Bangalore Insite Report Jan-Mar 2019

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Market Movers

Metro Phase 2 expansion gains momentum

With the settlement of land acquisition hurdles for the proposed depots, the work on the 72 km-long stretch of the Namma Metro Phase 2 has begun. The 128 km-long metro line is anticipated to become operational by 2024. As a part of Phase 2A project, the State has also approved the Outer Ring Road (ORR) line, connecting Central Silk Board Junction to KR Puram and KR Puram to Kempegowda.

Land conversion process goes online

The launch of a simplified affidavit-based online system for land-use conversion will reduce paperwork and expedite the process duration. Now, the time taken to convert land use pattern will be two months, as against six months to a year earlier.

Infra projects to begin on defence land

Bruhat Bengaluru Mahanagara Palike (BBMP) has received 11 acres of defence land to expedite multiple road infrastructure projects such as the construction of alternate stretch from Kavalbyrasandra Main Road to Modi Garden, development of road from Ejipura Ring Road to Sarjapur Ring Road and widening of Hosur-Laskar Road. The State also plans to execute several new projects worth Rs 8,015 crore under the ‘Nava Bengaluru Kriya Yojana’’.

Road widening projects underway

The much-awaited widening of the Tannery Road from 40 ft to 80 ft has finally commenced, benefitting the commuters in East Bangalore and those travelling to Kempegowda International Airport. Also, the land acquisition process has been initiated for the widening of the 3.6 km-long Begur Road, connecting Bannerghatta Road to Electronics City.

99ACRES OUTLOOK

The Jan-Mar 2019 quarter saw a burgeoning residential market in Bangalore with the sale of over 15,000 housing units. Upcoming infrastructure projects, especially the expanding metro network, helped keeping the market sentiment upbeat. Ready units continued to be the homebuyers’ first choice. Even as enquiries for under-construction units posted a hike in Jan-Mar 2019, the city reported negligible transactions in the segment owing to the much-awaited revision in the GST regime.

While the GST rate cut from 12 to five percent on the under-construction segment cheered homebuyers, confusion prevailed over Input Tax Credit (ITC), which led buyers to adopt a wait-and-watch approach until April 2019. Surplus inventory, majorly in the under-construction luxury segment, restricted price growth in the city to a negligible one percent, QoQ.

East and South Bangalore bagged maximum enquiries owing to their proximity to the IT corridors, improving metro connectivity and ample housing inventory. Despite the Quarter-to-Sell (QTS) the residential stock in the city coming down to 10.3 from 10.6 last year, the city has around 93,000 unsold housing units. Like other metro cities, Bangalore displayed a shortfall of almost 20 percent in the supply of affordable homes, i.e. homes priced within Rs 40 lakh. The addition of 50,000 affordable units under PMAY (U) in the State might help the city bridge this gap. This along with the quick implementation of revised GST rates, timely execution of upcoming infrastructure projects, and faster approval under RERA would ensure a realty revival for Bangalore.

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BANGALORE

The year 2019 started on a positive note for Bangalore’s real estate market with healthier sales volume, consistent housing demand and improved number of new launches than the previous quarter. While the ambiguities pertaining to GST rates kept property price hike limited to a percent in the city, QoQ, Bangalore recorded the second highest sales in India with over 15,000 units sold in Q1, 2019. The rental landscape continued to narrate a happy tale with an uptick in average ‘ask’ by three percent, YoY.

KEY HIGHLIGHTS

In line with the previous quarters, East and South Bangalore continued to garner maximum housing demand and sales across the city. Housing hubs such as Whitefield, Marathahali, Kadugodi and Varthur in the East; and JP Nagar, Kudlu Gate, Bommanahalli and Hosur Road in the South received maximum enquiries from the homebuyer community in the first quarter of 2019.

While affordable and mid-income housing categories accounted for almost 65 percent of the total housing demand, a dip in the supply of such apartments by almost 25 percent marred the buying sentiment. To trim the demand-supply mismatch, developers reduced the average unit sizes in newly-launched projects to match the ‘ask’ price in localities of North and South Bangalore such as Hennur, Thanisandra, Hebbal, Devanahalli. All these areas are well-connected to the Kempegowda International Airport and the Outer Ring Road.

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Bangalore-3The residential pockets of the eastern belt such as CV Raman Nagar, Varthur and Gunjur, along with Kudlu Gate in the South, topped the popularity charts, recording a five percent spike in property prices, each, QoQ. However, the suburban areas of Bangalore such as Marathahalli in the East recorded a negligible surge in property values. A popular hub in the South, Uttarahalli, saw prices dipping by a percent in Jan-Mar 2019 vs. Oct-Dec 2018.

The rental landscape remained the prime gainer due to the availability of fresh inventory across the IT hubs of East and South Bangalore. The expanding metro connectivity also played a key role in boosting the rental market in the city.
Kadugodi from East Bangalore topped the market with 11 percent growth in average rental values, YoY. Other prime localities, including Doddathoguru and Hulimavu from South, and Nagavara and Hebbal from North, garnered an upsurge of 10 percent, each, in average rental ‘asks’ in Jan-Mar 2019 vs. Jan-Mar 2018.

On the commercial leasing front, a dip in the supply of Grade A office spaces in prominent markets such as Whitefield and Electronic City, and robust demand from the IT/ITeS and start-up sectors are anticipated to lead to an upward revision in commercial rental values by the year-end.

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Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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  • Comments
  • A K singh April 27, 20198:38 pm

    I bought a 2 bhk unit in orchid Picaddilly in Thanisandra road being developed by Goyal hariyana group. Is it a wise investment in terms of growth and rental. Expected cost is around 70 on completion in July 23. Please review

    Reply
    1. Dhruv Mathur

      Dhruv Mathur May 1, 20195:51 pm

      Mr. Singh, from an investor’s perspective, Thanisandra seems a promising realty hotspot as it hosts several tech parks and IT companies which makes it quite ideal for service class people. Its proximity to Hennur road, Old Madras road, Outer ring road and Yelahanka makes it well-connected to the crucial zones in Bangalore. Also, there is no dearth of availability of civic utilities nearby, and some of them are known as Lulu Shopping Mart, Elements Mall, Cratis Hospital, Regal Hospital, Banaswadi Railway station, Kirloskar Business Park and Manyata Tech Park, Sinclairs High School, Rashtrothana Vidya Kendra. The capital values in Thanisandra have witnessed nearly 8 percent surge in the last year and currently range from Rs 4,700 to Rs 5,900 per sq ft. At last, owing to the upcoming infrastructure projects in Thanisandra such as Red Line metro from Gottigere to Nagawara and the PRR [Peripheral Ring Road], the property rates may go up in the near future.

      Reply
    2. Praveen Kumar Shishodia

      Praveen Kumar Shishodia May 1, 20196:06 pm

      Mr Singh, apart from investment, Thanisandra is a popular choice for working professionals since the area hosts tech parks and commercial centres along with an abundance of educational institutes. Mostly, Thanisandra gathers traction from working professionals and offers excellent social infrastructure and robust connectivity, thereby gathering a lucrative rental demand. If you decide to purchase a 2 BHK in MJR Pearl and once the project gets completed, you can place your property on rent and earn rental returns of 15,500 – 18,500 per month. Due to the project’s proximity to commercial centres such as Manyata Tech Park and Kirloskar Tech Park, and colleges like Ambigara Chowdaia College of Education, Indira Gandhi College of Nursing etc., finding a tenant in my opinion would be quite easy.

      Reply
    3. Iyer Associates Leading Property Consultant and Management May 15, 20196:00 pm

      Sir,if I make my client for Investment and Purchase Property in North Bangalore especially in Shriram Sameeksha one of best project kindly advice if it is right thing I am doing and they benefit out of it.

      Reply
      1. Dhruv Mathur

        Dhruv Mathur May 20, 201912:18 pm

        Shriram Sameeksha is a ready project and being located in Jalahalli east, it provides direct connectivity to major IT hubs in Bangalore such as Manyata and Kirloskar tech park. Also, there is no dearth of civic utilities availability, schools, hospitals, malls such as Kendriya Vidyalaya, Ryan international, Delhi Public school, Baptist and Ramaiah hospital, Vaishnavi Sapphire Mall, Orion Mall, Esteem Mall, etc are located within proximity. Neighbouring areas such as Hebbal, Peenya Industrial area, are easily connected via Cunningham and MG road. Also, Namma Green Line Metro from Nagasandra to Yelachenahalli passes close to this area providing metro connectivity to the residents from Jalahalli metro station. At last, owing to the proposed infrastructure projects such as Peripheral Ring Road, the elevated expressway from Krishnarajapura to Goraguntepalya and grade separator at Jalahalli Cross are likely to boost the capital values in the future. The property rates here vary from Rs 4,500 per sq ft and Rs 5,000 per sq ft. and due to its proximity to IT hubs and ease of nearby facilities availability, one can easily garner rental yields up to Rs 10,500 per month to Rs 12,000 per month for 2BHK configuration and a 3BHK unit ranges between Rs 13,000 per month and 15,000 per month.

        Reply
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