Townships for IT and communications-based enterprises are all the rage worldwide and the reference mega techno-park is the prestigious Dubai Internet City (DIC).

Dubai Internet City has spawned several sister-projects and one of the latest is Smart City Kochi, which is causing a great deal of excitement in the real estate scene in Kerala, India. In fact, no better fortune could have befallen this quickly up-coming region!

Dubai Internet City, a blueprint for Smart City Kochi

Launched in the year 2000, Dubai Internet City is a platform for several Information and Communications Technology (ICT) companies including Microsoft, IBM, HP, Sun Microsystems and many other small and medium businesses.

According to a Dubai Internet City report, it houses 835 companies from across the world. As testimonial of its success, the report says that the IT market grew from US$ 6.9 billion in 2003 to more than US$ 9.5 billion in 2005. Furthermore, ICT spending in Gulf states (Saudi Arabia, UAE, Kuwait, Oman and Qatar) is expected to exceed US$ 10.10 billion by 2010. In the midst of all this growth, Dubai Internet City has become the one-stop shop for related business activities in the region.

Smart City to change Kochi’s destiny as a leading Indian IT park

Kochi, in Kerala, India, already a preferred destination for IT/ITES companies will get its own version of Dubai Internet City with the rising of Smart City Kochi, a joint venture between TECOM Investments and Sama Dubai.

The Dubai-based Technology and Media Free Zone Authority (TECOM) and the Kerala Government signed an agreement in May 2007 for setting up Smart City in Kochi, Kerala, which will rise in 246 acres of land at Kakkanad. Kerala’s Chief Minister, V. S Achuthanandan laid the Smart City’s foundation stone in November 2007, and by 2012 the project is expected to have a space of 6.2 million square feet

Software exports from Kerala surpassed Rs.700 crore (US$173 million) in 2006-07, up by 50 per cent compared to 33 per cent at the national level. The proposed Smart City project will create around 90,000 job opportunities in the next decade and the first part of the project is scheduled to go live in two years’ time.

The Kochi Smart City project is not restricted to IT/ITES companies, however, but will also have other services including residential, retail, hospitality and recreational facilities. This is sure to turn Smart City intone of India’s most sought-after IT parks.

Smart City to set further increase Kochi real estate demand and prices

The real estate prices in the region escalated as soon as the Smart City Kochi proposal was put forward. The boom kept at a constant pace and in some cases, prices doubled and tripled within a short span of time. Lands which cost only Rs.25,00,000 ($65,000) per acre in 2004, now costs Rs. 3-4 crores ($790,000-$1,052,600) per acre.

With further progress of Smart City, including the signing of the project agreement, builders find the area in and around Smart City to be of the top-notch locations in Kochi. They are well aware that their apartments will sell like hotcakes once the IT people rush in to take up their jobs, possibly precipitating an accomodation shortage.

The people who have lived in and around the Smart City area for decades and even generations are selling their land and moving to peripheral locations of Kochi where land is cheaper, making a very tidy sum of money in the process.

Builders are putting up real estate shows in the city of Kochi to display range of apartments rising in and around Smart City.

The real estate mood in Kerala is very buoyant indeed. Many are watching and waiting to see Smart City take shape and glow in its own right. The investment-savvy are rushing to buy in!

I began to realize how much the world had changed over my lifetime when the New York Times ran an article recently about a new “Ho Chi Minh Trail” in Vietnam-this one having nothing to do with arming and supplying an insurgency.

The new Trail is a marketing tag for a string of golf courses. If your image of Vietnam is stuck in the twentieth century or is shaped by “Apocalypse Now”, you need to rethink it. Consider, for instance, the Gulf of Tonkin being spoken of not as an ill-fated Act of Congress, but rather as a “breath-taking tourist destination”. The new Vietnam has no Colonel Kurtz. Twenty-first century Vietnam has bicycle tours, diving, sailing, extreme sports, and of course, golf and a long list of other attractions for its visitors from around the world.

After a tragic Twentieth Century, Vietnam is on the rise. It remains a poor country with a low GDP but one in which economic progress is palpable. Vietnam is expected to grow 8 percent in 2008. It is communist country, but, in the model of China, one in which Marxism seems curiously not to impede the pursuit of wealth. What’s more, in a historic move Vietnam joined the WTO in 2007.

There have been some growing pains for this budding economic dynamo but Vietnam is beyond doubt a hot real estate market. The new HCM Trail is an interesting sidelight, but on a more bread-and-butter level the government has designated large tracts of land for the creation of “new towns” set aside for the type of development which exemplifies the lifestyle to which the long-suffering population of this Southeast Asian nation aspires.

Vietnam’s overheated real estate market

Unfortunately, the real estate market in Vietnam seems to have overheated. It is probably not too hard to understand why, since the international interest in this country has been pretty intense and property speculation is blamed for the incredible rise in prices of certain real estate areas. In some cases the prices of commercial real estate have even reached first world levels.

Stocks market and real estate competition

The Wall Streed Journal ran an article at the beginning of March discussing the interplay between Vietnam’s real estate market and its much-touted stock market. After Vietnam joined the WTO, the stock market surged. Now it is tanking. The stock market’s surge had created an oversupply of both currency and stock offerings. At the same time, the real estate market had a concomitant surge that drew investment dollars away from the market. By some estimates the jump in real estate prices has been 100%.

The Journal reports that the Vietnamese government has high hopes for its stock market as a way of raising capital for the economy and so the government is intervening to slow down the real estate sector. The Vietnamese Central Bank is asking banks to stop lending to property developers, and there is talk of a tax on large real estate holdings. There is reporting, however, that foreign banks have stepped in to fill the gap created by the local banks’ pull-back.

Is there opportunity despite it all?

So is there still opportunity in Vietnam? The short answer seems to be yes, but at the present time it is rather risky.

Experts are still forecasting continued growth this year but the market has the risks of a market fueled by speculation. There is still much being said, however, about the strength of the Vietnam real estate market. A recent survey of real estate investment trusts ranked China, India and Vietnam as the leading property growth markets in the Asia-Pacific Region.

The speculation that has driven prices up may have slowed a bit because of the tightening of credit, but price inflation is still a problem. As one might expect of a newly developing country with an 8% growth rate, there is talk of poor government planning and inadequate infrastructure being potential problems.

All in all, while there are clear pitfalls, this seems too attractive and ascending a market to overlook entirely.

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