Kerala begins to feel the effects of the property boom

A tropical Indian province is starting to feel the effects of the property boom. Jill Parsons reports
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The Independent Online

Five years ago, the Indian property market was one that went right under the overseas investors' radar. A build quality that was variable at best, and at worst downright shoddy, poor infrastructure, economic uncertainty and a host of regulations to restrict non-Indian buyers were among the reasons that most property hunters looked elsewhere, despite temptingly low prices.

Five years ago, the Indian property market was one that went right under the overseas investors' radar. A build quality that was variable at best, and at worst downright shoddy, poor infrastructure, economic uncertainty and a host of regulations to restrict non-Indian buyers were among the reasons that most property hunters looked elsewhere, despite temptingly low prices.

There has been a sea change among buyers looking for a perfect holiday home due, in part, to the fact that even beachside properties still sell for what seems like silly money compared with Europe and Asia. In Goa, which has a British expat community of about 5,000 and a growing number of British buyers, it is possible to pick up a two-bedroom apartment for less than £30,000, albeit by going through a number of hoops to secure it. Compared to Phuket, Thailand, where a beachside apartment is currently on sale for £190,000, or the Costa del Sol, where £150,000 might be a realistic figure, it's a steal.

Yet the real boost to the Indian housing market, and what could lead to a relaxation in the country's protectionist property laws, has been the influx of multinational companies and their money.

Kerala, the verdant western province with a white-sand coastline, beautiful rivers and lakes, and lush tropical forests, is starting to feel the effects of the property boom. Among potential British buyers, its stock as a tourist destination is rising, both for chill-out beach holidays and as the centre of Ayurvedic medicine.

Kerala has also exported a huge number of workers to the Middle East, particularly the United Arab Emirates, and to Europe. Many reinvest their earnings in property.

The province also offers excellent schools, colleges and universities for those who choose to settle here. Kochi, the capital, is one of the fastest-growing cities in India, a major port with forts, palaces and museums, as well as shopping malls, marinas and a popular beach at Fort Kochi.

One of the most engaging aspects of the fledgling appeal of the property market to British buyers, weary of home-grown sales speak, is that property details still tell it like it is. Buyers in Kochi's Ernakulam and Edappally districts are told of their high-quality, professional, middle-class neighbours, in a nice area "without the snotty attitude". Equally, they are cheerfully warned about the lack of driveway to one house because it is five metres from a sharp bend in the road and, therefore, too dangerous.

Good-quality, well-built homes are routinely described as "posh". One such posh home is a detached villa on Manimala Road, Edappally. Set in large, flower-filled gardens, the house has four bedrooms, all with en suite bathrooms. It is for sale for £70,000 ( www.keralarealestate.com).

Premium beach locations command the highest prices. Kochi's palm-fringed Marine Drive, looking out over the Arabian Sea, offers waterside living with a suitably enhanced price tag. A sprawling estate near Marine Drive with a 5,000 sq ft posh bungalow advertises breathtaking views of the water from every window. The price tag is not far short of £300,000 ( www.keralarealestate.com).

Such properties should be great bets for both rental and resale. That it is not quite that simple explains why India's property prices have remained relatively low. Non-resident Indians (NRIs), who have to have at least an Indian grandparent, can buy and sell property and take out any profit on their ventures, but the rules governing this procedure are still strictly applied.

British buyers have a number of choices. They can qualify as residents by spending 182 days in India and then buy under resident rules. They can set up a company, which can be complicated and there are questions over how any money made from rental should be handled.

There is also the option of a 99-year leasehold arrangement. The problem is not the capital, as the exact sum put in can be taken out on resale, but any profit. Careful research and good legal advice is a must.

"The restrictions on selling to overseas buyers are there to limit speculation and to stop areas becoming overdeveloped," says Rajesh Goenka, chairman of Axiom Estates, one of India's biggest property companies. "But it would surprise no one if the rules governing overseas ownership were relaxed in the next few years."

Rohit Gera agrees. He is director of operations for Pune-based Gera Developments ( www.geradevelopments.com), which is offering upmarket, four-bedroom villas in the city, with bathrooms that open to the sky and manicured gardens with pools, for £80,000. "As more international investors wish to buy property in India, so the pressure will increase to make it simpler for them. That pressure will be hard to resist," he says.

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