Bengaluru real estate: Due to good market drivers – IT/ITes sector- which ensures strong macro-economic dynamics, most home buyers find Bengaluru a perfect place to settle and retire.
Bengaluru is proving to be a shining spot for real estate investors. The capital of Karnataka has witnessed phenomenal migration in the last several decades to become the hub of Indian IT industry with a 40 per cent share. Due to good market drivers – IT/ITes sector- which ensures strong macro-economic dynamics, most home buyers find Bengaluru a perfect place to settle and retire. It is not a surprise then that the real estate demand in the city arises majorly from the migrant population looking for housing units priced below Rs 60 lakhs.
Experts say Bengaluru is a stable realty market and has steady prices as it has neither seen violent fluctuations nor a crash which could have enginereed a negative sentiment.
“Residential sales in Bengaluru has seen stable 9-10 per cent growth over the last two years in spite of subdued markets. At the same time, prices have not only been largely stable, but also few regions have witnessed considerable rise in prices due to the presence of limited number of players, catering to a market with higher demand,” Arshia Ladak, head-marketing, residential, Phoenix Mills Ltds said.
Abhijay Verma, General Manager with a prominent hotel in Bengaluru vouches for the city. Having made up plans to settle in Kolkata until a few years ago, he eventually sold off his apartment and invested in a 3-BHK in Bengaluru instead. His reasons were simple – with sprawling engineering and medical colleges in the city and nearby areas, it ensured a smooth career growth for his two kids. Also, the city offered affordable property prices with easier rent-out investment.
According to Cushman and Wakefield, “Bengaluru has been a stable market that has witnessed gradual increase in capital values, however average rental yields are comparatively better ranging between 2-4 per cent as compared to cities like Mumbai where yields are about 1-3 per cent. For investors looking for less volatile market with long-term horizon, Bengaluru provides an attractive investment option. There is minimal loss of rental income as duration to identify or replace tenants is low. There has been investor interests for capital appreciation as well, especially in certain sub markets of Bengaluru.”
Experts say Bengaluru does not have a very high percentage of unsold inventory compared to many other Indian cities.
Property portal 99acres.com proclaims that in the last one year Bengaluru has seen relatively quicker absorption and the total number of unsold housing units has come down from 84,000 to 4,500 in around three quarters. Having said that, the major reason for inventory not getting absorbed in the city is that projects in the premium housing category fail to attract buyers.
Although not alarming, but the city still faces accumulation of unsold inventories, as the investors practice ‘wait-and-watch’ approach, in hope of a price correction in future. Throwing more light on unsold inventory, Phoenix Mills’ Ladak said,”Projects in Bengaluru which are around 80 per cent complete have only 2 per cent inventory.The major portion of unsold inventory lies in projects which are less than 40 per cent complete.”
So is Bengaluru a good place to retire? Experts have different opinions on this. While some call it a pensioner’s paradise as the city has transformed into a major cosmopolitan centre with all basic-modern amenities, there are many who differ. This group believes that the rapid urbanisation is slowly eating up the green cover also.
“Traditionally, Bengaluru has been considered as a pensioner’s paradise and the immediate thoughts that would be associated with this adage are huge parks, gardens, lakes, cultural centers which are all intact with a better maintenance and newer legislations enacted to protect these landmarks. Bengaluru West has already established itself as a robust investment destination with its state-of-the-art soft and hard infrastructure consisting of all the aforementioned elements,” Ladak said.
However, Cushman and Wakefieild and JLL differ with Ladak’s views. “Bengaluru used to be a good retirement city overall, but those days are past. With the steady erosion of its green cover, even the tag of Garden City will soon stop making much sense. That said, there are still locations which are quite supportive of the special needs of senior citizens. The projects which seniors would prefer tend to be on the outskirts, as traffic and pollution are quite bad in the city. The best locations for retired people are near the airport in Devanahalli, Sarjapur and Atibele in the south, Kanakapura and Mysore Road. These areas are still relatively peaceful, connectivity is good and there is good availability of social infrastructure such as hospitals,” Juggy Marwaha, Managing Director – South, JLL India, opined.
From an investment point of view, experts advocate Bengaluru as a stable realty market for serious investors. For investors looking for less volatile market with long term horizon, Bangalore provides an attractive investment option. There is minimal loss of rental income as duration to identify or replace tenants is low. There has been investor interests for capital appreciation as well, especially in certain sub markets of Bangalore.
Narasimha Jayakumar, chief business officer, 99acres gives more meaning to this perspective. “Bengaluru is definitely an investment hotspot for both short and long-term investors. The steps being taken to overhaul the existing infrastructure of the region – including the approval of the Peripheral Ring Road, linking Tumkur and Hosur Road, and the scheduled completion of the north-south metro corridor by May 2016 – is set to positively impact realty prices. Other urban infrastructure upgrades pertaining to road, water supply and traffic management are believed to attract investors. Furthermore, the city recorded 13.43 million sq ft of office space absorption and 12.85 million sq ft of new construction, the highest in the country. Absorption of corporate space translates directly into higher rental demand, and indirectly into capital growth where ,” he said.
99 acres
The northern zone is viable for long-term investment. Enhanced connectivity via the Outer Ring Road (ORR), proximity to the international airport and quick access to the Central Business District drive property values here. In fact, North Bengaluru has been garnering footfall from investors in the luxury bracket of Rs 1 crore and above. Apartments in the localities of Thanisandra, Hennur Road and Hedge Nagar have clocked an average growth of three per cent in Jan-Mar 2016, vis-à-vis Oct-Dec 2015. East Bengaluru localities, such as Whitefield,Varthur,Budigere and the OMR stretch, score high for offering immediate returns. These locales are riding the wave of a flourishing IT/ITeS industry and presence of start-ups.
Cushman & wakefield
The northern zone is viable for long-term investment. Enhanced connectivity via the Outer Ring Road (ORR), proximity to the international airport and quick access to the Central Business District drive property values here. In fact, North Bengaluru has been garnering footfall from investors in the luxury bracket of Rs 1 crore and above. Apartments in the localities of Thanisandra, Hennur Road and Hedge Nagar have clocked an average growth of three per cent in Jan-Mar 2016, vis-à-vis Oct-Dec 2015. East Bengaluru localities, such as Varthur, Budigere and the OMR stretch, score high for offering immediate returns. These locales are riding the wave of a flourishing IT/ITeS industry and presence of start-ups.
JLL
In terms of price appreciation potential, the best areas in Bengaluru to invest in right now are Vartur, Jakkur, Sarjapur and Atibele.
Phoneix Mills
As on date Bengaluru West is the best region to invest from both long term and short term perspective, due to its infrastructural development. Then comes Bengaluru North as it is always under special focus due to the presence of BIAL and has remained a hotbed of real estate activity.
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