Property Market in Lucknow Continues to Gain Steam
Lucknow has come a long way to become a prominent real estate destination on the map of northern India. While many major property markets in India suffered under softened sentiments, property prices in Lucknow continued to move northwards without any deterrence. As per the research, prices have appreciated by around 11% CAGR during 2015 and 2018. As the demand continues to gain steam, average price growth will further move up marginally in the times to come. Interestingly, the market so far has been backed by end user dominance rendering it insulation against speculative forces.
Till a year before, almost 85% of the market has been driven by end users. However as per the latest insights, the end user driven market has started to transform into an investor driven one. Better connectivity with Delhi-NCR is further piquing investor interest. As investors have started to expand their foothold, possible fluctuations in property prices cannot be completely discounted in near future.
UP’s Focal Point
The prevalent optimism in Lucknow’s housing market capitalizes heavily on the city’s status as the capital of UP. As the capital town of India’s biggest state, Lucknow holds an envious position on the radar of Indian ruling and business elite. Lucknow, along with other adjacent catchments such as Kanpur, Sitapur and Bareilly, constitutes the State Capital Region (SCR) – drawing parallel to the NCR in Delhi. As the SCR, it justifiably becomes a very sought-after market for buyers and investors from nearby areas.
Massive infrastructure developments are unfolding across Lucknow and the wider region including new urban catchments, SEZs, logistics, roadways and much more. Likewise, the social facilities in Lucknow have made notable progress over the years, thereby narrowing the gap with metros in the country. Currently, the city boasts 22+ top quality malls. There is no dearth of top notch schools, colleges, medical facilities and leisure activities in and around the city.
An Unperturbed Housing Market
As the city grows across latitude and altitude, so does its housing industry. Some of the major residential catchments in the city includes Saheed Path (23-KM stretch that connects central Lucknow to Airport), IIM road, Gomti Nagar, etc. On a monthly basis, Lucknow currently enjoys a supply of around 650+ Grade-A units -with a run rate of around 400 units – leading to a commendable absorption rate that hovers mostly between 50-70%. Other major upcoming areas that are witnessing dynamic growth include Sultanpur Road, Rai Barely Road, Faizabad Road and Kanpur Road, which constitute around 80% of the current development activities of the city.
The market has much more potential owing to a healthy underlying macroeconomy and powerful sentiments. The prices in most of the markets within the city are moderately priced between INR 3000-3,500/Sq. Ft. thereby further incentivizing buyer’s participation.
More Organization on its Way
As the market in Lucknow continues to gain steam, most of the pan-India real estate advisories have made their ground presence in the city to deepen their foothold. As per our research, currently around 52% of the market is run by organized players, whereas the rest is controlled by small-time brokers. Amidst renewed optimism, marked preference for organized realty will continue to unravel in the city. However, individual brokers would not completely lose their hold in the market. Many of them will empanel with other bigger advisories as channel partners to expand their opportunities.
The current run rate of 400 is expected to rise by another 50% in next 12-18 months. Many national level developers are also upping its ante in and around the city to leverage on the heightened demand. In another 3 years, around 25,000 more units will enter the Lucknow market. Soon, the metro rail is set to enter fully fledged in the city, which will be a shot in the arm. The work on the ambitious (INR 13,000 Crore) project has begun in 2014. A small stretch is already operational.