Realty in Bangalore to see 25 per cent growth

The real estate sector in Bangalore has grown to a large extent in the past one year. In the year ahead, the city’s realty is expected to grow by 25 per cent, estimates the Karnataka Chapter of the Consortium of Real Estate Developers’ Associations of India (CREDAI).

“We are expecting the realty to grow by 25 per cent in the coming year. Last year too we have witnessed a similar growth,” said Sushil Mantri, President, CREDAI Karnataka.

As per studies conducted last year, the city is likely to absorb about 7.1 million sq ft of office space against a supply of 7 million sq ft. While demand for office and commercial sales in the city saw a rise, residential sales remained slow.
Experts said that the city witnessed a great strength in high street leasing and rent, and capital value has increased nominally in a few sub-markets. Also, there was a rise in rental value as demand by retailers remained strong.

With commercial office space developers offering favourable options, predictions for 2012 are that several IT companies in the city will look at pre-leasing office space.

However, analysts opine that office space supply will outweigh demand.
“FDI in multibrand real estate, is expected to catalyse a lot of demand from international retailers. International luxury brands will restrict their growth plans to Mumbai, Delhi and Bangalore,” states a projected report by Jones Lang LaSalle India, Realty Intelligence firm.

The report states that the mid-end and affordable housing segments will record healthy appreciation in capital value in short term from a low base.

Smart homes are gathering pace

Bangalore has seen “smart home” project launches by Sobha Developers and Mantri Developers in the past two weeks. “Smart homes integrate technology inside the house and the community with a security and comfort point of view,” Mr J.C. Sharma, Managing Director, Sobha Developers,

On Tuesday, Mantri Developers tied up with networking giant Cisco for tech solutions for all its future projects. As part of this initiative, Cisco will plan the developer's 12 residential projects – 28 million sq. ft. of super built-up area – over the next five years.

“Smart homes are the way of the future and residents will have access to wireless door locks, customized settings for lights, blinds, air-conditioning and touch-screen panels that can be controlled through Internet Protocol (IP),” said Mr Anil Menon, President, Globalization and Smart+Connected Communities, Cisco.

According to Ms Snehal Mantri, Director, Mantri Developers, customers can choose from three packages — silver, gold and platinum. These solutions would be available at Rs 300-350 per sq. ft.

For instance, a customer booking a 2,000-sq-ft home would spend anywhere between Rs 6 lakh and Rs 7 lakh for these smart home solutions.

Sobha Developers recently launched its Sobha Habitech project in Whitefield, one of Bangalore's IT hubs. In its second week of launch, Mr Sharma said the project has received “good response.”

The project offers customers smart-home features such as console-controlled switches, video-door phone, mood setting features, video surveillance and gas leak sensors. Though Sobha Developers refused to divulge its technology partner for this project, company officials said the tie-up would be extended to future projects too.

Home-grown companies such as Silvan Innovation Labs too are seeing increasing demand for smart-home solutions. Dr Giri Krishna, CEO, Silvan Innovation Labs, said customers who have bought houses upwards of Rs 80 lakh are willing to invest in technologies such as surveillance, home safety and device management solutions such as controlling centralised HVAC system or split ACs.

In other cases, residents are willing to fork out Rs 400-1,000 a month on surveillance-related technologies.

Bangalore costliest Indian city to live in: Survey

Glitzy tech capital Bangalore just earned a new sobriquet - the costliest Indian city. An analysis of the Reserve Bank of India's Consumer Price Index (CPI) shows that Bangalore is a couple of notches higher than the all-India cost-of-living average, with financial capital Mumbai just a shade behind.




The CPI is a measure of a standard basket of items, including food, clothing and transport, across cities. In the price race, Delhi is comfortably placed very low in the table, deriving its cushion from the subsidies galore it receives from the Centre . Take, for instance, LPG cylinders, which is a must-have in middle-class families . According to Bharat Petroleum's latest figures, Bangalore currently pays Rs 415 for a 14.5-kg refill, Kolkata Rs 405, Mumbai Rs 402 (expected to go up after budget), Delhi Rs 399 and Chennai Rs 393.50. Bangalore's CPI peaks in the national chart at a whopping 200, followed closely by Mumbai at 199, Kolkata 184 and Delhi a distant 181. The national CPI average is 198. For homemakers like Koramangala resident Aditi Rao, life in Bangalore is becoming tougher with each passing day. "Frequent hikes in the prices of basic items put our home budget out of sync every month," said Rao, 34.

Budget analyst Ravi Duggal, who has lived in Mumbai and Delhi, observed that the high cost of living in Bangalore has come about as a result of the IT industry. He said there were different reasons for differential living costs among cities, including the aspiration of people. Talking of India's two leading cities, he said, "Where education is concerned, for instance , Delhi has more public education facilities than Mumbai."

What makes Mumbai equally expensive ? "There are many factors, the chief being high rentals. Over 40% of the salary of an average Mumbaikar goes into paying rent," pointed out economist Vibhuti Patel of SNDT University.

Brigade trying to raise 500 crore from PE players

Brigade Enterprises is trying to rope in PE players to offload 30% stake in its special purpose vehicle BCV Developers for Rs 250 crore.The Bangalore-based real estate company floated the SPV to develop a 120-acre integrated township project in Devanahalli.
BCV Developers is a 50:50 joint venture between Brigade and Classic Valmark.The Rs 2,000-crore residential project in Devanahalli will have houses for low income households,as also luxurious townhouses and villas.
M R Jaishankar,CMD of Brigade Group,said he was not in favour of structured PE deals,but would definitely consider pure-play PE investors.We have invested Rs 350 crore from internal accruals and the rest will come from institutional funding and advances from sale of units, he said.He declined to divulge the names of private equity players he is talking to.
Brigade also plans to divest up to 30% stake in its subsidiary Brigade Hospitality Services for Rs 250 crore in order to raise funds to expand its hospitality footprint."We are looking at PE players or institutional investors,"Jaishankar said.
The company is planning a Rs 700 crore outlay for four hospitality projects in South India.It is launching a 220 rooms business hotel in Chennai in partnership with Holiday Inn that is expected to be ready by 2013.It is planning two business hotels with over 300 rooms in Mysore and a resort in Kerala.The company already runs two hotels in Bangalore -- a 230-room Sheraton at Brigade Gateway in Malleswaram and Grand Mercure in Koramangala that is managed by the Accor Group.The company has a consolidated debt of Rs 800 crore.It is trying to reduce the debt equity ratio to 0.5,from the current 0.7.

State attracts Rs 4,846 cr investment at Aero Park

The Karnataka government, which is promoting Bangalore as a potential hub for aerospace industry in the country, has seen investment proposals from as many as 54 companies for a combined investment of Rs 4,846 crore. Of these, 46 proposals are in the small and medium enterprises segment and the rest are major projects with investment of over Rs 50 crore cleared by the state high level clearance committee (SHLCC). Once set up, these projects are expected to generate employment for about 30,000 people.

“We have identified the aerospace sector as a focus area for attracting investment into the state. The state has an ideal ecosystem for the sector and we want to cash in on this not only to sustain Karnataka’s position as the country’s aviation hub, but also to encourage and support the MSMEs in the sector,” M Maheshwar Rao, commissioner, department of commerce and industries, government of Karnataka told Business Standard.

The state has acquired 982 acres near the Bangalore international airport for the aerospace park, of which 250 acres have been set apart for the aerospace Special Economic Zone (SEZ). The government till now has allotted 218 acres to 25 companies at the SEZ. The major investors at the SEZ include Hindustan Aeronautics Limited (Rs 2,095 crore), Dynamatic Technologies (Rs 465.8 crore), Jupiter Aviation Logistics (Rs 630 crore), BEML Limited (Rs 316 crore), Mahindra Aerospace Pvt Ltd (Rs 284 crore), European Aeronautics Defence and Space Company (Rs 278.2 crore), Sobha Aviation and Engineering Services, Tyco Electronics Corporation India, AMADA (India) Pvt Ltd and Wipro Ltd (Rs 52.05 crore) among others.
These companies are setting up manufacturing plants for producing aircraft components, assemblies, MRO activities related to aerospace applications, aerospace actuators and parts, engine and engine components, welded structural assemblies, aviation training academy among others. Further, Rao said the government expects to attract more companies to the aerospace SEZ during the forthcoming global investors’ meet (GIM) in June 2012. At the recently concluded India Aviation 2012 held in Hyderabad, the government had fruitful discussions with several global and Indian players in the aviation sector, he said.

He also said the state government and Confederation of Indian Industry (CII) have formed a joint task force on aerospace with the overall intent of promoting and developing the state’s aerospace industry.

The government also proposes to establish a Technology Innovation Centre on aerospace at the Bangalore Aerospace Park to provide R&D support, particularly to SMEs. The government plans to approach organisations like ISRO, USIBC, NAL, EADS and Honeywell among others to become stake holders in the Technology Innovation centre. As recommended by the Joint Task Force, the government hopes to set up an aerospace university in the near future to cater to the human resources for the aviation sector, he added.

Adigas in talks to sell stake in biz

New Silk Route Partners May Acquire A Share

The heightened global investor appetite for local cuisine may see Adigas,a chain of south Indian vegetarian restaurants and fast-food joints,offload shares to a private equity investor to fuel its expansion plans.
The $1.4-billion New Silk Route Partners is holding talks to buy a big stake in the KN Vasudev Adiga-promoted Bangalore restaurant network,valuing it at about Rs 200 crore,said three sources directly briefed on the matter.

KN Vasudev Adiga denied fund-raising plans as market speculation.New Silk Route Partners declined to comment.

The Adigas,which gained high visibility in the past decade,made news when Infosys co-founder N R Narayana Murthy signed it up for the wedding functions of his daughter in Bangalore a couple of years ago.
A Mumbai-based boutique investment bank is advising the Adigas on the possible induction of a financial investor.The PE investor could emerge as the largest shareholder,but the promoter family would continue to manage the growing business,said a source.Secondgeneration entrepreneur K N Vasudev Adiga started the restaurant chain in the early 1990s as an offshoot of Brahmins Coffee Bar in Basavanagudi,started by his father,late K V Nageshwar Adiga,in 1965.The Adigas operates 12 multi-cuisine restaurant chains,fast-food joints and catering services,with annualized revenue estimated at a little over Rs 80 crore.

The food-and-beverage street has attracted significant private equity investment and consolidation.Cuisine Asia,jointly owned by Everstone Capital and marque Belgian family office Verlinvest SA,has propelled Blue Foods operators of Copper Chimney,Noodle Bar and Bombay Blue to buy stakes in a slew of standalone restaurants.

TASTY BITES OF SWEET DEALS

India Equity Partners bought Sagar Ratna,a Delhi-based south Indian restaurant business,in 2001 Everstone acquired big stake in north Indian food chain Pind Balluchi Norways Orkla bought MTR Foods UKs Actis acquired food-and-grocery retailer Nilgiris in 2006

PIE GETS BIGGER

Investors have pumped in $400 million in food and-beverage sector;family-owned localized restaurants catch PEs eye because of their low-cost,high-value proposition

TRIUMPH MOTORCYCLES TO SET UP ASSEMBLY OPERATIONS IN Narasapura Near Bangalore

 

British motorcycle brand Triumph Motorcycle will launch a range of high performance motorcycles in the Indian market mainly aimed at motorcycle enthusiasts later this year. The motorcycle showcased its motorcycle range at the 2012 Indian Auto Expo, where it pleasantly surprised many of the Indian enthusiast motorcycle riders when it announced prices of its CKD models, as the prices were very competitive. To assemble motorcycles in India, Triumph is said to have identified a 40 acre land parcel at Narsapura, situated on the Bangalore-Chennai highway.


Triumph Motorcycle Range

In the recent past, Karnataka has seen a big ticked investment in the motorcycle segment with Japanese motorcycle giant Honda setting up a plant close to the state’s capital of Bangalore. The country’s largest two wheeler maker, Hero MotoCorp, is also said to be finalizing plans to set up a plant close to Dharwad, Karnataka. With Triumph also planning to set up an assembly unit in Karnataka, this southern state will now play host to over four motorcycle makers including TVS, which has a manufacturing facility at Mysore.


Triumph Tiger 800XC

The location of Triumph’s plant at Narasapura, off Bangalore, is said to be strategic as the motorcycle maker is said to have chosen this location due to its accessibility to the Chennai port. Triumph India also plans to build affordable premium sports motorcycles with displacements of about 350cc in the coming yearsand these motorcycles could also be exported out of India. Therefore, the location to high quality port infrastructure is quite critical to the motorcycle maker, which will also assemble motorcycled through the completely knocked down(CKD) kit route, with the kits arriving from Great Britain.

Although the Triumph assembly unit will take nearly a year to become operational, the motorcycle maker is said to be all set to launch its motorcycles in the Indian market over the next few months. It is also said that Triumph plans to price four of its models very competitively, despite them being brought into India as CBUs initially. These models would later be assembled by Triumph once the assembly unit is up and running. That said, 3 motorcycle models in Triumph’s 7 bike portfolio for the Indian market would continue to remain completely built units(CBU) as they are low volume products.

State plans to develop auto hub in Narasapur near Bangalore

One year ago nobody knew about Narasapur, a village in Kolar district situated about 52 kms from Bangalore. But on today, the village is on course to become a major automobile hub in South India as several automotive giants are in the process of setting up shop there. Thanks to the efforts of the department of commerce and industry, government of Karnataka, which is preparing to organise the second edition of global investors’ meet (GIM) in June this year, the automobile companies are making a beeline to Karnataka.

Already, Honda Motorcycle and Scooters India Limited (HMSI), a subsidiary of Japanese auto major Honda Motor Corp, is setting up its fourth two-wheeler plant in Narasapur at an investment of Rs 1,350 crore.

The state government has allotted 100 acres to the company. The new plant would go on stream by the first half of 2013. According to the company, the assembly unit has the capacity to produce 1.2 million units a year in the first phase. Eventually, the production capacity would be ramped up to 1.8 million vehicles a year in the second phase. The company has created employment opportunity for 3,000 persons, a top state government official said.
“In addition to HMSI, the government has also allotted about 150 acres more to Honda’s Tier-I suppliers for developing an ancillary park. In all, 13 vendors would be setting up their manufacturing units in the park with a combined investment of over Rs 2,000 crore,” M Maheshwar Rao, commissioner for industrial development and director of industries and commerce, told Business Standard.

HMSI’s vendors include XCD Corporation India Pvt Ltd, Musashi, Advik, Badve, Jay Ushin, Nippon Compo India and T S Interseat among others.

Apart from HMSI and its vendors, Swedish truck and bus maker Scania is setting up its truck and bus body building facility in Narasapur Industrial Area. To add to this list is UK-based premium bike maker Triumph Motorcycles, which has zeroed in on Narasapur for a local assembly plant. The company has recently signed a memorandum of understanding with the State government, Rao said.

About 40 acres land has been identified for the company for its plant. Scania has chosen Narasapur to set up its truck assembly plant at an investment of Rs 150 crore. The facility will serve as a completely knocked down (CKD) assembly unit for truck and bus chassis during phase one of the operations. It will employ about 800 people in this facility over the next five years.

Scania plans to roll out 2,000 heavy trucks and 1,000 inter-city buses and coaches from this plant in the next five years. Besides this, it plans to sell about 1,500 engines within the same period. In the next phase, it will build trucks and buses from the same facility. During the first phase, it will initially assemble trucks and by 2014, it plans to roll out buses.

Other than automobile companies, the government has allotted land to Mahindra Aerospace Pvt Ltd to manufacture small aircraft at Narasapur. The company will invest Rs 285 crore in this facility.

Convention centre at Devanahalli to get Rs 250 cr

Devanahalli, which has earned a reputation with the landmark Bengaluru International Airport, is set for another image booster.

The State government has made a budgetary provision of at least Rs 250 crore for an International Convention Centre (ICC) at Devanahalli, near the BIA, which is expected to be completed in the next six months.

The proposal which was cleared in May last, was expected to boost the second edition of the Global Investors’ Meet, scheduled for June this year. However, chief minister D V Sadananda Gowda, has said that it will take another six months now.

The ICC to be built on 35 acre, will have a capacity to accommodate 6,000 people, and is aimed at promoting Bangalore as an attractive destination for prestigious international meets and exhibitions.

The government had targeted completion of core components of the project (the convention hall, meeting rooms, exhibition hall and food court) before June this year, but was unable to do so.

There will be 20 meeting rooms with seating capacities varying from 50 to 250 and an exhibition hall with a minimum area of 20,000 sq mt.

Critics have questioned the need for such a centre with the Bangalore International Exhibition Centre is already in place, but officials in charge of the implementation have been backing the project.

While the ICC is yet to come up, the BIA is going through a transition phase with the expansion of Terminal-1. The Bangalore International Airport Limited developed on a PPP model will complete the expansion by December 2012.

Being implemented at a cost of Rs 1,479 crore, the expansion will enable the airport to handle 17.5 million passengers per annum as opposed to the existing 11 million.

Embassy Group to launch residential projects this year

Bangalore based realty developer, Embassy Group is all set to re-enter the residential segment with a few launches this year,

Chairman and Managing Director, Embassy Group, Jitu Virwani said, “We have launched two residential projects in Bangalore and have lined up few more.” The total cost of these projects is estimated to be around Rs 1,800 crore.

The company is thinking about meeting its fund requirement through sales and bank debts.

Embassy Pristine, located at the Outer Ring Road Sarjapur Road junction, would have a saleable area of 1.4 million sq ft. The project would offer apartments upwards of Rs 1.7 crore.

The company has also launched a 53-acre, 170-villa project — Embassy Boulevard — on Bellary Road for which it has acquired land at Rs 265 crore. “We have already sold 68 villas at Rs 10,000 per sq ft,” said Virwani, adding that the price has now gone up to Rs 12,500 per sq ft.

Another high-end apartment project — Embassy Lake Terraces — would offer 470 units, of which, 40 would be large units of about 7,000 sq ft each. The other units would be in the 3,200-4,500 sq ft range. The price of these units has been fixed at Rs 2.8 crore and above. 

The company also has plans to launch an IT park project in Belgrade in April this year. The first phase of the 125-acre project would see development of 1.2 lakh sq ft.

The company, which develops two million sq ft of commercial space every year, is looking at another IT park in Bellary Road. Embassy Group is developing a 250-key hotel at its Embassy Golf Links Business Park to be operated by Hilton.

Pillars to be dressed up with advertisements

Ending months of speculation, Bangalore Metro Rail Corporation Ltd. (BMRCL) plans to adorn the concrete pillars of Namma Metro with advertisements.

There were suggestions by sections of people to paint the pillars as the concrete façade was not aesthetically appealing. Now, BMRCL has decided to lease them out for advertisements.

Initially, Pillar Nos. 10 to 207 on the 7-km stretch of Reach 1, between Anil Kumble Junction on M.G. Road and Byappanahalli, will be up for auction for ad purposes, tenders for which will be called shortly.

BMRCL General Manager (Finance) U.A. Vasanth Rao told , “Painting the pillars is an expensive affair and they will require fresh coats of paint after every monsoon. If we leave them as they are, the pillars will be ‘decorated' with posters and buntings, making things worse. If they are given for advertisements, the agency will prevent any disfigurement,” he said.

The move will bring in revenue to BMRCL. Mr. Rao said, “Our aim is to cross-subsidise the travel cost as much as possible. Revenue from advertisements will help cushion the operation cost.”

Mr. Rao denied that the advertisements would distract motorists. He said pillars at busy traffic junctions will not sport any advertisement. If ads are found to be distracting, motorists and traffic police can say so, and BMRCL will remove them, he said. The BMRCL has now invited tenders to provide electricity supply to these pillars so that the selected bidder will not have any problem in arranging power supply.

METRO SET TO BECOME EXPENSIVE

GE to open validation lab in Bangalore

The American conglomerate GE today announced launch of a state-of-the-art validation laboratory in Bangalore which will support repair and calibration of Kaye range of products designed to meet industrial requirements.

The lab which has a capability to calibrate temperatures to an accuracy of 0.005° C will meet vital requirements of pharmaceutical and life science industries, a company statement said here.

GE's measurement and control business is a leading innovator in sensor-based measurement, inspection, asset condition monitoring, controls and radiation measurement solutions to a wide range of industries including oil and gas, power generation, aerospace, transportation and healthcare.

"The new lab supports GE's 'In Country, for Country' strategy to build on capabilities and resources within India," GE regional general manager for measurement and control division Ashish Bhandari said.

The lab will also help reduce turnaround time for customers from three months to just one week, he said.

IT majors like Mahindra Satyam, EMC, Cognizant save on office rents to weather slowdown storm

A rising number of information technology firms are consolidating and re-aligning leased office spaces across the metros, hoping to save their rents and operating costs that will help them sail through the global economic storm.

Among the big-ticket lease agreements locked recently is that of Mahindra Satyam. The IT services provider, which operates from multiple locations in Bangalore, has taken up 5,00,000 sq ft of space in Manyata Tech Park in the city.

Following suit are IT majors, such as EMC, Cognizant, Persistent Systems and Nokia-Siemens, all of which have leased large office spaces to house multiple units under one roof.

According to real estate services firm Jones Lang LaSalle, 80-85% of the demand for office spaces in India comes from the IT/ITeS sector. The sector occupied 28 million sq ft of office space last year compared with 32 million sq ft in 2010.

"IT firms grew in sporadic manner as their clients were located in multiple locations," said Ram Chandnani, deputy managing director at commercial real estate broker CB Richard Ellis. "Now companies are looking at moving into one or two locations to bring efficiency and reduce transport and other costs."

While EMC, a provider of storage hardware solutions, has picked up 3.5 million sq ft of office space on the outskirts of Bangalore, Cognizant has taken up 250,000 sq ft in DLF Akruti in Pune.

The IT and BPO services firm has also rented three strategic sites to expand operations in Hyderabad. This is in addition to around 7,00,000 sq ft the company had recently taken on lease in Hyderabad's K Raheja Mindspace SEZ.

Earlier, Persistent Systems, a software product development services provider, had taken up 4,70,000 sq ft of space on lease in Pune, while wireless equipment maker Nokia-Siemens rented 8.5 million sq ft in Bangalore's Manyata Tech Park.

Real estate and transport of staff constitute about 24% of an IT firm's total costs. Consolidating offices could translate into a 15-22% saving under this head, according to some analysts. Moreover, housing staff under one roof saves expenditure on energy and housekeeping and maintenance staff.

"Rental forms a large part of the total operational costs and we are looking at maximum utilisation of real estate," said N Venkatraman, CFO of Sonata Softwares, which recently closed its facility in Bangalore's central business district and moved to Global Village Tech Park. "Even if we can save a rupee on fixed costs, it will directly reflect on our bottom line. All our new headcount addition will be in the new campus."

Sonata, a technology solutions provider, occupies 1,15,000 sq ft in the Global Village Tech Park. The company also owns a campus in Hyderabad besides the corporate headquarter in Bangalore.

Slowdown in the US and the lingering debt crisis in Europe have put nearly 85% of Indian IT firms' revenues under a cloud. Experts say the global outlook will determine real estate spends by IT firms in the days ahead.

Anil Ambani sells 8% stake in NICE for over Rs 300 cr

Industrialist Anil Ambani has sold nearly half of his 15 per cent stake in NICE Ltd, an entity developing Bangalore-Mysore infrastructure corridor, for over Rs 300 crore.

Ambani, who heads telecom-to-financials conglomerate Reliance Group, has sold an eight per cent stake for USD 65 million (over Rs 300 crore) out of his total holding of 15 per cent in NICE Ltd held in his personal capacity, sources said.

When contacted, a Reliance Group spokesperson declined to comment.
Ambani had acquired 15 per cent stake in NICE (Nandi Infrastructure Corridor Enterprises Ltd) for Rs 60 crore way back in 2005 and the latest deal has given him a return of nearly 10-times in about seven years ago.

NICE was formed by industrialist Baba Kalyani-led Kalyani Group of Companies and SAB International Ltd to develop the Bangalore-Mysore Infrastructure Corridor.

As the owners of this Build-Own-Operate-Transfer (BOOT) project, NICE will implement the project in its various phases and operate the facilities after completion of construction.

Sources said that the shares have been sold by Ambani to a Mauritius-based fund affiliated to global financial services giant JP Morgan and values NICE Ltd at over Rs 4,000 crore.

Pursuant to this deal, JP Morgan's stake would rise to 18 per cent in this entity, where Kalyani group's BF Utilities holds nearly 75 per cent.

Shares of BF Utilities today soared by over 10 per cent to close at Rs 431.65 at the BSE. Shares of another group company Bharat Forge Ltd also rose over 5 per cent to Rs 326.90.

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.

Real estate prices along the Metro will follow the same pattern as in Delhi where prices shot up by 15% to 20%, says Sushil Mantri, CMD of Mantri Developers.

Namma Metro MD N Sivasailan says, “In fact the people who protested are now the biggest champions of the metro, they are happy that business is booming.”

Irfan Razack, CMD of Prestige Group says the action has moved from downtown to the suburbs. Metro connectivity to areas like Kanakapura and Mysore Road will see a lot of realty traction. Hence, price escalation on the periphery is sharper than in the Central Business District.

Moreover, with the value revision coming into effect, most localities in Bangalore could see an upward revision of 15-20 per cent in property values. This is likely to impact property-buying in the city.

No wonder, large industrial houses such as the Tatas, L&T, Godrej, Murugappa, Mahindra & Mahindra etc have established presence in the real estate sector here, and the Coimbatore-based LMW and Lakshmi Mills also are gearing to enter. This makes Bangalore the most sought after property market. Mumbai-based Godrej Pro­perties (GPL) has already launched three projects in Bangalore.

As S.S. Asokan, Executive Director, Shriram Properties says, “The presence of reputed corporates in the real estate sector provides an assurance of quality to real estate projects and the buyers are the biggest gainers from their entry.”

Advantage Bangalore

1. Healthy transaction & upward movement
2. No boom-no bottom market
3. HNIs choice
4. Bullish corporates
5. Metro connectivity to periphery