Bangalore emerges as safest property market

During the year 2011 when almost all other matured property market witnessed dip in transaction and price correction was on everyone’s lip, Bangalore registered both healthy transaction as well as upward price movement. While the home loan interest rate hikes are dampening the property market in other parts of the country, sales are steady in Bangalore because there has been substantial wage inflation too.

Bangalore typically has first home-buyers in the 27-35 years of age. “Younger home-buyers are willing to take the rate hike,” says Archana S. Bhargava, Executive Director, Canara Bank.

Some property analysts believe Bangalore is possibly the safest location for investments in the world. Prices do not skyrocket or get hyped here and they do not go downwards too like they have in many other prominent locations in India. This is because Bangalore is a market where most of the property purchases are by end users and not speculators. Speculators treat it as a pure investment for financial gains.

A leading real estate company conducted a study on the pattern of first purchases (purchase straight from developer) by end-users. The study found a surprising and comforting factor that 81.2 percent of first purchases in Bangalore were by end-users and not speculators or investors who look for just financial returns. This figure in locations such as Mumbai could be as low as 40 percent.

The advantage of end-users buying more is prices do not appreciate or depreciate at abnormal percentage across the city. This is comforting factor for a homebuyer since the prices would be stable and would move upwards or downwards within a small band. Even during the recession, the salability in Bangalore property was quite visible. Also, the market here is not driven by economic sentiment in some other parts of world but by the actual demand and supply situation in the particular location where the project is located.

Bangalore real estate has, of late, seen a spate of transactions where high networth investors (HNIs) have scooped up fixed rental income assets. Traditional business families from Kolkata and Uttar Pradesh, who in the past financed developers in cities like Chennai, have moved their capital in Bangalore in recent years. A Kolkata-based investor has acquired 2.17 lakh sft of commercial space from Embassy Property Developments for Rs 141 crore. The office space at Embassy Paragon in Bangalore’s IT suburb Brookefields is occupied by tech giant Intel.

The Silicon Valley of India is also witness to more and more land being dedicated to the establishment of tech parks and commercial real estate Grade-A office space. According to global workplace solutions provider Vestian CEO (Asia Pacific) Shrinivas Rao, “In the last five years, around 50 million sq ft of commercial real estate Grade-A office space has been absorbed, out of which more than 75 per cent has been taken by IT/ITeS.”

Bangalore has also seen an escalation in rents of residential apartments during Q2’11 (April-May-Jun-2011) over Q2’10, according to the real estate portal 99acres.com. The rate of appreciation differs in each micro market but most localities have witnessed double digit growth.

“The commercial property prices in Bangalore are more affordable compared to those in NCR and Mumbai. Tenants here are more stable and pedigreed, given the dominance of the IT industry. And these are huge positives for HNI investors,” says Anuj Nautiyal, Executive Director, Redwoods Capital, a real estate brokerage and asset management firm.

He reckons that Bangalore may now be the top metro in terms of HNI transactions by volume even though Mumbai and NCR would outstrip it by value. Standard Chartered Bank, Kotak Mahindra and ICICI Securities are pushing Bangalore’s commercial real estate story to their private banking clients and often syndicating deals on their behalf for 10-12% annualized return. The city’s realty is seen as more competitive and open, which often enables investors to wrest better deals.

Now that metro rail has zoomed across Bangalore, the real estate industry in the city is also seeing property prices zoom. From Old Madras Road to Byappanahalli, realty has zoomed up by the sq ft – from Rs 3,000 to Rs 6,000 per sqft. Developers as expected are now rushing to start projects along the first phase of metro. What is getting property developers really excited is the second phase of Bangalore metro which will be launched in December 2012. This phase will connect most suburbs to the commercial hubs of the city. Property prices in these areas are increasing by 10 to 15 per cent in anticipation of the metro.

DLF sells 350 flats for Rs 500 crore in Gurgaon

DLF, the country’s largest realty firm, has sold 350 flats worth about Rs 500 crore in a luxury housing project at Gurgaon.

The housing project ‘The Primus’, which is part of a 450 acre integrated township – DLF Garden City, was launched yesterday and all the flats were sold on the same day.

According to sources, the company achieved a sales booking of about Rs 500 crore from this project.

When contacted, a company spokesperson said: “We have received overwhelming response for this project. The company got more applications from customers than the number of flats it offered.”

DLF has earmarked an investment of Rs 8,000 crore to develop the integrated township at Gurgaon within 2-3 years.

The proposed township – DLF Garden City – will be spread over sectors 86, 87, 90, 91 and 92 (new Gurgaon), and will comprise of group housing, commercial and plotted development.

The Garden City will have plotted development projects, namely The Primus, Regal Gardens and New Town Heights, besides housing a commercial complex — Galleria 91.

As per plans, the project will offer plots of different sizes ranging from 250 to 502 sq yards.

Besides, the institutional sector will house educational, cultural, religious and healthcare facilities.

DLF is currently constructing 3,200 apartments in about 100 acres of this townships.

The company has total developable potential at 349 million sq ft and currently 45 million sq ft of projects area are under construction.

DLF seeks MCG nod for 3 Multi-level Parking lots

There could be respite from parking woes to commuters, especially for those working in the Cyber City area in the coming days.

DLF has sought approval from the Municipal Corporation of Gurgaon (MCG) to construct three multi-level car parking areas – two in Cyber City and one in DLF City Phase V. At present, there is not a single multi-level parking lot in the city. The MCG has been claiming that it would build one such parking lot in the old city but the plan has remained on paper for the past three years.

DLF, meanwhile, has constructed two such lots in Delhi. While the one at Sarojini Nagar is already operational, the trial runs are on at the other one in Connaught Place.

All the three parking lots will be 18 metres high and the builder has sought the fire safety NOC from the corporation. According to MCG officials, the matter is under consideration and they are verifying if the plan adheres to the building code.

“Since no such structures exist in the city, we are carefully going through the proposal before issuing the no-objection certificate. We are also consulting the urban local bodies department and have sought their comments,” said an official.

DLF authorities meanwhile say that they are awaiting the response of the municipal corporation.

“Multi-level parking is the need of the hour since there are so many vehicles getting added every day and the parking space is decreasing,” said an official. Even though there are a few parking lots in the Cyber City area, commuters get fleeced as the parking operators charge at will. “Parking remains a sore point in this area which boasts several multinational companies. We have clients visiting the area almost every day and it is quite embarrassing when they can’t find a decent place to park their cars,” said Subashish Ghosh, an MNC executive.