Namma Bengaluru shouts out real estate investors
Namma Bengaluru
Property Consultant JLL India and Royal Institute of Chartered Surveyors (RICS) have forecasted that Indian realty market will see a revival in 2016. Bengaluru, witnessing a real increase in realty, has emerged as the second most preferred destination for investors after Mumbai.
Mainly driven by private equity (PE) players, the demand for real estate is especially coming from the commercial real estate segment. Juggy Marwaha, Managing Director, South, JLL India says, “PE investors are attracted to Bengaluru, as it is a highly corporatised market with good quality tenancies. The IT firms pay decent rents, the lease terms are good and it’s a stabilised market where demand and supply has always been kept neck-to-neck.”
The increase in demand for commercial real estate doesn’t mean that there is a lack of opportunities for retail investors. Affordable commercial units in North Bengaluru can become potential good investments because of the large demand emanating from eCommerce businesses and startups in the area. Endorsing the prospects of North Bengaluru, Satish B.N., Executive Director, South India, Knight Frank India says, “North Bengaluru (Thanisandra and Hebbal) has better prospects than East Bengaluru (Whitefield and Brookfield), owing to better infrastructure and metro connectivity,”.
Over the last three years, the average price growth in Bengaluru’s residential areas, has been approximately around 23%, higher than the average price growth in other important real estate hubs such as Delhi NCR (18%), Mumbai (22%) and Pune (17%). A case for example would be Hebbal, which saw a 67% growth with average property prices rising from Rs 4,250 per sq. ft in 2012 to Rs 7,100 per sq. ft in 2015.
While the growth in residential properties is expected to be subdued in the long run, mid-range residential projects might become a positive exception. The price appreciation in the mid-range segment (Rs 3,500-5,000 per sq. ft) is high because of the demand and availability of customers in the market. Says Marwaha, “Owing to the new set of people joining the city’s IT brigade, the midrange segment is doing better than other project and investors can also looking at renting out the properties after purchase,”. Stating the potential growth of upcoming areas such as Thanisandra and Yelahanka in North Bengaluru, Marwaha added, “You can expect up to 35% price escalation in Thanisandra and up to 30% in Yelahanka, if you buy now and can hold for next 4-5 years. Other areas in the North such as Nagwara, Hoskote, Kanakpura are also good areas to invest in.”
