GOD’S OWN COUNTRY

“KOCHI”
India’s Emerging Real Estate Hub

CBRE RESEARCH | 2017

CONTENTS

04 08 12 14
KERALA ~ AT A KOCHI’S THE EVOLUTION EXPLORING
16 18 20
WHAT’S A COMPARATIVE IS KOCHI SET
GLANCE BACKBONE – OF KOCHI’S THE CITY’S HAPPENING ANALYSIS OF KEY TO BECOME
ITS LANDMARK OFFICE MARKET COMMERCIAL ACROSS THE COMMERCIAL THE NEXT COST
INFRASTRUCTURE OFFICE OTHER REAL DESTINATIONS EFFECTIVE IT/ITES
INITIATIVES LANDSCAPE ESTATE IN KOCHI DESTINATION?
SEGMENTS?
 EVOLUTION OF KOCHI
FROM THE ORIGINAL DESTINATION OF SPICE
TRADERS TO A NEW TECHNOLOGY HUB
21st
century
Arrival of global
corporates
1500 AD
ARRIVAL OF
EUROPEAN
AND ARABIC
SPICE
TRADERS

94.88 TOTAL AVERAGE URBANIZATION

sq km
CITY’S POPULATION LITERACY RATE RATE
DEMOGRAPHIC
2.11mn 97.36 % 68.1%
2011
POTENTIAL 2011

erala (2nd largest in Kerala) (Highest Literacy Rate in India) (Most Urbanized City in Kerala)
2nd Largest in K

OTHER REAL ESTATE SEGMENTS

MAJOR EXISTING & UPCOMING
INFRASTRUCTURE INITIATIVES PLEASANT CLIMATE ALSO DOING WELL…
RAPID URBANIZATION / AFFORDABLE RENT IN KOCHI
AVAILABILITY OF TALENT VIS-A-VIS BANGALORE, CHENNAI,
HYDERABAD
tial lity
WHAT DRIVES 04:23 GOVERNMENT THRUST ON IT
Retail Residen Hospita
KOCHI’S More than Presence of Ample
3.0 mn. sq. ft. national and availability of
COMMERCIAL IMPROVING INTERNET of organized regional hospitality
OFFICE CONNECTIVITY retail space
with presence
developers,
majority of
infrastructure;
tourism and
MARKET? Chennai Hyderabad Bangalore Kochi of national these medical
EXCELLENT CONNECTIVITY and developments tourism to
Chenna: OMR Zone 1
Hyderabad: IT Corridor - Madhapur, Kondapur, international cater to the sustain
Hitech City, etc. brands (Lulu NRI and IT demand.
Bangalore: Outer Ring Road mall – Asia’s populace of
POLITICAL SITUATION Kochi: Kakkanad
largest mall). the city.

CBRE RESEARCH
This report was prepared by the CBRE [REGION] Research Team, which forms part of CBRE Research – a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real estate.
© 2017 CBRE, Inc. Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness.
This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
 GOD’S OWN COUNTRY KOCHI | INDIA

highways passing through the city include NH-17 (to Mumbai), NH-47 (to Coimbatore) and NH-49
(to Madurai). Kochi International Airport at Nedumbassery (the first international airport developed
through public-private partnership model in India) connects the city to various national and international
destinations (such as Dubai, Doha, Colombo, Abu Dhabi, Malaysia and Singapore).

KERALA ~ In consonance with other major cities in the country, Kochi witnessed significant activity in the IT/ ITeS

AT A GLANCE
sector over the past decade. The state government played a pivotal role in promoting the IT sector by
establishing technology parks in Thiruvananthapuram (Technopark) in 1990, Kochi (Infopark) in 2004
and Calicut (Cyber Park) in 2016. Further, to promote private sector participation, the government has
been constantly reviewing the state level IT and Industrial Policy, which has led to the development of
large scale private/public IT/SEZ developments such as KINFRA, SmartCity. INKEL and Cyber City.
The state of Kerala, also known as “God’s Own Country”, was formed in the year
1956, when Travancore-Cochin state was merged with Malabar district of Madras and
Kasaragod Taluk of South Canara district. As per the Census of India 2011, the state has
a population of 33.4 million people (12th largest state in India in terms of population)
with an area of 38,863 Km2 (as per the Kerala Economic Review 2015). It is divided
into 14 districts; Thiruvananthapuram being the administrative capital and Kochi being
the commercial capital of the state. The GDP of the state during FY 14/15 stood at
INR 4,32, 876 crores at constant prices 2011-12, with a growth rate of 7.46%1. In
terms of its socio-economic indicators, Kerala is one of the most developed states of
India, with the lowest population growth rate, highest Human Development Index,
highest literacy rate and highest life expectancy .

Kerala, traditionally being an agrarian and a tourism led economy, witnessed

a gradual shift towards the services sector with the advent of the information
technology industry in the past decade or so. It is also a hub for manufacturing
industries such as chemicals, rubber, oil refineries, mineral exploration and
trading for spices. Kerala typically consists of small urban agglomerations
with Thiruvananthapuram, Kozhikode and Ernakulam being the most
urbanized economic centers. Ernakulam district recorded the highest rate
of urbanization in the state at about 68.1%, consequently, emerging as
the district which has added the highest gross value at basic prices to the
state’s income.

Emergence of Kochi (Ernakulam District)

Kochi (also known as Cochin), part of the Ernakulum district, is
a vibrant city situated in the South-West coast of India. The city
is nestled between the Arabian Sea in the East and the Western
Ghats in the West. It is the largest urban agglomeration and the
second largest city in the state of Kerala - after the capital city
of Thiruvananthapuram. After the formation of Kerala in 1956,
Kochi emerged as the commercial and industrial capital of the
state. The city comes under the Greater Cochin Development
Authority (GCDA) and is one of the 12 principal ports of India.
Further, the development of the International Container Trans-
shipment Terminal (ICTT) at Vallarpadam has enhanced the
city’s prominence as a maritime and logistics hub. It is very
well-connected to other parts of the country by road, rail,
sea and air transport. A few of the prominent national
Macro-Economic Profile, Kerala Economic Review 2015
1

Census of India, 2011

2

4| CBRE RESEARCH © 2017 CBRE, Inc. |5

 ALUVA

NH
10 17

KOCHI ‘MAPPED’ KOCHI

INTERNATIONAL
AIRPORT

PRESENT
NH VENGOLA
VYPIN 47

INFRASTRUCTURE AND 7

FUTURE PLANS
PUKKATTUPADY
13
11
6
KAKKANAD

1 ERNAKULAM JUNCTION
4
2 VYTILLA JUNCTION SBD
1
3 KOCHI METRO PHASE I 8 9
14 PUTHENKURISH 15
4 KOCHI METRO PHASE II 2
OFF CBD
5 KOCHI WATER METRO

6 KOCHI INFOPARK 3
KOCHI
PORT 12
7 ASTER MED CITY CBD &
EXT CBD

8 LNG TERMINAL

ARAKKUNNAM
9 KOCHI INTERNATIONAL TRANSHIPMENT TERMINAL

10 INDUSTRIAL CORRIDORS
MANAKUNNAM
11 VYPIN-MUNAPPAM ROAD
17
12 MG ROAD 16

13 KAKKANAD PALLIKARA ROAD

14 AIRPORT-SEAPORT ROAD
PERUMPALAM
15 KOCHI-MADURAI ROAD CHELLANAM

16 ETTAMANOOR-ERNAKULAM ROAD
NH
47 5
17 ALAPPUZHA-KOCHI ROAD

6|
 GOD’S OWN COUNTRY KOCHI | INDIA

KOCHI’S BACKBONE – ITS EXPANSION OF KOCHI INTERNATIONAL

LANDMARK INFRASTRUCTURE AIRPORT (CIAL)

INITIATIVES • Construction of the T3 terminal with an estimated investment of INR 800 crore was initiated in 2011
• The terminal with a passenger handling capacity of 10 million per annum became operational in
2017. This is the world’s first airport to be completely operational on the basis of solar energy

Implications for real estate

Kochi continues to witness various infrastructure initiatives, in order to augment the industrial and
commercial activity in the city. Some of the key infrastructure initiatives that are currently under various Increased international connectivity is a major attraction for global corporates; expected to drive
demand for office space and encourage hospitality development.
stages of development/implementation are as follows:

Infrastructure Developments Completed

ASTER MED CITY

KOCHI INFOPARK PHASE I • Located in close proximity to MG road and Marine Drive, the entire development is expected to have
540 beds in Phase I and 500 beds in Phase II coupled with a 4-star hotel and serviced apartments
• Located in Kakkanad village, spread over 108 acres; built up area is estimated at 4.5 million sq. ft. • Phase 1 constituting of 250 beds became operational in 2014
• Land parcels were allocated to private developers such as Brigade Group and Carnival Group to Implications for real estate
develop IT parks
Improvement in social infrastructure is expected to spur medical tourism, thereby aiding growth in
Implications for real estate the residential and hospitality segments.

Inaugurated in 2004, the park has attracted investment from IT majors such as IBS Software, US
Technologies and Tata Consultancy Services (TCS).

LIQUEFIED NATURAL GAS (LNG) TERMINAL

SMART CITY KOCHI PHASE I
• A Greenfield LNG Re-gasification Terminal developed by Petronet with a storage capacity of 5 MMTPA
• Became operational in 2014
• Located in Kakkanad village, spread of 246 acres; built up area of phase I is estimated at 0.45
million sq. ft. Implications for real estate
• Developed with a joint venture between the state government and TECOM investment The Terminal attracts more gas-based industrial units to Kochi.
Implications for real estate

Inaugurated in 2016, the development has seen take-up by corporates such as Baker Hughes, etc.

KOCHI INTERNATIONAL TRANS-SHIPMENT

TERMINAL (ICTT)
VYTILLA MOBILITY HUB PHASE I
• Located in Vallarpadam; the ICTT is a container trans-shipment facility and is a part of the Kochi Port
• An under development integrated transit terminal (37 acres) for various forms of public transport SEZ
• The first phase of development has been completed • Phase-I of the facility became operational in 2011

Implications for real estate

Implications for real estate
The trans-shipment facility has improved the trading activity in the city, thereby positively impacting
Improves inter-state connectivity; facilitates easy mobility of talent. the industrial and warehousing segments.

8| CBRE RESEARCH © 2017 CBRE, Inc. |9

 GOD’S OWN COUNTRY KOCHI | INDIA

Proposed Infrastructure Infrastructure Underway

KOCHI METRO RAIL PHASE II KOCHI METRO RAIL

• Phase II of the metro corridor received approval from KMRL and the construction activity is expected to • The first phase would cover a distance of approximately 25 kms. The network will extend from Aluva
start post the successful completion of Phase I in the North to Petta in the South
• It will be an extension from Aluva to Angamally via the Cochin International Airport, from Petta to • Construction commenced in 2013, expected to be completed by 2017
Tripunithura, and from Palarivattom to Infopark via Kakkanad
Implications for real estate
Implications for real estate
With an improvement in connectivity, development of commercial real estate along the
This will further improve connectivity from the CBD to the IT corridor (East Kochi). stretch to be positively impacted.

KOCHI WATER METRO

KOCHI INFOPARK PHASE II

• Kochi will be the first Indian city where water connectivity will be developed as a feeder service for
Metro Rail
• The total project cost is estimated at INR 747 crores shared between State government and German
Development Bank
Implications for real estate
This is expected to improve intercity commute by providing last mile connectivity.
• Infopark Phase II, with an earmarked land of 160 acres, consists of both SEZ and Non SEZ clusters
• The initial block (Jyothirmaya) with a built-up area of about 4,00,000 sq. ft. became operational
recently
Implications for real estate
Quality commercial office supply is expected to support the expansion activity of various corporates
and generate employment opportunities.

VYTILLA MOBILITY HUB PHASE II

SMART CITY PHASE II

• The blueprint for phase II and DPR has been sent to the Union government for approval
• The second phase of the hub design involves construction of the main terminal with two basements
and bus bays in a multistoried complex
• The second phase of the project consists of developments by Sands Infra, Holiday Group, Prestige,
Implications for real estate Maratt, etc.
Expected to improve inter-state connectivity and provide a hassle free transportation experience.
Implications for real estate
The office space supply will provide more expansion opportunities to corporates.

KOCHI SMARTCITY (100 SMARTCITY

MISSION)

• Kochi is the only city in Kerala selected under the Central Government’s SmartCity mission for urban
rejuvenation
• Kochi ranks 5th in the Top 20 list and is likely to garner an investment of INR 2,076 crores
• The government has also earmarked INR 500 crores from the state’s budget towards implementation
of the SmartCity project
Implications for real estate

Improved physical and social infrastructure of the city and Kochi SmartCity – Kerala’s signature IT
project expected to help the city gain branding and more visibility.

10 | CBRE RESEARCH © 2017 CBRE, Inc. | 11

 GOD’S OWN COUNTRY KOCHI | INDIA

RENTAL VALUE MOVEMENT

INR/sq. ft./ month

THE EVOLUTION OF
80
70
60

KOCHI’S OFFICE MARKET

50
40
30
20
10
Economic activity in Kochi was traditionally driven by trading, port and related activities, manufacturing,
0
tourism and mineral exploration. In early 2000, the office leasing activity was predominantly CBD & Ext CBD Off CBD (Non SEZ) SBD (Non SEZ) SBD (SEZ)
concentrated in the CBD locations of MG Road, Kaloor and Kadavanthura, with standalone office (Non SEZ)
buildings catering to the requirements of small to medium sized occupiers (largely non IT). However, post 2014 2015 2016
2005, limited availability of land for development, led to the office activity moving towards the Extended Source: CBRE Research
CBD and Off-CBD locations of Marine Drive, Vytilla, Palarivattom and Edappally.
Kakkanad located in the Eastern suburbs of Kochi has emerged as a prominent IT corridor, having
With an aim to leverage the strong growth being witnessed in the IT sector across the country, the witnessed development completions of about 5 mn sq. ft. in the past five years. Prominent corporates
State government undertook several initiatives to position Kochi as a cost-effective destination for such as TCS, Cognizant and Wipro have set up their own campuses along the corridor. Private IT parks
Indian and global technology corporates. As a first step, the government promoted Kochi Infopark such as Brigade WTC, Smart City, Lulu, Carnival Infopark have also witnessed healthy leasing activity. A
which was developed as a Special Economic Zone (SEZ) in 2004. However, demand from corporates strong growth momentum in the IT corridor has ensured that Kochi’s investment grade office stock has
remained limited for couple of years, as other relatively larger and more prominent Southern Cities expanded from less than 5 mn sq. ft. in 2012 to approximately 10 mn sq. ft. in 2017.
such as Bangalore, Chennai and Hyderabad remained the focal destinations for the IT sector. These
cities attracted majority of the IT companies by providing attractive incentives such as land allocation, The availability of large scale land tracts within the government promoted SEZ parks has also
relaxation in development control norms, single window clearance mechanism and an industrial status; encouraged both national and international developers to propose SEZ developments in the city. More
steps that augmented the development of investment grade office space in these cities, to a great extent. than 90% of these developments are envisaged along the IT Corridor.

In order to revive the sector, the State government came out with a comprehensive Information
Technology Policy in 2012 with an objective to make Kerala the most preferred IT destination in
India. The incentives provided in the policy included single window clearance and industrial status,
concessional power tariff, maximum FAR (up to 5 for IT developments) and incentives for green
buildings. These initiatives coupled with a sustained increase in occupancy costs in Bangalore, Chennai
and Hyderabad has resulted in resurgence of the IT sector in the city. Various prominent developers
such as the Brigade Group and the Lulu Group have initiated development plans in the city. Prominent
corporates such as US Technology, IBS Software, E&Y, KPMG, TCS, CTS, Wipro, etc. have established
their footprint in the city.

OFFICE STOCK MOVEMENT

mn.sq.ft
2019
2018
2017

0 5.0 10 15 20

Source: CBRE Research

12 | CBRE RESEARCH © 2017 CBRE, Inc. | 13

 ALUVA
N VENGOLA
H-
17 3

-47
VYPIN

EXPLORING

NH
2 PUTHENKURISH D
ROA
ADURAI

THE CITY’S
VY HI-M
PIN KOC
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UN
AP 1

COMMERCIAL
PA
M
RO
AD ARAKKUNNAM

OFFICE
LANDSCAPE KOCHI PORT
MANAKUNNAM
ETT
AM
AN
OO
R-E
RN
AK
UL
AM
RO
AL AD
AP
1 2 PU
ZH
A-
KO
CH
I
CBD & EXT CBD OFF CBD RO
AD
RO
Prominent Locations: MG Road, Kaloor, Kadavanthura, etc. Prominent Locations: Vytilla, Palarivattom, Edappally, etc. AD

Office Stock: 1.04 mn sq. ft. (Grade A/B)
Supply Pipeline: 0.12 mn sq. ft.
Average Rental Value: Approx. INR 65 – 85/ sq. ft. / month
Average Capital Value: Approx. 10,000 – 15,000/ sq. ft.
Key Tenant Sectors: BFSI, Retail and Trading
Prominent Commercial Developments: Alapatt Heritage,
Imperial Trade Centre, CUC Ventures and Muthoot Tech Tower.
Leasing Activity Trends: Leasing activity is driven by smaller
sized office space take up (up to 10,000 sq. ft.). Most of the space is
utilized for front office operations by corporates from sectors such as
BFSI, Manufacturing, etc.
Office Stock: 2.86 mn sq. ft. (Grade A/B)
Supply Pipeline: NA
Average Rental Value: Approx. INR 55 – 70/ sq. ft. / month
N
Average Capital Value: Approx. 7,000 – 10,000/ sq. ft. H-
47
CHELLANAM
Key Tenant Sectors: BFSI, Media, Quasi Retail, Research &
Consulting, Telecommunication, etc.
Prominent Commercial Developments: Syama Dynamic,
Jamer Symphony, Q1 Infra, Genesis, etc.
Leasing Activity Trends: Leasing activity is driven by smaller
sized office space take up (5,000 to 20,000 sq. ft.). Most of the space
is utilized for front office and quasi retail operations.

SBD
Prominent Locations: Kakkanad, Seaport-Airport Road
Office Stock: 6.05 mn sq. ft. (Grade A/B)
Supply Pipeline: 5.6 mn sq. ft. (Grade A/B)
Average Rental Value: Approx. 34 – 37/ sq. ft./ month (Non SEZ),
34 – 42/ sq. ft./ month (SEZ) CBD & EXT CBD
Average Capital Value: Approx. 4,000 – 7,000/ sq. ft. Central Business District (CBD) and Extended Central Business District

Key Tenant Sectors: IT/ITeS, BFSI, Research & Consulting OFF CBD
Prominent Commercial Developments: Brigade WTC, Smart Off Central Business Districts
City Kochi, Lulu Cyber Tower, Carnival Infopark, Geo Infopark
SBD
Leasing Activity Trends: The Most active IT micro-market, most of Suburban Business Districts
the space is utilized for back office operations across IT/ITeS and BFSI
sectors
 GOD’S OWN COUNTRY KOCHI | INDIA

WHAT’S HAPPENING MICRO MARKET/

MAJOR MALL
KEY BRANDS OVERVIEW
AVERAGE RENTAL
VALUES* (INR/SQ. FT./
MONTH)

ACROSS THE OTHER REAL Central - Marine

Vero Moda, Jack &
Jones, Mont Blanc,
Omega, Tag Heuer, Q
The micro-market houses
four organized retail
developments. Majority of

ESTATE SEGMENTS?
Cinemas, Pantaloons,
Drive, MG Road, these malls are positioned 90 - 140
Spencers, Central,
Vytilla, Maradu as mid-high end retail
Pepe Jeans, Burger
developments and house
King, Subway, Pizza
several prominent brands.
Hut, Big Bazaar
Hamleys, Jack &
RESIDENTIAL Jones, Josco, Joy
Alukkas, Marks &
Residential activity in Kochi was primarily concentrated in areas such as Kadavanthara, Thevara, Spencers, GAS, Steve
The micro-market houses
Panampilly Nagar, Tripunithura, Kaloor and Palarivattom, all in close proximity to the CBD. These areas one of the largest malls of
Madden, Crocs, PVR 125 - 175 (Organized
India (Lulu Mall ~ 1.7 mn
command a premium on account of their location. The emergence of IT/ITeS development in East Kochi East – Edappally, Cinemas, Tommy Developments)
sq. ft.). Vicinity to residential
has catalysed residential development activity in the Northern and Eastern peripheral locations of the city. Palarivattom Hilfiger, Vero Moda,
catchments has spurred the 80 – 120 (High Streets)
Westside, Lulu Fashion
retail development in these
Store, Costa Coffee,
areas.
KEY RESIDENTIAL CAPITAL VALUES (INR/ Wow Momo, Mc
MICRO MARKET OVERVIEW Donald’s, Bloomsbury
PROJECTS SQ. FT.)
Café
Locations such as
Central - Kadavanthara, Thevara,
Marine Drive, Tata Tritvam, Purva Panampilly Nagar, HOSPITALITY
Thirupunithura, Grand bay, Confident Tripunithura, Kaloor,
Kochi is an attractive tourist destination and serves as a transit point for travellers visiting other tourist
Kadavanthura, Avior, Dewa Pier, Palarivattom are
4,000 - 7,000 destinations such as Munnar, Alappuzha, Kottayam and Palakkad. With the establishment of the IT/ ITeS
Palarivattom, 24 Carat, Galaxy characterized by unorganized
Kaloor, Emerald, Prestige, individual dwelling units, industry in Kochi, the hospitality sector has also witnessed a surge in the number of business travellers to
Panampilly Neptune retail high streets, and the city.
Nagar premium sea-facing
residential apartments.
KEY HOSPITALITY AVERAGE ROOM RENT
Predominantly characterized MICRO MARKET OVERVIEW
DEVELOPMENTS (INR/DAY)
North - Aluva, by residential apartments
Amity Landmark, Asset Bolgatty Palace & The hospitality sector in
Angamally, and plotted development.
Green Ford, Orion, Island Resorts, Ramada Central Kochi is dominated
Kalamassery, Demand is driven by the 3,000 - 4,500
PVS Iris, Terracore 22, Central - Kochi, The Gateway by business and leisure
Nedumbassery, presence of small scale
Synergy Kumbalam, Hotel, Vivanta By hotels; largely catering to
Cheranallur industries and proximity to
the airport. Tagore Nagar, Taj, Trident Hotel, Le tourists. In addition, the 4,500 - 6,000
Wellington Meridian, Raddison region also has unorganized
Prakriti, Jain Tufnell, Island, Fort Kochi Blu, Keys, Grand hospitality developments,
Majorly characterized by
East - Kakkanad, Purva Eternity, Ivy Hyatt, IBIS, Crowne homes stays and serviced
residential apartments and
Edappally, league, Trinity Mercury, Plaza apartments.
plotted development from 3,000 - 6,000
Vazhakalla, Astern Campus Court,
local developers, largely Sheraton, Taj Gateway, Limited availability of
Pallimuku ABAD Celebration East - Kakkanad,
catering to the IT populace. Park Residency, Hotel hospitality infrastructure as
Tower Edapally, 4,000 - 7,500
hill View, Marriott travelers prefer to stay either
Vennala
Hotel, Holiday Inn in the city or near the airport.
RETAIL
North -
Majority of the existing retail development in the city is primarily concentrated within the existing Courtyard by Marriott, The micro-market largely
Nedumbassery,
Flora, Diana Heights, caters to the requirements of 3,000 - 4,500
CBD locations (i.e. MG road, Chittoor road, Shanmugam road). These regions are predominantly Airport Road, NH
Airlink Castle business travellers.
characterized by the presence of single brand/multi-brand retail outlets. Limited land availability for 47
large-scale retail developments has led to the development of retail in East Kochi. The city currently has
more than 3 mn sq. ft. of organised retail stock.

16 | CBRE RESEARCH © 2017 CBRE, Inc. | 17

 GOD’S OWN COUNTRY KOCHI | INDIA

A COMPARATIVE ANALYSIS
OF KEY COMMERCIAL
DESTINATIONS IN KOCHI
Similar to other Indian cities, the centralized
CBD EXT CBD OFF CBD SBD
locations of Kochi are also endowed with
a developed fabric of social and physical
AVAILABILITY OF INVESTMENT infrastructure, besides excellent connectivity to
GRADE OFFICE SPACE all major locations and landmarks in the city.
However, lack of availability of developable
FUTURE SUPPLY OF INVESTMENT land parcels has ensured limited availability of
GRADE OFFICE SPACE investment grade office space for corporates.
These factors, along with comparatively higher
rental values, have resulted in limited office
OFFICE RENTAL
VALUES leasing activity in the CBD and Extended CBD
micro-markets of the city. Consequently, the
entire development thrust for commercial
PRESENCE OF ORGANIZED spaces in Kochi in recent years has been on
RETAIL the emerging micro-markets of Off-CBD and
SBD; the presence of residential clusters in
RESIDENTIAL these locations has further encouraged the
AFFORDABILITY development of their commercial base.

PHYSICAL The SBD micro-market has emerged as the

INFRASTRUCTURE most sought after location in Kochi for the
IT/ITeS sector and other corporates who
are looking for medium to large sized office
SOCIAL spaces. National and local developers such as
INFRASTRUCTURE Brigade Group, Lulu Group, Prestige Group
are developing large scale SEZ developments
AVAILABILITY OF in this micro-market. These developments
TALENT are slated for completion in the next 2 – 3
years. In addition, infrastructure initiatives
such as the Metro Corridor, Airport to seaport
PROXIMITY TO INTERNATIONAL road, expansion of the existing airport, large
AIRPORT
scale residential and retail developments are
likely to attract more corporates to this micro
OVERALL market.

Source: CBRE Research, August 2016.

18 | CBRE RESEARCH © 2017 CBRE, Inc. | 19

 GOD’S OWN COUNTRY KOCHI | INDIA

Availability of Talent: Presence of more than 35 colleges (Professional and Arts & Science) and
proximity to other Tier II cites of South India such as Coimbatore, Kozhikode, Madurai provides a large
talent pool, especially to the IT/ITeS sector.

IS KOCHI SET TO BECOME Infrastructure: Kochi enjoys excellent connectivity via road, rail, air and sea. Upcoming infrastructure

THE NEXT COST EFFECTIVE

initiatives such as the Metro Rail, Water Metro and Vytilla mobility hub are expected to further improve
the infrastructure fabric and positioning of the city. Infrastructure related grievances of corporates in
established cities, such as Bangalore and Chennai can be addressed by a pivot towards Kochi.

IT/ITES DESTINATION?
Kochi has been fast emerging as an alternative IT destination over the past few years. The major driver
for IT growth has been the government’s initiative to earmark land parcels and develop SEZ parks
in the city. In addition, the city has also received the much needed impetus in terms of an improving
physical infrastructure. Other infrastructure initiatives such as expansion of the airport, metro connectivity,
proposal for developing Vytilla as a mobility hub, expansion of internal roads as well as SmartCity Kochi
– Kerala’s signature IT project have positively impacted the growth of the commercial office space.
Destination Kochi - Opportunities for Developers and Corporates:
WHAT IN FOR DEVELOPERS?
Established Basic Infrastructure: Large scale SEZ developments such as KINFRA, SmartCity Kochi,
Infopark, etc. provide basic infrastructure amenities such as roads, power, high speed internet
connectivity, etc. to developers.
Policy Initiatives: Development incentives, land allocation by the State government, single window
clearance, etc. will attract more corporates and developers to set up their operations in the city. Most
policies have been devised recently and factor in the incentives critical for sustaining corporates in the
city.
Availability of Space: With limited vacancy levels impacting the availability of mid to large-sized
investment grade office space in the core micro-markets of Bangalore, Chennai and Hyderabad
(coupled with sustained increase in rental values), corporates have been exploring locations outside the
three cities. From a business continuity perspective, Kochi with ready availability of large scale office
space, is a major expansion destination.
Stable Political, Natural and Operating Environment: Kochi has a stable political environment when
compared to the other Southern Cities which have witnessed some political (Hyderabad) and natural
(Chennai) unrest in the past. Bangalore has also been witnessing issues with the NGT over storm water
drains, lake buffer zones and flyovers developments; which have been hindering development over the
past couple of years.

Proactive Policy Initiatives: The government has taken several steps to boost the IT ecosystem in the
State such as providing Single Window Clearance, attractive FSI options, infrastructure benefit for the IT
developments, etc.

Availability of Land Parcels: Compared to other metro cities of India, land parcels in Kochi are
relatively cost effective and more readily available.

WHAT IN FOR CORPORATES?

Rental Arbitrage: The availability of quality Grade A supply at a comparatively lower rental than the
Southern metro cities provides an opportunity to corporates for their expansion/consolidation strategies.

Thriving Start-Up Culture: The State government has come up with start-up policy which provides
young entrepreneurs with facilities such as innovation labs, incubator space, mentorships, etc.; thereby
promoting the talent ecosystem of the city.

Availability of support infrastructure: The availability of quality residential developments and good
social infrastructure such as schools, colleges, retail destinations, etc. in and around the IT corridor
provide a holistic operating ecosystem for employees.

KOCHI VERSUS THE THREE SOUTHERN TIGERS

Asset Pricing: The commercial office space rentals across the leading office micro-markets in Kochi
are at significantly lower than the leading office hubs of South India, such as the Outer Ring Road,
Whitefield (Bangalore), Hitec City and Gachhibowli (Hyderabad) and OMR Zone 1 (Chennai). The
rentals in the core markets of Kochi are comparable to those in the peripherals of Bangalore – making a
case for “flight to cost”.

20 | CBRE RESEARCH © 2017 CBRE, Inc. | 21

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Manager – India Research Preetham Mehra
raajthilak.raveendran@cbre.co.in Executive Director – Head – Operations
Chennai Office & CBRE Consulting (South)
preetham.mehra@cbre.co.in

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