West Bangalore Offers High Potentials for Growth

Bangalore is one of the fastest growing cities as evident from the fact that capital appreciation is the highest in Bangalore. Being driven prominently by the IT industry, the growth of the sector is also empowering the growth of housing demand. As more numbers of people migrate to the city for jobs, the demand for housing would be on the rise. Most people usually prefer staying in North Bangalore because of its proximity to the International Airport and other IT SEZs, south Bangalore too is quite prominent.

Western Bangalore took some time to become prominent but now there is no stopping it. The area has spread wide and far and much beyond the borders of traditional neighbourhoods such as Vijayanagar, Rajajinagar and Yeshwantpur.  The upgraded Bellary Road has improved connectivity of West Bangalore to North. The elevated expressway goes through the outskirts of the west and the Tumkur highway. Important locations of the North East are connected to West Bangalore via metro railway. The improvement in connectivity has led to increase in the speed of development of this area.

Property in Bangalore

  West Bangalore was earlier occupied by industrial and trading activities because of its connectivity inter-state through the Yeshwanthpur Railway Station and Kempegowda Bus Station in Majestic.  As both the railway station and bus terminus was in the west, industrial activity too was concentrated here. The capital appreciation of the area has happened mainly because of its closeness to the Central Business District comprising of Ulsoor Road, Richmond Road and Vittal Mallya Road etc. The transformation has happened only in recent times.

Growth and Metro Connectivity

The time taken to commute is mainly the deciding factor when someone chooses a home rather than the distance required to be covered. West Bangalore has benefitted greatly because of the presence of the metro railway. When this line gets connected to central hub, the acceleration in priced would be more rapid. Prior to the opening of the metro railway, the capital values in the region were around Rs 5000 or so. However, after the metro railway line was inaugurated, it shot up to Rs 8000 or so.

As Bangalore is a radial city, its growth has been in every direction. Therefore, connecting various areas with one another becomes a big hassle because of the growth in traffic every day. Even though roads are being widened, it won’t prove to be sufficient for the rise in traffic. Hence, the metro railway and the elevated roads are the only source of respite for easy commuting and improved connectivity.

Areas in the West would be much benefited by the metro and hence its growth would be fuelled further. Jalahalli, Magadi Road, Tumkur Road, Yeshwanthpur, Vidyaranyapura, Abbigere and Nelamangala shall benefit a lot from the connectivity via metro railway. The presence of good social infrastructure such as malls, hospitals, schools and colleges have also helped the area turn into a residential hub.

Pricing and Options

For a 2BHK property in Bangalore West whose size is greater than 1100 sq. ft., buyers will have to pay Rs 75 lakhs or so in Yeshwantpur. Three bed room apartments whose sizes are around 1850 sq. ft. cost a little more than Rs 1 crore while 4BHK flats in West Bangalore measure around 3100 sq. ft. and their price is roughly Rs 2 crores. Magadi Roads also has 2BHK apartments on offer which are sized a little more than 1000 sq. ft. and available for Rs 28 lakhs. For 3BHK flats which are around 1400 sq. ft., Rs 40 lakhs have to be shelled out. Nelamangala also has 2BHK flats on offer whose sizes begin from 700 sq. ft. or so would cost one around Rs 30 lakhs while for 3BHK flats whose sizes are around 1300 sq. ft., the price is around Rs 55 lakhs.

Tumkur Road has 2BHK apartments of 800 sq. ft. size starting at Rs 35 lakhs or so. The 3BHK flats which measure 1200 sq. ft. in size shall cost one Rs 50 lakhs or so. Jalahalli has 2BHK property in Bangalore which is around 1050 sq. ft. for Rs 41 lakhs whereas the 3BHK apartments which measure 1500 sq. ft. cost Rs 60 lakhs or so. Near Malleswaram, the 4BHK flats are available from Rs 3.5 crores and they measure 2800 sq. f.t

A lot of developers are starting off on niche projects near the Yeshwanthpur Metro Station. Two malls in Yeshwanthpur and Malleswaram provide for the needs of residents in West Bangalore while some projects close to the highway are being developed to have a retail and residential mix in future. Kengeri and Bidadi are also areas to look out for as they will come up as investment locations that offer good connectivity. Connectivity in these areas would get a boost primarily as they would be located near Mysore and the Bangalore Mysore highway is being planned to be widened. The connectivity to the satellite town via the Phase II of the Metro Railway shall also benefit Kengeri.

Dynamics for Demand 

The price of ultra luxury and luxury apartments is around Rs 10000 to Rs 15000 per square feet and they are available in Yeshwanthpur and Rajajinagar. The mid segment luxury apartments close to Yeshwanthpur Metro Staion are available in the Rs 6000 to Rs 8000 per square feet rate. The mid segment apartments in Rajarajeshwarinagar and Vijaynagar are available in the Rs 4000 to Rs 5000 per square feet rate. 

The price bracket of Rs 50 lakhs to Rs 1 crore is the safest market for catering to. Most of the demand for the Rs 1 crore flats comes from traditional businessmen, traders and industries while those employed in the IT and MNC companies look for middle segment apartments here. Top executives of MNCs and industrialists in this area look for residential options which cost more than Rs 1 crore.

Final Word

Realtors agree that there is tremendous growth potential in West Bangalore. A lot of premium apartments are expected to be constructed in this area because the elevated demand from the wealthy segment. The suburbs of Jalahalli and Tumkur Road have the potential of developing in residential hubs in the coming future. If more infrastructure projects are planned by the government here for the improvement in connectivity, the growth patterns of this area would become similar to that in North Bangalore. This would be the next best location to live in then.

Bangalore Tops Cities in Terms of Capital Appreciation

Real estate has always been considered to be one of the safest investments to make because price of land appreciates over time. The gain in capital values of land outweighs returns from other forms of asset and it is a secure one. For a very long time, Delhi NCR and Mumbai have provided buyers of property with the best possible appreciation in capital value. Post downturn years, the cities dominated by the IT industries such as Pune and Bangalore have moved ahead of the traditional cities when it comes to capital appreciation for residential properties. 

Data should that the maximum median capital appreciation has been clocked in Bangalore in the middle income residential segment of forty one percent between the first half of the year and the next period of the same year. The city that came in the second position was Pune with 28 percent. The increase in capital values for the premium properties in Pune was around 39 percent while in Bangalore it was 37 percent. Pune had topped the list for the country. As there is a lot of disparity between comparisons of residential prices in every city, it was classified that a property would be a mid income one if its capital value was less than Rs 5000 for a square minute. Anything higher than that would be premium property.

In terms of affordable housing and premium housing, Mumbai and Delhi NCR are towards the bottom of India’s well performing realty markets. Usually Delhi NCR and Mumbai have done well in the higher end segment but this time there was a 24 percent capital appreciation only. The two cities fell behind the affordable property market of Kolkata as well, which clocked in at 26 percent.

Markets which are driven by end users in Pune and Bangalore have exhibited the maximum mean rise in capital values whereas markets driven by investors such as Mumbai and Delhi NCR have not done very well. In the last three years, the IT sectors of India have shown a growth trajectory which has given rise to salary scales and job possibilities. There is a logical and distinct correlation between appreciation of property prices and the IT sector in the country. Metro areas which are largely dependent on the IT sector have seen a fair, consistent and generous demand for luxury and middle income housing. Cities driven by the IT sector are more evolved in terms of aspiration levels among house hunters, including increased exposure in international housing, improved purchasing power and standards or luxury along with awareness regarding environmental sustainability and other contemporary ideas.

Between the years 2008 and 2010, the prices of real estate in Pune and Bangalore had steadied which made the realty markets of these cities appear stagnant. Delhi NCR and Mumbai on another hand were peaking in terms of property prices. Pune and Bangalore have also gained from the NRI segment along with funding from private equity companies as Delhi NCR and Mumbai became unproductive.  Currently, Mumbai and Delhi NCR are facing price correction and stagnation.

The market for property in Bangalore has attracted the most amounts of private equity or PE investments in India in the former half of 2014 and has defeated the Delhi NCR region along with finance capital of India, Mumbai. There is very high demand for commercial and office spaces along with steady housing demand which has made the realty market of the city see PE investments elevate by almost 20 times year-on-year to roughly Rs 2005 crores. In the first 6 months of the year 2013, Bangalore had received private equity investment of almost Rs 103 crores. The real estate investment received by Mumbai has been around Rs 1140 crores while NCR Delhi has received Rs 490 crores and Chennai has received Rs 200 crores in the same period. Mostly availability of office assets on lease and steady yields has positioned interest level high.

The private equity investment share is expected to be significant in the years to come in Bangalore. A lot of the assets have very high occupancy rate and shall offer stable yields of roughly 9 percent that make them much attractive to investors. A 100 crore non-convertible debenture has been struck by Piramal Fund Management with Century Real Estate Holdings on 2 projects in the Garden City. This Tata Capital preceded this deal by investing almost Rs 470 crores for roughly 15 percent shareholding along and board seat in Vaswani Group and Shriram Properties which has raised Rs 100 crores almost from JP Morgan. Underwriting projects in Bangalore is easier as ticket size is quite reasonable. Almost 1 to 2 transactions are closed in a month although a reverse challenge in velocity is there of which one has to be careful. Piramal Fund Management are thinking of investing Rs 300 to Rs 400 crores for each deal in Bangalore, compared to earlier investments of Rs 100 crores.

 The Red Fort Capital group is making mid income projects which are priced between Rs 60 lakhs and Rs 4 crores as their targets in Bangalore. Even though the NCR Delhi and Mumbai are high margin and value markets, the most stable market that is driven by end users is Bangalore. Capital being churned around in the city is also quicker than other markets.

Some companies which are seeking transaction opportunities in the Garden City are MotilalOswal Private Equity, Milestone Capital Advisors, ShapoorjiPallonji, Blackstone and Xander. Milestone Capital Advisors invest almost 30 to 40 percent of their whole fund outlay in property in Bangalore and they are also evaluating numerous transactions for their latest Rs 500 crores fund which shall be launched in the next few months.

Market for property in Bangalore is growing as a number of projects have been started in different areas of Bangalore such as HSR Layout, Whitefield, and Bannerghatta Road etc. Infrastructure projects such as widening of roads and completion of various phases of the Metro Railway have also inspired investor and end buyers’ confidence which is why the market for property in Bangalore is booming.