Mumbai and Delhi, in that order, have been harbingers of real estate evolution in the country, and most other cities have looked at these for ideas and models to fuel real estate growth. Delhi, of course has grown beyond its boundaries and now NCR market provides some very interesting case studies on how one city could provide impetus for growth to three to four big offshoots like Noida/ Gurgaon/ Faridabad etc. The two biggest asset classes in real estate, residential and commercial have showed slightly different trends in these cities. For more than the last few decades, Malabar Hills and Marine Drive have enjoyed being the toniest addresses for residential real estate in Mumbai, and so has Lutyens’ Delhi. Even though these cities have developed fine residential real estate assets in relatively newer parts of the city, the charm of toniest (read priciest as well) addresses, probably because of its recognition of being the address of the pedigreed wealthy, have continued to be the same, and as it appears today, their pre-eminent position is not under any real threat. This has been validated by the recent 100+ crore transactions that have taken place in these markets reinforcing their position as the most expensive residential markets in the country.
Commercial real estate, however, has a different story to tell. Nariman Point that used to be the epicenter of commercial development in Mumbai and Connaught Place likewise in Delhi have not remained the same. Bandra Kurla Complex and Parel areas have perhaps become the first choice of commercial occupants in Mumbai and Delhi has seen large scale migration of occupants to Gurgaon and Noida. The reasons may be many, like changing business environment creating demand for better quality or type of real estate spaces, or growth in service sector creating more demand for office, or even larger floor plates being demanded by new age industries like IT/ITeS. However, there is no denying that the center of gravity for commercial spaces has shifted in the two largest urban conglomerations in India.
Bengaluru, as Bangalore is called now, absorbed more real estate than Delhi and Mumbai put together in the year 2014 and this is no mean achievement. Those of us who went to school in eighties would recall of Bangalore as capital of Karnataka and nothing more. However, no real estate commentary on India today can leave Bengaluru out and still claim to be a credible. Bengaluru too has been witnessing the shift in commercial centers. In the eighties it was Electronic City, which then shifted to Whitefield in late nineties. The first decade of the new millennia ended with Outer Ring Road (ORR), especially the Sarjapur-Marathahalli belt gaining the top spot in the pedestal as the location of choice of office spaces in the city. ‘The cheese has been moving’ that is for sure, the question now is where it moves to next?
The most logical answer seems to be North Bangalore. This story is about crystal gazing but not of the mystical kinds and hence we need to know why our crystal ball shows North Bangalore as the future. Going back to history once again, Electronic City was a Government initiative and so was ITPL in Whitelfied. ORR too saw development when Karnataka Industrial Areas Development Board (KIADB) made lands available for IT Parks’ development and Government through Bangalore Development Authority (BDA) created the ORR. Private real estate developers have played a big role, no doubt; however, the ball was set rolling in all these cases by the Government. Commercial Real Estate development led to demand of housing and retail and schools and hospitals and today all these locations are self-sufficient in terms of real estate requirements that individuals, families or a society would need.
Government has created not one but two large magnets in North Bangalore. One that is above eye level is obviously a large greenfield airport on about 4,700 acres of land. Airport itself is going to create close to 40 million sq ft real estate over next decade or so. The one that seems to be below radar is actually about 3,000 acres of space in north Bangalore that is trifurcated into Aerospace Park, Hardware Park and IT Park. To put this 3,000 acres in perspective, Electronic City is about one-tenth this size. So the magnet is really big. In addition, in all the previous magnets (Electronic City, Whitefield and ORR) the commercial development was followed by development of other asset classes like residential, retail etc. However in North Bangalore, residential real estate is already coming up in a big way, hospitals, malls and schools are present and being added as well.
If that is not enough to prove anything, we as real estate consultants can see the trend that large occupants who are either looking at new spaces or at consolidation have already been evaluating options in north Bangalore.
All in all ‘the cheese is moving’ and it is looking North.
