Bangalore realty: The year that was and what to look out for

ByKarun Varma

Flashback 2012

Residential: The best performing areas in the city for the residential sector in 2012 were Hebbal, Sahakar Nagar and RT Nagar in North Bangalore. These locations saw the highest demand and appreciation during the year. The improved infrastructure in this region, its proximity to Bangalore International Airport Ltd (BIAL) and overall enhanced connectivity helped North Bangalore to crystallise into a much sought-after residential destination.

Because of the infrastructure initiatives in various stages of construction and planning there, including the proposed high-speed rail link, the Hebbal-Yelahanka expressway, the elevated expressway to BIAL and the advent of the monorail, North Bangalore was one of the safest and most lucrative residential property investment bets of 2012.

[caption id=“attachment_567341” align=“alignleft” width=“380”]  North Bangalore will continue to grow thanks to its massive potential for capital appreciation. IBN Live[/caption]

The top emerging destinations through 2012 were Tumkur Road, Vijayanagar and Magadi Road in West Bangalore, with capital value appreciation to the tune of 12-15 percent. This region saw stable demand because of the developing metro line, which will provide enhanced connectivity.

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Yet another area to start edging its way into the limelight was Kanakapura Road, which has begun seeing the benefits of metro connectivity, the establishment of the NICE Road (the Bangalore-Mysore Infrastructure corridor), the availability of Cauvery water and its affordable price points.

The Mysore Road witnessed moderate activity because of its pronounced infrastructure deficit and low-grade demand. The area remained a stagnant market in 2012.

Commercial: The best-performing areas for commercial real estate in 2012 were Outer Ring Road (specifically the KR Puram-Marathahalli-Sarjapur Road stretch) and Whitefield.

Bannerghatta Road, Koramangala and the Central Business District remained largely neutral throughout the year. The low leasing activity in these areas was due to lack of fresh supply and the fact that as established locations, they have limited scope for infrastructure enhancement. Also, companies relocating to alternate areas showed a market preference for destinations with economic rentals.

Outer Ring Road (ORR), being a predominant IT growth corridor, benefited from the controlled nature of office space supply, which ensured low vacancy levels, healthy absorption rate and rental appreciation. Also, corporates continued to prefer ORR for its accessibility to employee residential catchments and its connectivity to the various SEZs and IT parks along this stretch. Moreover, pre-commitments are very prevalent on ORR owing to the lack of ready-to-move-in supply. ORR continued to be the location of choice for new entrants as well as existing occupiers looking at expansion.

Whitefield reaped a lot of spill-over demand from ORR, thanks to its healthy inventory of ready-to-occupy Grade A office space supply. The affordable rentals there also worked in its favour.

Retail: In terms of retail space absorption, Bangalore’s top performer in 2012 was Indiranagar, whose high leasing activity was a direct result of its proximity to established residential catchments. Indiranagar continues to solidify its position as a high-demand destination for high street retail spaces, especially by international brands.

Among the notable emerging retail locations in 2012 were Kamanahalli in North Bangalore, which made a convincing entry as a high street destination, and Rajaji Nagar, where the Brigade Orion mall saw high retail activity during the year.

Whitefield remained a neutral market.

Outlook 2013

Residential: North Bangalore will continue to grow thanks to its massive potential for capital appreciation. On ORR, projects under construction on Sarjapur Road will reach the completion stage and will see incremental sales because of the preference for ready-to-occupy projects by end users. This area’s advantageous proximity to the IT growth corridor will also be a contributing factor. This area will thrive on the back of increasing Information technology investments and the Aerospace SEZ being planned by the government over the coming 3-5 years.

Whitefield will continue to yield considerable residential sales, thanks to its affordable prices, proximity to important workplace centres and the enhanced retail and social infrastructure in this location.

Commercial: In terms of commercial property absorption, ORR will work exceedingly well. Thanks to its proximity to employee catchments, the enhanced connectivity via signal-free flyovers and availability of SEZ as well as non-SEZ office spaces will ensure that ORR continues to build up its already dense corporate presence in 2013.

Whitefield will not lose any of its sheen. The office space market drivers there will continue to be its economic rentals.

In North Bangalore, infrastructure development, the controlled office space supply coming up and proximity to BIAL will provide continuing impetus. North Bangalore will ramify its status as the business continuity location of choice.

Retail: For retailers, mall developers and retail space investors, North and East Bangalore are definitely the areas to watch out for. The rapidly developing infrastructure and expanding residential catchments in these locations are harbingers of vastly increased retail activity over the mid to long term.

Advice to small investors: Go for residential projects in which units are priced between Rs 80 lakh and Rs 1 crore. Three-BHK units are going to be the fastest-moving and appreciating products in 2013. Consider only established locations which have significant Grade A commercial real estate development by Grade A developers.

The author is Managing Director - Bangalore & Kochi, Jones Lang LaSalle India