Commercial Realty Development In Bangalore

Bangalore’s real estate market’s dynamics has been revolutionized by the IT sector which mushroomed across the length and breadth of the city. Considered to be the IT capital of the country, Bangalore soon became a booming hub of employment opportunities and professional education. Its real estate market followed this boom without any lag.

For catering to the requirements of the massive IT sector, SEZ or Special Economic Zones had been marked in and around Bangalore for the making of large IT parks. The zones have come become defining landmarks of Bangalore of its realty sector’s growth in the coming years.

Through the years, activities in commerce have shifted from the CBD or Central Business District to peripheral and suburban areas. Micro markets in the suburbs like Kormangala, CV Raman Nagar and Bannerghatta Road right now have 27.70 million square feet of land for commercial and residential purposes. An addition of 2.70 million square feet in the coming years will definitely set a record for these areas.

Expanding space needs for the booming IT industry, inexpensive rentals for spaces of improved quality and access to pool of talent residing in the residential hubs in the suburbs have propelled large companies to relocate and consolidate their offices to micro markets along the periphery such as ORR or Outer Ring Road that has a land stock of 28.8 million square feet along with a supply that is under construction, amounting to almost 10.10 million square feet.
When considering the current, real estate market for commercial property in Bangalore, it is a booming scenario as companies are expanding and outsourcing a lot of their jobs. Commercial leasing mechanism in Bangalore has seen good activities of transaction in the first half of 2014. Growth prospects are highest in areas along the ORR or Outer Ring Road as they offer an opportunity for expansion of the commercial real estate market. For example, Whitefield is considered to be a good micro market as it shall have a 2.50 million square feet added to the existing 27 million square feet stock. Moreover, with the airport being relocated to the northern side of Bangalore, areas located in this particular sub market have shown prominent realty activity.

The upcoming hub of commerce is probably going to be North Bangalore as it has initiatives in infrastructure like the Hebbal airport expressway, ORR and widening of Bellary Road which improves the connectivity to this micro market.

There are almost 10 million square feet of office space available in the northern pocket of the city while 3 million square feet is under construction presently. Areas with upcoming and current commercial developments in the northern fringes include Thanisandra Road, Bellary Road, Tumkur Road and the north half of the ORR.

The Outer Ring Road has a character of supply being controlled which ensures low levels of vacancy and good absorption rate along with increase in rentals. The micro market shall continue to bring in new occupiers and entrants who are looking out for expansions. The ORR is a preferred destination for occupiers working in the corporate sector for its closeness to catchment segments for employees, improving infrastructure, connectivity and numerous SEZs and tech parks. Pre commitments and leasing are prevalent here because of the limited supply of ready to move in units.

Even though fresh supply in the commercial realty market has been frugal in the first quarter of 2014, supply is much in the pipeline and construction is robust. A large infusion of supply is being experienced in Bangalore. There is long run potential because of improving infrastructure and expanding residential market. The eye of commercial realty developers have been caught by Sarjapur Road as next destination because of the existing catchment for residences, improving social infrastructure and closeness to the Outer Ring Road. Land parcels are held by developers in this area and it shall see an infusion of supply for addressing spilled over demand from the Outer Ring Road.

The expansion of Bangalore outwards, locations along the periphery are seeing an increase in value houses. Costing less than Rs 30 lakhs, these houses are the best choice for employed professions who move to the city to become employed in the upcoming commercial hubs.

Yelahanka Doddaballapur Road and Devanahalli in north, Chandapura along Hosur Road towards the south is where plotted developments can be availed for roughly Rs 18 and 20 lakhs. Townhouses can be bought for Rs 30 lakhs roughtly. In the western side, affordable housing options are coming up near the NICE Road. As price of land is going up, they have an appreciation potential of almost 20 percent.

Studio apartments that are sizes between 400 and 750 square feet are available within Rs 30 lakhs. Such apartments can be bought along Magadi Road, Old Madras Road, Attibele etc. Doddaballapur Road and Old Madras Road offer 2BHK apartments with square feet area of 650 and 1075 square feet. 2BHK and 3BHK apartments can be bought in areas like Magadi Road, Anekal, Sarjapur Road which have a carpet area of 650 square feet and 1600 square foot.

In this segment, the total supply of projects is around 22 of which 22 percent of the total stock has not been sold, which roughly amounts to 36,000 units. Over the last year, the affordable apartment segment has seen the highest velocity of sales when compared to other segments. Most of the affordable units have been launched in the south east and then the north east.

The demand for property here is being driven via the development of commercial properties and the employment that will be created as a result. A large share of existing commercial property is located in south east while a new chunk is coming up in the north east. Another important thing to consider is availability of value land to build on.

Elevated expressways and flyovers, ring roads like the NICE Peripheral and the Outer Ring Road along with the Metro Project act as key factors that drive the sale of affordable housing. This section has fared very well as a large part of this market is at the end which offers high scope to grow. There has been a very high percentage rise in value stock as some projects have seen a rise in price to almost 100 percent between the pre- launch and handing over.