An Overview of Bengaluru’s Real Estate

According to the 2017 report of Emerging Trends in Real Estate Asia Pacific, published by the Urban Land Institute, Bengaluru is one of the top ranked cities for prospects in terms on both investment and development. The City has witnessed phenomenal growth due to migration in the last few decades to become the hub of the Indian IT industry. Many experts have indicated that Bengaluru’s real estate market has been relatively stable and has seen neither violent fluctuations nor crashes. Bengaluru has witnessed growth in all the sub sectors of real estate- housing, retail, hospitality and commercial. This growth in real estate is complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations.

For investors looking for less volatile market with long-term horizon, Bengaluru provides an attractive investment option. There is minimal loss of rental income as duration to identify or replace tenants is low. There has been investor interests for capital appreciation as well, especially in certain sub markets of Bengaluru.

Growth Contributors

Bengaluru’s real estate market is growing aggressively in the last two decades. This City scores over many other Indian cities for various reasons; pleasant climate, cosmopolitanism and growing knowledge economy. Besides being the Information Technology (IT) hub, Bengaluru has a multi-cultural population with good social infrastructure, excellent educational institutes and constantly upgrading physical infrastructure.

Real estate emerged as a major player in the economic growth of the city. The city added nearly 1,500 new apartment complexes within the last two years. There are some key reasons that supported the rapid development of Real estate sector in Bengaluru:

  • Bengaluru is the third-largest hub for High Net worth Individuals (HNIs).
  • Bengaluru has a large base of expatriates who live and work in the city.
  • A growing base of young professionals with rising disposable incomes and substantial global exposure has provided an immense opportunity for development across the real estate segment.
  • With multiple economic activities, the city has grown from a singular nuclear structure with a Central Business District (CBD) to a multi-nuclear structure with several Suburban Business Districts (SBD) and Peripheral Business Districts (PBD).
  • The City being an important industrial town has significant presence of manufacturing, automobile and textile companies.
  • The mid-segment is mainly driven by individuals working in the IT and ITES industry. The main driving factors for this segment are social infrastructure, proximity to workplaces, good physical infrastructure and access to medical and educational facilities. Some of the key micro markets for mid segment housing are Whitefield, Sarjapur Road, Electronic City and a few areas in North Bengaluru.
  • Affordable housing has seen constant demand on the outskirts of Bengaluru. Availability of large land parcels at lower price points has encouraged these developments. Areas such as Mysore Road, Hosur Road, Kanakpura Road have witnessed high demand for this segment. The planned Metro Rail and Peripheral Ring Road have also increased the demand on the outskirts of Bengaluru.

Administrative Framework

Bengaluru’s Local Planning Area is conceptually into three main ‘rings’ for the consideration of zoning and regulations. The inner core of the city falls under the purview of the Bruhat Bengaluru Mahanagara Palike (BBMP). Land in the second ring falls under the purview of the Bangalore Development Authority (BDA), and land belonging to the outer ring is the concern of the Bangalore Metropolitan Region Development Authority (BMRDA).

For layouts, BDA is the plan-sanctioning authority for all areas under the purview of the BBMP as well as the BDA. The BBMP itself has no powers to sanction layout plans but can sanction the construction of apartments, individual houses and commercial buildings. BBMP administers and collects property tax for properties falling under the jurisdiction of the BBMP.

The BMRDA, through its five Local Planning Authorities (LPA) namely, Nelamangala, Kanakapura, Magadi, Anekal and Hoskote along with Ramanagara-Channapatna Urban Development Authority (RCUDA), Bangalore International Airport Area Planning Authority (BIAAPA) and Bangalore Mysore Infrastructure Corridor Area Planning Authority (BMICAPA), are the plan-sanctioning authorities for all properties falling in the outer ring.

BIAAPA deals with the ‘island’ containing the airport along with parts of Bengaluru North, Devanahalli and Doddaballapur. The BIAAPA is a plan-sanctioning authority concerning land use only around the airport. The organization primarily focusses on the operation of the airport and the flight paths of aircrafts before sanctioning any land development plans in that area.

BMICAPA is the plan sanctioning authority for areas that are in the Bangalore Mysore Infrastructure Corridor. This corridor includes parts of Kengeri, Uttarahalli and Yeshwanthpura.

All lands falling beyond the jurisdiction of the BMRDA are considered as rural areas, and such areas come under the purview of the Directorate of Town and Country Planning (DTCP).

Bengaluru Residential Market Overview

The Bengaluru residential market is broadly divided into five zones: Central, East, West, North and South.

Zones

Major Residential Destinations

Central M.G. Road, Lavelle Road, Langford Town, Vittal Mallya Road, Richmond Road, Cunningham Road, Indiranagar
East Whitefield, Old Airport Road, Old Madras Road, K.R. Puram, Marathahalli, Sarjapur Road, Outer Ring Road Bellandur, Budigere Cross/Hoskote
West Malleswaram, Rajajinagar, Yeshwanthpur, Tumkur Road, Vijayanagar, Malleshwaram, Mysuru Road, Rajarajeshwari Nagar, Nagarabhavi
North Hebbal, Bellary Road, Hennur, Jakkur, Yelahanka, Banaswadi, Doddabalapur Road, Jalahalli, Devanahalli, Thanisandra
South Jayanagar, J.P. Nagar, Kanakapura Road, Bannerghatta Road, Hosur Road, Electronic City

 

Central Bengaluru

Central Bengaluru is the area of a radius of around 10 kms from Vidhana Soudha and is the commercial and retail heart of the City, with various corporate offices and high-end residential properties in this region.

  • Excellent connectivity with various parts of the City and good physical and social infrastructure, along with the presence of organised retail, have ensured the highest property prices in this part of the City.
  • The prominent residential micro-markets in this region include M.G. Road, Langford Road, Richmond Town, Vittal Mallya Road, Residency Road, Cunningham Road, and Indiranagar.
  • Due to low availability of large land parcels and high capital values, these CBD micro-markets have seen a limited supply of residential developments. These markets have very good social and physical infrastructure and cater to high-segment housing mainly because of the sky rocketed land prices.
  • The Central Business District is well connected to other parts of the City through Metro and public transport bus service. The TenderSURE project that has been incorporated in parts of the CBD has made parts of the City pedestrian friendly.

Hospital around this Area:

Mallya Hospital, Vikram Hospital, Fortis Hospital, St Martha’s Hospital, Philomenas Hospital, HOSMAT

 

Schools around this Area:

St. Joseph’s High School, Bishop Cotton, Sophia High School, Frank Anthony Public School, Baldwins High School, National Public School Indiranagar

 

East Bengaluru

East Bengaluru is characterized by major IT Hubs like Whitefield and Sarjapur Road that has escalated the development of residential apartments over the past few years. Continued improved performance of the IT sector has driven the real estate markets along these belts. The presence of good retail and commercial developments is helping the Whitefield belt evolve into a self-sustaining hub.  Some of the highlights of this sector are:

  • The region has witnessed the launch of projects in the mid and high-end segment, meant to cater to the growing IT population. K.R.Puram, Hoskote Road and Budigere Cross belt has witnessed the launch of several new projects in the recent years.
  • Sarjapura Road with its accessibility to major IT Parks on the Outer Ring Road continues to attract buyers. The construction of flyovers and underpasses along the stretch of the Outer-Ring Road has decongested traffic and has provided further impetus to the growth of real estate in this region.
  • Several residential projects have been launched along Sarjapur Road and Bellandur. However, availability of water supply is a concern in this area.
  • The Whitefield and Sarjapur Road region has a presence of good schools, hospitals and malls, making it a self-sustaining hub.
  • The Outer Ring Road connects the Whitefield hub to the IT hub at Sarjapur Road /Bellandur Area. Both these areas enjoy strong connectivity to the CBD through Outer Ring Road, Varathur Road, Sarjapur Road, and Old Madras Road. However of late, both Sarjapur Road and the Whitefield Area have been plagued with traffic congestion.
  • Old Madras Road is also well connected to CBD through Metro. The extension of the purple line to the Whitefield area and the proposed elevated corridor on Sarjapur area would further alleviate traffic congestion

 

Hospital around this Area:

St. Johns Hospital, Manipal Hospital, Sakra World Hospital, Columbia Asia Whitefield, Rainbow Children’s Hospital, Vydehi Hospital, Narayana Multi Specialty, Shankara Eye Hospital

 

Schools around this Area:

Indus, The International School of Bangalore, Greenwood High, Inventure Academy, Delhi Public School, Primus,

 

West Bengaluru

West Bengaluru is mainly an industrial hub due to its proximity to the Peenya Industrial Area, which is one of the largest industrial areas in Asia.  West Bengaluru is characterized by a low social profile and industrial surroundings. However, with range of infrastructure enhancements and the Bangalore International Exhibition Centre (BIEC), along with the establishment of some large industries, one is seeing a change in the socio economic profile in this area. In addition, being located away from the major IT-ITES corridors; it shows less potential for real estate growth. Although it has high availability of land for real estate development, the demand is substantially low in this part of Bangalore. Further extension of the Metro in the near future (Mysore Road to Kengeri and Hesaraghata Road to BIEC) will further boost the development of mid-segment residential apartments in this area.

  • In the recent past, this region has been gaining considerable interest with the commencement of several infrastructure projects, such as the elevated expressway along Tumkur Road, Bangalore Mysore Infrastructure Corridor and the Metro Rail connectivity.
  • The arterial road connecting Mysore Road and Magadi Road will ease traffic flow.
  • Micro-markets such as Malleswaram, Yeshwantpur, Rajajinagar, Mysore Road, Tumkur Road and Jalahalli West are considered key residential locations that have witnessed an impetus in growth.
  • The presence of the Yeshwantpur Railway Station, along with the Metro connecting Nagasandra to Sampige Road has provided the necessary stimulus for growth in this region. Once the green line of the Metro is completed, this area will be connected to South Bengaluru, other parts of East and West Bengaluru.

 

  • Properties near Jalahalli Cross on Tumkur road cater to the industrial catchments of Peenya. We expect this micromarket to remain stable in the coming years.

 

  • The traditional areas of West Bengaluru such as Malleshwaram, Rajajinagar and Vijaynagar continue to command a premium. There has been a series of launches of high-end projects by premium builders in the past 12 months.

 

  • The proposal to develop Tumkur as a smart city may act as a catalyst to spur residential growth in this market.

 

Hospitals in this Area:

Columbia Asia Yeshwantpur, Manipal North Side Hospital, BGS Global Hospital, Narayana Nethralaya

 

Schools in this Area:

National Public School, Cluny Convent, National Academy for Learning, The Brigade School, Poorna Pragya

 

North Bengaluru

With the construction of the new Kempegowda International Airport (KIA) at Devanahalli in 2008, North Bengaluru became the cynosure of all interested parties, from investors to business houses.  The demand for high-end residential units remains high in the North Bengaluru region. The residential projects located around Hebbal, Bellary Road and surrounding areas are in the luxury segment. North Bengaluru is projected to be the next economic centre of the City.  As per reports, Hebbal-KIA corridor in North Bengaluru has emerged as a high growth corridor and has added the highest number of apartment complexes during 2015 to 2017. Proximity to KIA and planned social and the physical infrastructure in the North have boosted development in the area. The planned Information Technology Investment Region (ITIR) near Devanhalli, Aerospace SEZ planned near KIA and the proposed Devanhalli Business Park are the key drivers for residential development in North Bengaluru.

  • Numerous real estate and infrastructure projects were announced to enhance the connectivity between the Bengaluru City Centre and KIA.
  • Today this region is on the edge of becoming a preferred business district of Bengaluru, presenting immense potential for real estate investment.
  • Due to its proximity to KIA, Yelahanka- Doddaballapur Road has emerged as an important destination with key developers proposing several high to mid segment housing in this area.
  • The major micro-markets in this zone are Hebbal, Thanisandra, Devanahalli, Yelahanka and Hennur.
  • This belt has witnessed a price appreciation to the tune of 8% to 10% over the last few years.
  • The northeast belt of Hennur Road, Thanisandra Road and other micro markets surrounding Manyata Embassy Park have witnessed increased real estate activity in the recent past.
  • Hebbal is equidistant from Airport and the Central Business District. Major initiatives like widening of Bellary Road and the overbridge at Hebbal Junction and alternative road to the International Airport are some of the initiatives proposed to decongest the area.

Hospitals around this Area:

Columbia Asia Hebbal, Aster CMI Hospital, Baptist Hospital

Schools around this Area:

Aditi Mallya, Vidya Niketan, Presidency School, Delhi Public School, Stonehill,

 

South Bengaluru

With the setting up of IT/ITeS companies, South Bengaluru became a sought-after commercial and residential destination. South Bengaluru is close to major work centres along the Outer Ring Road and is primarily classified as an upper middle-class residential catchment. It has potential for further augmentation of existing physical and social infrastructure. Over the past few years, the Southern suburbs have witnessed a high percentage of appreciation on investments.

  • Electronics City, located on Hosur Road, emerged as the first IT hub of Bengaluru in 1990.
  • Many IT giants, such as Infosys, HCL Technologies, HP, Wipro, Genpact and Siemens, set up their campuses in this region.
  • Electronics City was followed by more employment hubs in the region, such as Bannerghatta Road offering considerable office space to IT companies.
  • The residential clusters in proximity to the employment hubs, comprising locations such as, Jayanagar, Bannerghatta Road, J P Nagar, Electronic City, Kanakpura Road and Hosur Road, attracted a large number IT employees.
  • Connectivity to the NICE Road, has seen a lot of new projects around Kanakpura Road, Bannerghata Road, and Hosur Road.
  • The proposed Metro Green line once completed will propel tremendous growth.
  • Road widening, Metro and Peripheral Ring Road make this place attractive for the development of residential projects.

Hospitals in this Area:

Fortis Hospital, Sagar Apollo Hospital, Narayana Multi Speciality Hospital, Jayadeva Institute of Cardiology, Bangalore Hospital

Schools: in this Area:

The Brigade School, Treamis World School, The Valley School, National Public School, BGS School.

Future of Bengaluru’s Real Estate

The fundamental economics of real estate maintain that price appreciation is dependent on two factors – employment generation and infrastructure development (connectivity).

  • On the employment front, Bengaluru enjoys the moniker of being the IT and Biotechnology Capital of India.
  • It also houses numerous government-promoted heavy industries, including defence organisations, scientific establishments, and aerospace and telecommunication companies.
  • Of late, the City has witnessed substantial interest from the ecommerce sector as well, translating into significant potential for its real estate.
  • Going forward, the IT/ITeS sector will continue to dominate the office space landscape in Bengaluru, although its share may decrease slightly owing to the growth of other sectors such as ecommerce.
  • Factors such as relatively affordable office rents, the availability of a talent pool, favourable state government policies and a conducive business environment will continue to attract IT/ITeS sector occupiers to the city.