lBangalore real estate market is predominantly IT-ITeS driven
lWater is a predominant infrastructural challenge emerging in Bangalore
lHuge volume projects have showcased a mixed bag performance
l`Namma Metro' set to change the dynamics in Bangalore real estate
lShort-term speculation is being discouraged in projects of good builders
lPrice gaps between the pre-launch and launch stage are miniscule in Bangalore
The IT-ITeS industry has been the primary driver of real estate in Bangalore. The development of IT-ITeS
catchments along South and East Bangalore, has led to the unprecedented growth of the city during the past
decade. Micromarkets along Whitefield, Outer Ring Road Sarjapura, Bannerghatta Road and Electronic City, have
developed into self-sustaining hubs. Areas along the northern corridor of the Outer Ring Road, such as Hennur
Road and Thanisandra are also emerging as attractive locations catering to the housing requirements of the ITITeS
catchments present along the north-eastern corridor.
Water is emerging as a major issue in Bangalore, with the problem more pronounced in the northern and eastern
regions. On a relative basis, the problem is not as acute in south and west Bangalore as it is located much nearer to
the water table.
IT and commercial office developments in these markets are overshadowing the infrastructure constraints.
Builders are trying to overcome the problem mainly by providing methods like rainwater harvesting and water
tankers.
Homebuyers should execute caution while looking at projects, which have huge volumes. Traditionally, large
format projects, unless supported by commercial presence in the vicinity have not done well.
Real estate prices in Bangalore are yet to completely factor in the metro effect. The north-south corridor from
Nagasandra to Puttenhalli and the east-west corridor from Byappanahalli to Mysore Road, once completed, can
lead to a rise in property prices as Bangalore gradually wakes up to `how the metro can make life easier and
simpler'. A few builders are holding up to 30% of their available stock, which will be launched at a 25-30% premium
once the metro in the particular region becomes operational.
Good builders are strongly discouraging short-term speculation in their respective projects. They either impose a
transfer fee of 2-4% on the prevailing capital value or INR 100 psf if the investor intends to exit his/her property
before the registration date. Registration mostly takes place when the property is in a `ready-to-move-in' shape.
.
Unlike in Gurgaon and Mumbai, where the differential in terms of pricing and time interval in the pre-launch and
launch stage are substantial, the scenario is completely different in Bangalore. The gap in the former between the
two stages is approximately 10-12 months with prices increasing by 30-40%, even 50% in certain cases. In
Bangalore, the time gap is 1-4 months with prices increasing by approximately 0-5%. In essence Bangalore is
largely an end-user market.
Thus, after analyzing the macro-trends in Bangalore realty, we delve deeper and analyse the micro-trends.
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