Southern India's Real Estate Renaissance: Kerala and Beyond

In a rapidly transforming real estate landscape, the southern states of India are emerging as a beacon of growth and innovation. Crisil, a global leader in analytics and insights, recently held its Real Estate Conclave (CREC) in Kochi, unveiling a vision of optimism and opportunity. The event, attended by developers and industry stakeholders, highlighted the potential of southern markets, particularly Kerala, as they adapt to changing dynamics and embrace new possibilities.

A Growing Sentiment of Optimism

The sentiment survey conducted ahead of the CREC revealed developers' bullish outlook for southern India’s real estate market. This region accounts for approximately 34% of India’s 1.35 lakh RERA-registered projects, underscoring its critical role in the country's real estate ecosystem. Among these, Kerala commands a 3% share, with projections of double-digit growth in the coming years.

Kerala’s real estate trajectory mirrors the broader trends seen across the southern states—Tamil Nadu, Andhra Pradesh, Karnataka, Telangana, and Kerala. Urbanization, infrastructure advancements, and industrialization have fueled the growth of established hubs like Kochi and Trivandrum while igniting interest in emerging cities such as Mysuru, Mangalore, and Amaravati.

Kerala’s Transformation: From NRI to Domestic Market

Once a stronghold for Non-Resident Indians (NRIs), Kerala’s real estate market has seen a shift in buyer demographics. Over the past three years, the NRI share has dropped by 25%, with domestic buyers now constituting 60% of the clientele. This shift reflects a preference among second-generation NRIs for locations with superior social infrastructure and growth opportunities outside Kerala.

Developers have adapted to these changes, prioritizing local markets and focusing on untapped opportunities within Kerala. Micro-markets in cities like Kochi and Trivandrum—including Edappally, Kalamassery, and Kazhakoottam—are gaining prominence, offering a blend of affordability and promising economic activity.

Sustainability and Innovative Housing Models

A significant trend reshaping the southern real estate market is the growing emphasis on sustainability. At the CREC, 60% of developers anticipated rising demand for eco-friendly and green buildings. Many developers are integrating sustainability into their luxury housing projects, setting a benchmark for environmentally conscious living.

New housing concepts, such as senior living communities and built-to-rent properties, are also gaining traction. Kerala’s infrastructure growth and increasing economic activities have further spurred demand for commercial properties, with 75% of developers predicting moderate expansion in this segment.

Emerging Opportunities in Tier-2 and Tier-3 Cities

Southern India’s growth is not limited to major cities. Thrissur, Pallakkad, and Kollam are becoming high-growth regions, while smaller hubs such as Nellore, Vellore, and Mysuru are gaining attention for their affordability and rapid urbanization. Developers believe these regions are ripe for expansion, driven by favorable demographics and robust economic activities.

Addressing Industry Challenges

Despite its immense promise, the southern real estate sector faces challenges that require strategic shifts. Experts at the CREC emphasized the need to cater to local market demands, prioritize affordable housing, and adopt eco-friendly practices. Leveraging digital advancements and fostering global collaborations were also identified as critical drivers for long-term growth. “Developers can unlock growth by aligning with customer preferences and exploring innovative solutions like retirement communities,” said Binaifer Jehani, Business Head - Assessments, Crisil Market Intelligence and Analytics.

A Promising Future

As government policies and economic growth continue to propel the real estate sector, southern India, particularly Kerala, is poised for transformative growth. With a focus on sustainability, affordability, and innovative housing models, developers are well-equipped to cater to evolving customer preferences and build a resilient future.