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It's Raining Real Estate: Bang in Bangalore's Real Estate

The once peaceful city of Bangalore has transformed into a cosmopolitan city with a population of over 6.5 million and still growing. With the unprecedented growth of the IT and BPO industry,Bangalore has been at the helm of the real estate boom for the last few years. Growth drivers such as proposed infrastructural plans,establishment of IT parks and high income levels are expected to keep the property trend on an upswing in the coming years.


Bangalore is the third-largest hub for High Net worth Individuals (HNIs). Bangalore has been the fastest-growing city of India since the past few decades. The Bangalore real estate market saw absorption of 6,519 units in Q2 of 2013 against 6,689 units in QI. IT has been the major growth driver and is responsible for aggressive real estate development in the city. Bangalore as a whole has a diverse set of economic drivers that include IT/ITeS, Biotech and Aerospace engineering, with a lot of the existing demand coming from these sectors. Bangalore is expected to see the second highest demand for office space at 6.3 million sq ft in the Asia-Pacific region in 2014, according to a report by international property consultant Cushman and Wakefield.

A steady increase in population is another prime
reason behind the greater demand for housing facilities and commercial and retail space in the city. Areas such as Whitefield, Bannerghatta Road, Marathahalli once considered the most preferred location, have now joined the ranks of almost saturated zones in Bangalore. Currently, the most promising residential micro-markets are Outer Ring Road (ORR), Sarjapur Road and North Bangalore. The city has witnessed an increased demand for high-end residential apartments,particularly in the Central Business District (CBD),Secondary Business District (SBD), North Bangalore and Outer Ring Road sub-markets.

Developing Trends :

Bangalore’s residential market is booming and witnessing a lot of stir in the form of novel investments from major realty barons in India. The real estate market in the year 2013 fared remarkably well in Bangalore and across South India, despite the economic slowdown. Prices have been in line with inflation and the market has seen good momentum in sales and leasing.

It has been observed that India is undergoing a demographic transition and gaining economically from the changing age pattern. India’s youth population (15-32 years, comprising nearly 40 percent of the urban population, is fast becoming a new set of consumers with their inexhaustible and ever-increasing demand for the very best, backed by their increasing disposable income . This is expected to add to the increase in demand in the real estate sector. In addition,the increasing migration to the cities will also drive this demand. Additionally, the rapid land and infrastructure development, increasing earnings, growing aspiration and improving standard of living will fuel the housing and construction demand in smaller cities and towns.

CREDAI has identified demand from tier-II and tier-III cities as an impetus for better real estate solutions this year. Moreover, India continues to be a favored destination for global investment in the real estate sector. The recent move to introduce REITS, Real Estate Investment Trusts, will help the Indian real estate market to gain more depth as it is a great way to direct the investment into the Indian economy, and help smaller investor to access income-generating real estate assets.

Roadblocks to Overcome :

Every sector has its own challenges and there are ways to overcome it as well. The real estate sector is no exception. In the recent past, Indian real estate sector has been facing a lot of challenges such as increased land cost, absence of single window clearance, high borrowing costs, delay in approvals, labor challenge and increasing cost of construction material, lack of availability of funds both at buyers and developers’ levels, under-developed infrastructure and lack of skilled manpower.

Flip Sides of the Sliding Rupee Value :

The Indian rupee recently has witnessed a historic low against the US dollar which aggravated the challenges for the real estate sector. The costs of services and raw materials like transportation and steel have escalated
indirectly raising the cost and delivery time of the real estate projects. The raised cost will become a reason for projects’ delay. An expected hike in Cash Reserve Ratio (CRR) by RBI will impact the lending rate of banks that harms funding of new and existing projects.

The only positive sign among all the adversities has been the continuous inflow of the NRI investment. The depreciation of the rupee provides a psychological boost to both NRIs and developers. NRIs enjoy the rupee depreciation and invest in Indian real estate in order to enjoy the asset value appreciation with time.

A Wary Stride :

Buying a home can be an overwhelming experience for a first time buyer. The buyers should always do a proper research before finalizing and signing a deal to buy a new house. A proper research always comes handy even if you are going with a property agent. While the number of rooms, the floor plan, and the layout of the property, various amenities and facilities are important, the buyer should also consider factors such as location where is the property located, proximity to work, educational institutes, retail outlets, banks, hospitals etc.

Via : Siliconindia.com




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