Real growth in real estate

By Nandita Raman, Nitindra Bandyopadhyay, Priyanka Maheshwari and Pallavi Ail

South Bangalore is facing a realty boom, with the Namma Metro serving the expanding populace there.

BANGALORE (Nov. 28)—Jadayappa, a farmer from Devegere village in rural Bangalore, will soon be the proud owner of a house more comfortable than he ever dreamed of living in after he sold a little over an acre of his agricultural land to a real estate agent for Rs. 630,000.

Like Jadayappa, many farmers across Bangalore are selling their land because they can make more money from selling it than cultivating it.

“I had no one to look after my land,” Jayadayappa said. “My sons are not interested, so I just decided to sell off the land, and now I have money to build a house.”

The real estate agent, a Mr. Kumar, has divided the land into 60 smaller plots and plans to sell each plot for Rs.350,000 for commercial purposes.

Bricks and mortar turning to gold

This is the current scenario of real estate in Bangalore. Soaring land prices are making every property a potential jackpot. If you bought a piece of land a few years back, you could well be a rupee millionaire now.

As Bangalore enjoys pleasant weather, has a cosmopolitan reputation and is the most modern of South Indian cities, many foreign firms decided to set up shop here. This has led to a huge nonresident Indian population.

According to MagicBricks.com, a leading real estate portal, with the revision of property guidance values coming into effect, most localities in Bangalore could see an upward revision of 15-20 percent in property values. This is likely to impact property buying in the city.

IT industry behind boom

The main reason for this boom is the IT industry. As more and more companies set up shop here, the city started expanding. Areas like Electronic City, Bannerghatta, Sarjapurand and Koramangala are all developing and are among the hot locations in which to buy a house.

Builders are looking southward as the city tries to adjust its ever-widening girth into the cramped confines of Bangalore city limits. The borders are being redrawn as demand for residential options for techies in city are running out. North Bangalore is no longer a viable option thanks to the “lack of a quality market,” property valuation and advisory firm CB Richard Ellis said in a research report.

Luxury apartments with all sorts of amenities including swimming pools, recreation centers and parks are springing up in different parts of the city for people to choose as per their convenience.

“The price for residential is Rs.3,000 to Rs.5,000 per square foot and for commercial it is Rs.6,000 to Rs.8,000,” real estate agent Manjunath (name changed), said about the property prices on Bannerghatta Road. “There has been an increase in the rates from last year.”

Ever since the Meenakshi Mall opened on Bannerghatta Road, the demand for housing in the area has been brisk.

Koramangala now a happening place

A few years back, these areas were not developed and access to the city center was difficult, but Koramangala is now one of the poshest places in Bangalore to live in. It is a hub for students and has an array of restaurants and shopping malls.

Malls, hospitals and schools have also sprung up with the advent of more demanding consumers. The connectivity to these parts has improved tremendously. Bangalore Metropolitan Transport Corporation has introduced Volvo buses to and from these areas that ensure people a comfortable ride home.

With the metro coming into the equation, Mysore Road has become another hot spot. The adjacent areas of Rajarajeshwari Nagar and Kengeri are seeing a commercial boom, and demand for land in this area is high. According to Zamanzar, a real estate portal, the average prices in Rajarajeshwari Nagar is Rs.3,081 per square foot.

High salaries paid to white-collar workers in Bangalore are boosting demand for luxurious homes in high-rises across the "Garden City."

According to MagicBricks, the metro railway will help ease traffic congestion in the city, along the Old Madras Road, which provides connectivity to the city’s manufacturing (in and around Hoskote) and IT hubs such as Whitefield and International Technology Park, Bangalore. Some of the upcoming residential localities that will benefit from this boom are K.R. Puram, Kasturi Nagar, Ramamoorthy Nagar and C.V. Raman Nagar.

A real estate market review report issued by CB Richard Ellis for the first quarter of 2011 says, “With no fresh supply infused or likely to be infused in the Extended Business District (EBD) of Indira Nagar, Koramangala, Old Madras Road, C.V. Raman Nagar in the near term, most companies have plans to relocate to peripheral markets of Outer Ring Road (ORR) and Whitefield for furthering their expansion and consolidation plans.”

Rents also rising

It is not just the purchase prices that are on an upward trend. Rental values, which are inversely proportional to buyers’ demand, are also riding the upward graph.

“As most of the projects that are nearing completion or are under construction have registered healthy pre-commitments on the ORR stretch, quoted rentals have witnessed an upward movement in the range of 4-5 percent and are expected to continue to increase in the coming quarters as well,” said CB Richard Ellis.

The reason people are able to afford property is their salary levels. An IT employee earns about Rs.70, 000 a month.

“I am looking for an investment in Bangalore. I will purchase a house in Electronic City since it’s close to work and there is good connectivity,” said Pramod Emjay, an employee of HSBC Bank. “Some agents also told me it would be a good investment as the prices are increasing all the time.”