Bangalore Insite Report Jan-Mar 2015

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Bangalore Insite cover_Jan-Mar 2015

City Highlights

After recording a five per cent appreciation in the last two quarters, Bangalore slowed down in Jan-Mar 2015 and witnessed an average hike of two per cent. Neutral buyer sentiments awaiting price correction in the market led to slow absorption of housing units.

Significant price movements in Bangalore_Jan-Mar 2015

  •  Like most other metros, Bangalore realty market also recorded a unsold inventory of housing units, resulting in an overall drop in the number of new project deliveries. The number of new launches in Bangalore dropped by 30 per cent in Jan-Mar 2015, as compared to Oct-Dec 2014.
  • South and East Bangalore witnessed the maximum number of new launches. Presence of IT industry kept housing demand as well as supply healthy in these zones.
  • The luxury market continued to perform well due to robust demand from expats and top-management professionals of the IT companies.
  • The Karnataka Government, in its State Budget 2015-16, earmarked Rs 4,700 crore for development in Bangalore. Emphasis was laid on rehabilitation of slums and provision of affordable housing in the city.
  • The budget also revealed plans to construct important roads, subways, flyovers, bridges and under-bridges, skywalks and lakes that are expected impact the city’s real estate market positively.
  • To bring down land registration costs, a uniform stamp duty of two per cent was proposed by the government.
  • Development of industrial corridors, affordable property and improved connectivity propelled housing demand, and resulted in price growth in West and North Bangalore.
  • The city continued to record maximum supply for apartments in the mid-income housing category (Rs 40- 60 lakh) and high-income housing category (Rs 60 lakh - Rs 1 crore). Both the categories clocked a total supply of almost 30 per cent, each. 

Key influencers in Bangalore_Jan-Mar 2015

East and South Bangalore

Capital Analysis

Top performers in East and South Bangalore_Capital Values_Jan-Mar 2015

  •  Growth in absorption of commercial spaces in South and East Bangalore led to increased demand for housing, and thus, three per cent growth in property prices this quarter.
  • Banashankari and Subramanyapura in South Bangalore recorded a price rise of 19-20 per cent. Backed by the Bangalore Development Authority (BDA), Banashankari is preferred for its seamless approach by the major highways such as Outer Ring Road (ORR), Kanakapura Road, Mysore Road and NICE Ring Road. Planned connectivity by Namma Metro also spiked property prices in the areas.
  • Price competitiveness to neighbouring localities like JP Nagar and easy connectivity by NICE Ring Road kept the market robust in Subramanyapura.
  • Offering affordable and mid-income properties, Hosur Road recorded a 10 per cent hike this quarter.
  • Cooke Town, Kalyan Nagar and Channasandra from East Bangalore emerged as the top grossers with 13-17 per cent price appreciation. Proximity to the planned Line 4 under Phase 2 of Namma Metro maintained buyer’s interest.
  • With homebuyers preferring peripheral locations, prices in Akshaya Nagar in East dropped by 20 per cent, and in BTM Layout in South Bangalore by 10 per cent.
  • Slow absorption of residential apartments on Begur Road led to a drop of nine per cent in property prices.

Rental Analysis

Top performers in East and South Bangalore_Rental Values_Jan-Mar 2015

  •  Year-on-year comparison of rental values revealed that the East and South zones together recorded an average hike of five per cent each. IT industry catalysed demand for rental properties in these zones.
  • Banaswadi from the East recorded the maximum rental hike to the tune of 20 per cent in the last one year.
  • The planned radial development of Bangalore ensured all-round growth along the ORR, including areas such as Banaswadi and Kadubeesanahalli, which recorded a 13 per cent annual rise.
  • All areas proposed to be a part of the metro corridor recorded healthy rental demand, especially Whitefield. However, an oversupply of residential properties led to an insignificant rise in rental values by six per cent.
  • Proximity to IT companies and easy connectivity kept rental demand robust in southern areas such as Uttarahalli, Koramangala and Bannerghatta. Uttarahalli also gained preference due to price competitiveness.
  • Kadugodi recorded the maximum dip in rental rates (13 per cent) due to lack of public transport and insufficient social infrastructure.
  • Southern localities such as Hosur Road, BTM Layout, Arakere, Bommanahalli and Haralur Road recorded a dip of six to seven per cent in the rental values due to increasing traffic snarls.

North, West and Central Bangalore

Capital Analysis

Top performers in North, West, Central Bangalore_Capital Values_Jan-Mar 2015

  •  Increasing industrial activities, growing IT companies and affordable properties were the major growth stimulators for North and West Bangalore. The two zones, thus, recorded a one to two per cent growth in housing prices.
  • High ticket inventory and spilling housing demand led to a downfall in Central Bangalore, where average prices dropped by four per cent.
  • About 80 per cent localities in top performers were from the North. However, the top grossers were from the West – Magadi Road and Tumkur Road, which recorded a price hike of 16 per cent and nine per cent, respectively.
  • Improved connectivity by Namma Metro fuelled residential demand and property prices on Magadi Road. Tumkur Road benefitted from proposed metro connectivity, proximity to the ORR and the development of SEZs.
  • Planned industrial development and healthy investment potential drove buyers to Jakkur, Hebbal and Jalahalli in the North, which recorded seven to eight per cent hike.
  • With peripheral localities around Central Bangalore coming up with affordable luxury housing options, the demand and subsequently prices for such inventory in Richmond Town went down by close to 10 per cent.
  • From the North, Hennur and Hennur Road recorded the maximum dip of four to six per cent. Whereas, from the West, Nagarbhavi emerged as the top non-performer with five per cent drop.

Rental Analysis

Top performers in North, West, Central Bangalore_Rental Values_Jan-Mar 2015

  •  Demand for rented accomodations remained robust in Central localities due to their proximity to Namma Metro and easy accessibility to all parts of the city. Both Richmond Town and Frazer Town recorded a decent growth of eight to 10 per cent between Jan-Mar 2014 and Jan-Mar 2015.
  • Jalahalli from North Bangalore was the top performer in the current quarter with a price rise of 15 per cent. Planned connectivity by the Namma Metro improved customer sentiments, thereby, encouraging leasors to increase rental rates.
  • From the West, Raja Rajeshwari Nagar recorded the maximum hike in rental values (eight per cent). Its strategic location near the NICE Ring Road makes it a preferred rental destination for those travelling to the IT companies in the South.
  • Namma Metro continued to show its impact on the rental rates of Malleshwaram as well. While Oct-Dec 2014 versus Oct-Dec 2013 analysis indicated a 19 per cent increase in rental values, the Jan-Mar 2015 versus Jan-Mar 2014 analysis showed a hike of eight per cent.
  • Other northern localities which recorded a significant rise in rental rates due to availability of affordable options were Yelahanka, Yelahanka New Town, Jakkur and Sahakara Nagar. Sahakara Nagar also benefitted from improved metro connectivity.

Supply Analysis

Bangalore caters to a lot of housing demand from migrants working in IT industries located in the city. Residential apartments, hence, are the most demanded as well as supplied property type in the city.

Availability of different property types

Supply of property type in Bangalore_Jan-MAr 2015

  • In comparison to the previous quarter, supply of various property types such as apartments, builder floors and independent houses/villas saw insignificant changes in the current quarter.
  • Residential apartments constituted almost 80 per cent of the entire market with maximum demand and supply noted in peripheral areas closer to the IT hubs in the city.
  • Independent houses/villas were the next most supplied in the city (16 per cent market share). While this property type belonged to the premium category, supply for these went up insignificantly in the last three months.
  • Builder floors were the least supplied in the city with only two per cent market share.

 

Availability of Property by Budget

Supply by Budget in Bangalore_Jan-MAr 2015

  • Mid-income housing category (Rs 40-60 lakh) and high-income housing category (Rs 60 lakh–Rs 1 crore) were the most supplied in the city. Both the categories garnered almost one third supply each. Almost half of the total supply in each budget category was under construction.
  • In case of mid-income housing, availability of ready-to-move-in properties went up considerably by four per cent in this quarter.
  • The affordable housing segment (property priced up to Rs 40 lakh) and luxury housing segment (Rs 1-2 crore) recorded equal supply of over 15 per cent each.
  • Supply of affordable housing dropped from 19 per cent in Oct-Dec 2014 to 16 per cent in Jan-Mar 2014, whereas that of luxury housing went up slightly owing to higher preference for premium properties.
  • Out of the total properties supplied in the affordable budget category, close to 60 per cent were under-construction. However, the share of ready-to-move-in affordable homes went up considerably in this quarter.
  • Availability of ultra-luxury properties (Rs 2-5 crore) went up by three per cent in the current quarter and reached 10 per cent, as compared to seven per cent in Oct-Dec 2014.
  • Despite a considerable hike in supply, ultra-luxury properties remained the least supplied in the city owing to less takers. The budget category of Rs 1-2 crore recorded a dip in new launches as the number of under-construction homes in this bracket went down by almost six per cent.

BHK-wise Distribution of Property

Supply of configuration in Bangalore_Jan-MAr 2015

  • Given the young and expat population residing in the city, demand for mid-sized homes has always been high in Bangalore. Houses with 2BHK units remained the most popular choice amongst developers and made up almost half of the total inventory available for sale.
  • Close to 57 per cent of the total 2BHK units were under construction, as compared to 60 per cent in the previous quarter.
  • Availability of 3BHK units followed 2BHK units with 40 per cent supply, which remained stable over the last three months. The category had an almost fair distribution of under-construction and ready-to-move-in units.
  • Supply of 4BHK units increased slightly and reached nine per cent in Jan-Mar 2015. The ratio of ready-to-move-in as compared to under construction 4BHK units was 45:55.
  • Houses with 1BHK units remained the least supplied in the city with hardly two per cent market share. More than half of these units in this quarter were under construction. There was a rise of four per cent in supply of under construction 1BHK units.

Ready to move vs Under-construction

Ready to move vs under construction property in Bangalore_Jan-Mar 2015

  • The city recorded an increased supply of ready-to-move-in properties. Overall, supply of these units went up by four per cent registering 47 per cent as compared to 43 per cent in the previous quarter.
  • Supply of under-construction properties dropped to 53 per cent this quarter, from 57 per cent, indicating slow rate of new launches in Bangalore.
  • Out of the total number of under-construction properties, maximum were offered in the budget range Rs 40-60 lakh (mid-income housing), closely followed by Rs 60 lakh–Rs 1 crore (high-income housing).
  • The ultra-luxury category (Rs 2-5 crore) saw least takers and hence, lowest number of under-construction properties (eight per cent). However, the number of homes constructed in this category went up by five per cent, as compared to the previous quarter.
  • In terms of property configuration, 2BHK units captured more than half of the market share of the total under construction properties. Houses with 3BHK units followed 2BHK units with almost 40 per cent inventory of the total under-construction properties. Properties with 1BHK units continued to be the least constructed in the city.  

Annexures

CAPITAL VALUES

Locality

Jan-Mar 2015

% Change

RENTAL VALUES

Locality

Jan-Mar 2015

% Change

 

Akshaya Nagar

3150

-21

 

Banaswadi

15

20

Banashankari

7450

20

Bannerghatta

14

14

Bannerghatta Road

5000

6

Begur Road

12

8

BTM Layout

4600

-10

BTM Layout

18

-6

Cooke Town

10050

17

Cooke Town

22

5

Electronic City

3750

-1

CV Raman Nagar

14

7

Hebbal

6250

8

Electronic City

14

7

Hosur Road

4400

10

Frazer Town

21

10

HSR Layout

5800

-7

Hebbal

17

6

Indira Nagar

9100

5

Hennur Road

15

0

Jayanagar

10550

1

Hoodi

15

7

JP Nagar

5550

7

HSR Layout

18

6

Kanakpura Road

4600

10

Indira Nagar

20

5

Koramangala

8200

3

Jayanagar

19

5

KR Puram

3600

6

JP Nagar

15

13

Magadi Road

5100

16

Kanakpura Road

13

8

Marathahalli

5650

3

Koramangala

25

16

Ramamurthy Nagar

4250

-6

Marathahalli

17

12

Richmond Town

10600

-9

Raja Rajeshwari Nagar

12

8

Sarjapur Road

4900

7

Ramamurthy Nagar

11

9

Subramanyapura

4750

19

Richmond Town

26

8

Tumkur Road

4800

9

Sahakara Nagar

15

7

Uttarahalli

3500

-5

Uttarahalli

11

18

Varthur Road

4000

7

Whitefield

18

6

Whitefield

5050

1

Yelahanka

12

8

Yelahanka

4700

2

 

 

 

*Capital values represent quarterly change.
*Rental Values represent annual change.


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