Overview of Bangalore real estate market 2012

Bangalore real estate market holds a special place in the landscape of Indian real estate sector as it is being considered a stable market compared to its counterparts like Delhi and Mumbai. The ‘Garden City’ has rapidly emerged as a realty hub and has become a prominent realty centre in terms of creating new business opportunities. Real estate in India went through sluggish sales in 2012 and had to battle high inflation and high interest rates. Here is an overview of real estate market in Bangalore with reference to various sectors in 2012 and predictions for the next year.

Residential real estate

Although Bangalore real estate started off the year slowly with drop in sales, it remained stable throughout the year and surpassed property markets in Mumbai, Delhi and Chennai with 8% growth in the quarter to June over the year-ago period. Delhi-NCR and Mumbai witnessed a sharp drop of over 40% in property sales in 2012 in comparison with the previous year. Bangalore realty market has not witnessed such sharp drop and it has been the leader both in terms of loan disbursement and sanction, which indicates the steady interest of home buyers in the city.

Bangalore’s residential market has gained interest from all stakeholders – developers, landowners and investors due to a significant population of young, double income household and growing migration to the city owing to job opportunities. Analysts have pointed out that Bangalore has the greater percentage of end users among buyers than in other cities and a relatively moderate price escalation as the reasons behind the steady growth of the city’s realty.

Price trends

The following table showcases the average price in the important areas of the city as per July- September, 2012. Along with the price, the price change on Quarter to Quarter (Q-o-Q) basis, i.e. compared to the previous quarter, in those areas is given in the third column.

The table shows that in most of the areas prices have continued to go up on quarterly basis, regardless of the slump in realty scenario in the country. The average price increase in Bangalore has been 11%-12% in 2012.

Emerging localities

North Bangalore has emerged as a magnet attracting real estate development in the recent past. Proximity to International Airport, enhanced connectivity to city centres and improved infrastructure are the reasons behind North Bangalore’s rise as a realty destination. Localities like Hebbal, RT Nagar and Shankar Nagar have been the star performer in the past one year. Due to infrastructural development like Hebbal-Yelahanka Expressway, elevated expressway to the International Airport and the proposed monorail project, North Bangalore has emerged as a sought after realty hub.

Hebbal and KR Puram has been identified among the top real estate destinations in the coming five years in India. While Hebbal has been forecasted to witness 94% price appreciation in the next five years, 91% appreciation in property values is forecasted in KR Puram within 2017.

Residential forecast 2013

North Bangalore, Outer Ring Road (ORR) and Whitefield – these are the areas that are being forecasted to witness continued growth in the next year. Most of the projects in Sarjapur Road on ORR are nearing completion and sales is expected to rise as the ready to occupy homes will be grabbed by end users. Whitefield remains a favourite locale for IT professionals as it is closer to many workplaces.

Old Madras Road and Mysore Road are the two pivotal micro-markets with untapped potential for residential development. Old Madras Road is a fast growing locale due to its proximity to city’s IT hubs – Whitefield and ORR, Bangalore International Airport and City Center. Mysore Road still lacks infrastructural facilities which is a turn off for many buyers.

Commercial real estate

Bangalore, along with Mumbai, NCR-Delhi and Chennai, contributed to 72.5 percent of the country’s net absorption of commercial real estate. Bangalore’s office market has witnessed a compounded annual growth rate of 12% in the past four years and the leasing activity in Bangalore’s office market ensured vacancy levels of less than 10 percent, which is below the national average of 15 percent.  The city’s office space is expected to reach the milestone of 100 million square feet by 2016.

Availability of high quality, office spaces at considerably affordable rental levels and access to skilled workforce are the main factors behind the growth of commercial realty in Bangalore.

KR Puram-Marathahalli-Sarjapur Road stretch on Outer Ring Road (ORR) and Whitefield are the primary centres which have witnessed increased commercial activity. ORR seems to be the favourite among occupiers as well as new entrants due to the presence of prominent IT parks and SEZs. Goldman Sachs leasing a record breaking 1.6 million sq ft of office space in Sarjapur Road is a testimonial to that fact. Along with the absorption rate, rental values have also continued to go up in Outer Ring Road. Whitefield, too, enjoys commercial realty growth as it offers Grade A office supply at comparatively affordable rates.

Rental values

Here are the rental values of some of the significant locations in Bangalore along with rental change on quarter to quarter basis.

Retail real estate

In terms of retail real estate Bangalore is one of fastest growing metropolis in India. NCR-Delhi and Bangalore have absorbed 2.6 million sq ft of retail space out of total absorption of 4.4 million sq ft in 2012. Indiranagar remains the retail hotspot in the city as it offers high street retail spaces with close proximity to residential areas. International brands have opted for Indiranagar and leasing activity has increased in the area.

Among emerging retail destinations. Kamanahalli in North Bangalore and Rajaji Nagar are notable. North Bangalore will witness increased residential migration in the coming year and will be closely monitored by mall developers and retail space investors.

Read more real estate articles:

Indian real estate in 2013: A forecast

Yelahanka emerging as a realty destination in Bangalore

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