail Markets: Kochi:

Kochi retail is again dominated by the unorganized high-street market situated on MG Road (Kochi) and Panampally Nagar. MG Road has been a prime location for shoppers and the tenant categories largely include jewellery, apparel, F&B and footwear. In recent years, however, this retail cluster is less preferred by retailers as Panampally Nagar has grown in prominence. Panampally Nagar is home to households with high disposable income, and retailers identify this market as an upscale location - high on fashion & lifestyle. The planned metro construction around MG Road has resulted in traffic congestion that further deters shoppers as well as retailers, adding to the appeal of Panampally Nagar.

Retail Markets: Thrissur:

Like with office, retail real estate has also started to evolve in Thrissur. The most popular mall is the SELEX Mall, which is largely considered a shopping centre given its size of merely around 2 lakh (0.2 million) sq. ft. built-up area. Given its proximity to both, CBD and SBD micro markets, SELEX Mall enjoys proximity to a larger set of households that have better spending capacity. It attracts high footfalls and, therefore, rentals are at a slight premium rate as compared to other malls in Thrissur. Mall of Malabar is yet another popular mall in the city. Rentals in the organized retail malls in Thrissur range between INR 35-90 per sq. ft. depending on store location, anchor/non-anchor categories and mall footfalls.

Residential Market of Kerala:

The CBD is a densely populated area that constitutes of the business-class population with high and upper-middle income groups. This segment of the population has high disposable income and a propensity to spend on family, shopping and entertainment. New and upcoming real estate projects are mainly through the redevelopment of existing space. The SBD region has a population profile similar to that of the CBD. However, due to the presence of Government properties (offices) and tech parks (IT-ITES), the area also includes population belonging to the service sector. As a whole, the population of SBD has both high and moderate levels of disposable income and propensity to spend. The region has good connectivity and access to social and physical infrastructure, which act as drivers for residential development.


Kerala’s economy has been traditionally banking on remittances, consumerism and tourism sectors. It has consistently featured amongst the top consumer states in India, as per NSSO household consumption surveys. However, growth drivers in manufacturing and other productive sectors is low and as a result, unemployment is higher than the average of India. The government is rightfully trying to emulate the success of adjacent South Indian states in encouraging the new-age information technology sectors through start-ups and other incentives.

About JLL:

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with operations in over 80 countries and a global workforce of 88,000 as of September 30, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

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Ramesh Nair CEO, JLL India
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Updated: 03 Dec 2018
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