Bangalore Real Estate is on an Extension Mode

In the past few years, Bangalore has emerged as the fastest-growing city of the country. The major cause of real estate development is the development in IT sector. Bangalore is known to have a multi-cultural population with excellent educational institutes, constantly upgrading physical infrastructure and good social infrastructure. Right now, the most promising residential micro-markets are Sarjapur Road, Outer Ring Road (ORR), northern parts of the city and Whitefield.

Luxury Residential: Bangalore is considered to be the third-largest cluster for high net worth individuals (HNIs). The city is known to be home to around 10,000 individual dollar millionaires and has a huge base of emigrants. With this thing in mind, there has been a huge demand for high-end residential apartments in the city.

Mid-Income Housing: This sector sees the drive from the people working in the ITeS and IT industry. The prime driving factors for this section are proximity to workplaces, social infrastructure, access to medical and educational facilities and good physical infrastructure.

Affordable Housing: This sector sees extremely price sensitive buyers. The places which have seen a high demand for this section are Hosur Road, Mysore Road, Kanakapura Road etc.

There has been seen an increased demand and housing projects have seen an increase in capital values. They are currently priced higher than or similar to mid-income projects.

Overall Demand Scenario: The city’s market has seen an absorption of 6,519 units in the 2nd quarter of FY’13. This was as against 6,689 units in the previous quarter.

Supply: All in all, 21 residential projects were launched around Bangalore in the second quarter. This offered 9,889 units against 10,009 units in the previous quarter.

CBD & SBD: This section is seeing a high demand and low supply. Owing to availability of high capital values large land parcels, these micro-markets have seen a constrained supply of residential developments. These markets are considered to have good physical and social infrastructure.

Indian Real Estate News - The New Land Acquisition Bill & Its Impacts

The recent Land Acquisition Bill, though addresses many concerns, is not without loopholes, say industry experts. However, property litigation issues are expected to come down to a great extent.

The bill has incorporated changes to the inclusion of irrigation projects into the Social Impact Assessment and existing compensation policies. The unfair compensation paid to land owners has been one of the prime reasons for real estate related disputes in India.

The bill also states that it is impossible to dispossess people from an area without paying all dues and allocating another area. And, according to the new bill, seeking permission of Gram Shaba or rural authorizes is the first step in acquiring a land in such areas. If the acquisition is for private or PPP ventures, consent of 70 and 80 percent of land owners becomes imperative.

The bill also puts forward the option of 40percent profit sharing with the owner in case of a sale price more than the compensation amount.

However, on the whole, you would get to see two contradicting changes through the bill. It is certain that there will be a reduction in real estate crimes across the nation. However, the bill would also lead to high costs leading to a burden for real estate developers. The high-costs in real estate, one among the prime areas in India’s growing economy would have a direct impact on the nation.

In view of the enhanced attempts of urbanization, the high-costs going to come out of the bill, could hinder such attempts. There could be delays in project completion in case of lack of sufficient funds. Such discrepancies might prevent public firms from collaborating with the Government for new ventures.

The land acquisition clauses mentioned in the bill are applicable to 50 acres of urban land or 100 acres of rural land. Therefore, commercial and residential buildings out of this limit would not be abiding by the bill.

Also, if planning to implement all the clauses mentioned, certain amendments in the existing system might become necessary.

Property Prices Get Boost by Bangalore Metro

The residents of Bangalore who are tired of the unending traffic, can now find some respite as now they have various options to choose from. The good thing is that the advantages of a sound transportation may not show up immediately. However, the real estate prices which have seen a jump recently, may rise still further.

It is believed that the reach of the Rs. 11,609 crore – which was the revised cost mega project from M.G, Road in city to Baiyappanahalli in the eastern suburb covers 6.7 kms on elevated tracks with four stations in between.

According to the industry experts, the property prices within a two km radius around the metro have shot up from Rs. 3000 a sq. ft. to around Rs. 7,000 a sq. ft. now. Many of the real estate companies are concentrating on getting their projects on time along the metro route. A renowned realtor has around five projects in the area around Metro amongst which the three are close to the first phase of the metro. Another renowned realtor has three projects near the second phase of the metro.

According to the President of the Bangalore Realtors Association of India, it is expected that the CBD areas retail market might shoot up as common people can reach malls without facing any traffic woes and go back home easily. This trend is being welcomed in the business. However, the real estate in the CBD has shot up already.

Moreover, the Floor Area Ratio was raised from an average of 3.25 to 4. This means, the existing constructions within 150-200 metres from metro stations, could raise their number of floors. It is believed that once the rail line opens, developers are eager to expect a turnaround with business getting impacted during the metro construction work.

The project is expected to have 25 percent (Rs.2,040 crore) as subordinate debt and 45 percent senior term debt from Japan International Cooperation Agency (JICA). This is being built on public-private partnership model, what with the state and central governments holding 15 percent equity each (Rs.1,224 crore).

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