Are Start-ups driving Rental Market in B’lore?

A decade ago, Priyanka Joshi – a journalist by profession, who moved to Bangalore from New Delhi rented a place in Koramangala. Having stayed there for about 10 years, she can vouch for the huge metamorphosis that the area has undergone. Sharing her experience, she recollects, ‘Koramangala’s identity was just confined to retail and residential establishments. With Flipkart setting base here in 2007, the face of the area completely changed. With one start-up came an-other, and the list just kept on increasing. This was followed by commercial establishments along with increase in number of eat-out joints. And rest, as they say, is history.”

Since time immemorial, people with similar professions have settled close to each other. This was the case in ancient India which holds true even for contemporary society. A closer look at Bangalore clearly indicates that booksellers huddled around Avenue Road, similarly for anything related to automobiles-JC Road is the place and for electronic goods it is SP Road. Somewhat similar is the trend with start-ups.

Bangalore: The Great Indian Start-up Frenzy

Bangalore is currently being referred as the ‘start-up capital’ with maximum number of start-ups being hosted from here. According to Nasscom, almost 28 per cent of the country’s start-up eco-system is contributed by the Silicon Valley of India.

An interesting research paper by the Indian Institute of Science raises a point that past has a very important role to play in the Bangalore’s growth story. With public sector majors such as BEL, BHEL, HAL, to name a few, the Bangaloreans were already exposed to technology. Thus, ‘technology transformation’ was comparatively smoother, which set the perfect stage for a favourable environment for start-ups.

Apart from these, other factors such as pleasant weather, ripe pool of talent, sound social and physical infrastructure has helped the city of youngsters earn an epithet of ‘Mecca of Start-ups’.

Start-ups impacting Housing Growth

With increasing numbers of new ventures, the real estate market of several micro markets has also shown remarkable signs of upward trajectory. Analysing the rental markets of the areas where start-ups have sprouted, we found some common factors that drives the realty markets in those areas. These are:

1. Easy access with good Local Transport: Each market is easily accessible, even via public transport, which is of prime importance for any business set-up so that its employees are comfortable.
2. Affordable Rental Values: As against the large Tech Parks, all these localities offer properties at lower rental values. Most of the time, these start-ups take up a small office or an individual house on rent which is far more affordable than the IT Parks particularly in areas such as Whitefield, ORR or Electronic City. The interiors of these homes can also be customised based on the requirement of the tenants.
3. Affordable Markets with multiple options: It is also seen that all these markets boast of hav-ing reasonable options for food, lodging and other requirements.
4. Attracts Talent Pool of all Strata: It is also observed that these localities are easily accessible by all levels of Talent right from the CEO to the junior level employee.
5. Well-Developed Saturated Hubs: Another common feature among the selected localities is that all the markets boast of well-laid layouts coupled with developed social and physical infrastructure. These markets are essentially posh residential localities and have given way to buzz-ing employment options. With limited land availability, these localities offer good rental yield and have high rental demand. Moreover, the prices for sale here are very high and buying is very expensive.
6. Availability of Independent Houses: As per the apartment community rules, one cannot start a business in an apartment. Thus, role of independent houses come into picture here. Since most of these areas had a good availability of independent houses, they became hotspots for the start-ups.

CommonFloor takes a closer look at the top five markets that have seen immense rental growth due to the burgeoning start-ups.

Here is a snapshot.

Koramangala

With tree-lined boulevards and well-paved avenues, Koramangala is tagged as one of the most popular areas in the city. Located in South-East Bangalore, it is a prime residential and commercial area with well-established connectivity to other localities in the city with every block having a bus depot. Further, the area is home to an array of eat-outs and coffee parlours.

Home to: Flipkart, Dreamstarts, Toptomato, HiFives, Crumbs, Inspira, Daria System, among others.

Indira Nagar (includes Domalur)

If you want to experience a perfect blend of a signature locality with ultra-modern amenities, Indira Nagar is ‘the’ place. A residential layout with peaceful and sylvan environment, the area is an old establishment that boasts of being a premium pincode.

Located in East, its proximity to the IT hubs such as EGL, Bagmane Tech Park, Vrindavan Tech Park and EMC2 has significantly helped it to reach the real estate firmament of the city. In addition to the assortment of lifestyle amenities, the area also promises a home amidst acres of greenery, stoned- pathways dotted with a plethora of multi-cuisine restaurants.

Home to: CommonFloor, Fashionara, Redbus, Bookmybus, Lenskart, Ironwala.com, find-meashoe, Freecharge.

HSR Layout

Nestled between Hosur Road and Sarjapur Road, HSR Layout enjoys smooth connectivity to the IT hubs of Electronic City and Whitefield. Additionally, via NH-7, it enjoys direct accessibility to the international airport. Due to its proximity to Koramangala, it has developed commercially as well in recent times.

Home to: Zopnow, Nobroker.in, Simplilearn, Justeast, Squadro, Canvera,

J P Nagar

Located in South Bangalore, JP Nagar is a well-planned residential layout. Spread across 2,500 acres, the area has been divided into 9 phases. It is endowed with well-developed social and physical infrastructure. The Outer Ring Road which passes through the centre of this locality renders it excellent connectivity.

Moreover, Kanakapura Metro Station, coming up at the western limits of this area, will provide the residents of JP Nagar with easy and fast commutation, and an escape from traffic woes.

Home to: Zovi, Xenon, Milaap, 1on1links, Kyash, TaxiforSure, Multunus, Edemstore

Jayanagar

Jayanagar, a premium residential locality in South Bangalore, is one of the most coveted address in the city. Being one of the oldest areas, yet still modern and well-planned.

Home to: Dataweave, Borntowin, Toehold.in, Xithi Technologies

Impact on Rental Scenario

The start-ups effect on rental growth has been profound. Let’s have a look.

Growth in Seeker Demand (for rent) since 2012

Fig. 1 indicates that each of the localities mentioned have seen growth in seeker demand for rental properties since 2012.

With multiple start-ups commencing their operations over the last 2 years in these localities, there has been an increase in demand for rental homes.

Fig. 2 indicates the increase in rental prices per sq. ft.

With high seeker demand for rental homes, rental prices in each of the localities have seen con-siderable increase since 2012. Most of these localities don’t house many high-rises and land availability is very limited.