It has been a tough year for the Indian real estate sector, with developers' expectation of a sales revival and consumers wish for price correction both turning out to be pipe dreams. Although developers and consultants are hoping for an improvement in 2013, nobody is ready to bet on any sharp uptick. However, the coming year is likely to see some non-traditional markets emerge as investment destinations.

Consumers have been, for a long time now, waiting for a meaningful correction, which would have helped them realise their dream of buying a property, but it was not to be in 2012 as well. Sales volume, which has been weakening for almost two years, continued its downward trend through the year, with intermittent spurts of improvement that could not be sustained. Rising costs of construction, raw material and financing left developers in the lurch.

"It became evident in 2012 that homes are not selling at the current price points. Developers do need to re-calibrate their bottom lines while still remaining viable as businesses," said Anuj Puri, chairman of property consultant Jones Lang LaSalle India. "Since the only way to catalyse healthier sales at this point is offering buyers tangible financial relief, we are likely to see a drastic trimming of frills in projects to make them more marketable from a pricing point of view, and innovative payment schemes," Puri added.

However, it is doubtful whether the existing offers with freebies and other such incentives will help revive the sluggish sales volume. Still, residential market has seen a rise in capital values in 2012 in most micro markets across major cities. Middle-income properties saw an average price increase of 10% from a year ago, while high-end properties appreciated by 12%, a report from property consultant Cushman & Wakefield India shows.

The National Capital Region (NCR) witnessed the highest average growth in values of the high-end segment at 22%, followed by Pune at 20%. Chennai, on the other hand, saw the highest increase in prices in the mid-segment at 16%, followed by NCR at 15% and Mumbai at 14%. The average capital appreciation in Bangalore was moderate and in the range of 11-12% in 2012. Meanwhile, Kolkata and Hyderabad languished as non-movers with only marginal increases of 2-3% in select micro markets.

Apart from the traditional property markets like Mumbai, the National Capital Region and Bangalore, property consultants are now citing some other cities that can emerge as better investment destinations. Cushman & Wakefield India has identified Ahmedabad, Bhubaneshwar, Chandigarh, Coimbatore, Jaipur, Kochi, Indore, Nagpur, Vadodara and Visakhapatnam as emerging business destinations. These cities were identified after considering demographics, physical, social and real estate infrastructure, current level and scope of economic activities as well as government support and initiatives.

"The growth in these cities in the next few years will be led by primary sectors like metallurgy and power, though services and manufacturing will also play a crucial role in creating a more holistic socio-economic environment, which is likely to fuel future realty demand," said Sanjay Dutt, executive managing director, Cushman & Wakefield India.

Dutt is of the view that most of these locations have already identified their niche in certain primary and secondary sector verticals and are strategically poised for expansion into the services sector. Newer locations are bound to emerge and provide higher returns in real estate as businesses are identifying suitable locations apart from the established ones to operate or expand. New locations offer the benefit of either lower cost of production or operation or access to better resources and infrastructure.