Real estate news on Bengaluru Residential Real Estate: A look back

Real Estate services, Bengaluru, Real Estate Service (RES)
Posted on Dec 29, 2016
Bengaluru has been one of the very few cities in the country to have seen a relatively positive market. Even in the month of November 2016, post the demonetization move, there has been a marginal growth in property prices (0.51%) as well as a spike in buyer demand and residential supply.

The demand that has been recorded is a whopping 4 per cent while the supply is 1.6 per cent.

Did the real estate market fared equally well throughout the year? Or is it a recent phenomenon. Even post demonetization, the Bengaluru market seems upbeat.

Irfan Razack, chairman, Confederation of Real Estate Developers' Association of India says, “Bengaluru is one of the least affected cities, the reason being the market here has predominantly been transparent and cash transactions are almost negligible." Driven largely by the salaried class in the IT and ITeS sector, the market here is more end-user/consumer centric, dealing primarily through banking channels.

The positives of 2016 for Bengaluru

It will be right to say that not everything went smoothly for the city markets. Right from the beginning there has been some shortcomings, out of which some has been taken care of while others still await action.

Lets begin with the positives (small or big) which contributed to the wellness of the market. The first quarter of the year (Jan-Mar16) saw regulation of House Building Cooperative Societies (HBCS) activities such as restrictions in the membership of the cooperative and making the Registrar of Cooperative Societies responsible for land allocation for HBCS. This ended the discrimination in the enrolment of members. If the allocation did not take place within three years of collecting the vital deposit, the society will pay 4.5 per cent interest on the deposit amount.

Whitefield (40% Q-on-Q growth) and Outer Ring Road experienced heightened presence of internet start-ups, e-commerce activities, etc. which n bolstered the residential growth. Corporate biggies such as Facebook, Amazon, Ola signed up for 2.5 million sq ft, 1.2 million sq ft and 3.5 lakh sq ft office-space deals, respectively. The other top names which figured in the leasing activity included ANZ, KPMG, PwC and Mercedes.

"Overall supply in Bengaluru continues to remain a constraint but at the same time there are vacancies in micro markets such as Whitefield and Electronic City," Ram Chandnani, managing director, advisory and transaction services, CBRE India, said.

The growth in prices/demand /supply actually started from the beginning of 2016. The general sentiment amongst investors and property consultants seemed positive. In the first quarter, more than 70 per cent investors expected improvement in sales during the year. The demand was mainly being generated from the commercial real estate segment.

Infrastructure up-gradations also helped the Bengaluru market. The Metro connecting Whitefield in Phase II of the project; a new line running between Hosakerehalli and Marathahalli in Phase III; up-gradation of the NH4 connecting to K R Puram and Kadugodi; flyovers and underpass; etc, helped the citys residential segment.

The good news from mid-year came when the BBMP rolled back the hike in property tax capping it at 20 per cent for residential and 25 per cent for non-residential properties after several protests against massive hikes.

What the city needs to pay focus on the forthcoming year 2017, is its urban sustainability index. Civic issues has pinched its residents. Take for example the case of a particular apartment complex off Tumakuru Road that had received the sanction by BDA. The buyers realized that the access road is under dispute. Poor infrastructure near construction sites, traffic and garbage dumps, have been other issues. Lake catchments facing environmental stress have led to the government step up towards an action plan to rejuvenate Bellandur and Varthur Lake.

The authorities have already started taking measures to streamline practices. Some practices which are already underway are restriction on new construction projects, demolition drives, mandate for sewage plants, etc. The NGT and state government has barred construction activity within 75 metres of the periphery of water bodies and also set limits for buildings near feeder canals. The Karnataka's Environment Impact Assessment Authority has put on hold environmental clearance for 10 mega construction projects in Bengaluru, including large residential projects, for alleged encroachment of lakes and drains. Hopefully, this will boost the liveability index of Bengaluru.

Growth in prices

Liveability factor has definitely pushed the citys property prices higher. According to some builders and consultants, property developers will see the project cost going up by around 30 per cent as they will have to redesign projects and also keep paying interest on bank loan. Further, builders will also end up paying government charges for re-approval of their project plans.

Bengaluru with its affordability, job opportunities and varied housing options provides a perfect urbanised life. Once touted as the ‘Silicon Valley of India, the city today is also famous for being the mecca of start-ups. If demonetization has not dented your will, look at the housing options being offered at a ‘good cost or even the lower cost ones. You will earn profitably in future.

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