The local market, among the most stable realty markets in India, recent times have seen a sense of cautious optimism from both the consumer and developer front.
When the Lehmann crisis shook most global economies, all major sectors felt the blow, particularly the finance and IT sectors. Despite IT still feeling the heat of recession in India, the realty business bounced back to buoyant levels soon enough. This was particularly true for the Bangalore market.
“As seen today, the market here is fairly stable, there has been a sense of cautious optimism on the residential and commercial front, but we have seen reasonable growth over the last 2 years,” said Avinash Rao, regional director - south, Knight Frank property consultants.
So while the the local real estate market has been known for its stability, in stark contrast to cities like Mumbai and NCR, we asked industry experts for insights into what the future holds...
“Among the major trends that I see panning out in the years to come is primarily the decongestion of the city centre or the CBD (Central Business District),” said P Ravindra Pai, managing director, Century Real Estate. As has been witnessed in cities like Mumbai and Delhi, both residential and commercial space will move out towards the peripherals. In line with the historical trend, majority of activity on the development front is expected to happen in North Bangalore, in the vicinity of the new airport.
“According to me the largest infrastructure growth in the city will happen in the North in the next decade. We are already seeing a build up to this with the elevated road, metro work, improved public transport etc in the region,” Pai added.
Bangalore’s landscape is set to undergo a significant change in the future, also witnessing a growth in all directions. Micro-markets like Hebbal in the North and KR Puram in the East are likely to be growth hubs for the residential segment with major investments being made in the region.
“South Bangalore has had the highest residential activity over the last 3-5 years, this will continue, however there will be a slowdown in the rate of growth,” Rao said.
Providing more insight on the scenario, he added that North Bangalore, specifically Hebbal, will also see reasonable activity on the commercial front.
The local market, among the most stable realty markets in India, recent times have seen a sense of cautious optimism from both the consumer and developer front. Buyers expect greater value for their money, they want to get more out of their investments, and are willing to shell out a few extra bucks to get the right value. On the developer front, there is a similar sentiment, with builders willing to give consumers the right value proposition for money.
The city has an entire array of product offerings to meet varied customer demands, ranging from budget to high end luxury housing, priced anywhere between Rs 30 lakh to 10 crore. However, the most popular segment remains in the Rs 50 lakh - 1 crore range, where demand is significant with robust market absorption.
“We can safely say that the buzz word for the next couple of years will be luxury and value homes as there is soaring growth in IT/ITES and SEZs that stimulate the demand for quality homes,” opined Sanjay Raj, ED & CEO, Golden Gate Properties Ltd.
A major trend that will emerge in the run up to 2020 is the increasing popularity of mixed developments. As HR Girish, CEO, Vakil Housing, put it, “Bangalore will see higher absorption of
Residential/mixed use space, more so in Gated community and well planned Group Housing in upcoming areas where many land-banks are seeing good mega-projects.”
Industry folk agree that it is still too early to predict the outcome of these projects, though many are optimistic of a good response. “Ideally integrated townships should do well. With a mix of office and retail space along with residential complexes, developers are bringing every experience at the consumer's doorstep,” reasoned Rao.
On the commercial front however, the picture is not as rosy. This is largely down to the fact that the overall global economic scenario needs to be factored in while considering commercial property absorption. The sector has not seen significant growth in line with the last financial year, owing to greater cautiousness from the consumers. Being impacted by the performances of the European and US markets, businesses have not expanded the footprint much.
While the investments per square foot aren't as high as they should be, analysts say that absorption and investment rates have remained fairly stable in recent times, and aren’t expected to witness any major fluctuations going forward.
Going forward, being an end user market, Bangalore will continue to have a strong market for both budget and luxury housing. The current property rates in the city are around the Rs 5000/sft range. In the years to come, there is expected to be a greater degree of luxury and super luxury developments cropping up.
“Property prices are set to double in the next 4 years in all segments. The sector is likely to experience 2-3 cycles of boom and recession in the coming years,” Pai said. The realty industry could experience growth rates of 10-12 percent year on year, with prices set to increase 10 fold by 2020.
The future of the industry looks bright, with dynamic growth on the horizon.
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