Bangalore – Real Estate Overview
The ‘Silicon Valley’ and the ‘Garden City’ of India
An introduction to Bangalore
Bangalore (renamed as Bengaluru) is known as the IT Capital of India. Bangalore has an estimated metropolitan population of 7 million, making it India's third-largest city and fifth-largest metropolitan area.
Evolution of Industries in Bangalore
During British Raj, Bangalore developed as a centre for colonial rule in South India. The establishment of the Bangalore Cantonment brought in large numbers of migrant Tamilnadu and Andhra Pradesh and North Indian workers for developing and maintaining the infrastructure of the cantonment. After India gained independence, Bangalore evolved into a manufacturing hub for public sector heavy industries—particularly aerospace, telecommunications, machine tools, heavy equipment, space and defense. After the liberalization of India's economy has led to the growth of India's information technology industry. Bangalore is referred to as the Silicon Valley of India and accounts for 35 percent of India's software exports
Contd…
Bangalore experienced a boom in its real estate market in the 1980s and 1990s, spurred by capital investors from other parts of the country who converted Bangalore's large plots and colonial bungalows to multistory apartments. The establishment of multinational companies such as ANZ Bank and Citibank as well as international fast food chains such as Pizza Hut and Kentucky Fried Chicken (KFC) in the 1990s continued to expand foreign investment in Bangalore. Through the 1990s the state government promoted large-scale development projects such as the construction of sports stadium and exclusive apartment complexes.
In the mid-1990s, Bangalore's economy grew many fold because of the software boom.
Influence of IT on Bangalore Real Estate
INDIA’S booming economy and more liberalized laws for foreign direct investment (FDI) are creating waves in the real estate market. Bangalore accommodates the highest number of employees in IT-ITES sector in any Indian city. Bangalore has the highest number of higher education institutes in any Indian city. Bangalore has the largest resource pool in the form of graduating students suitable for IT-ITES. Bangalore has the second-highest upcoming supply of IT-ITES real estate space in the country. Bangalore has a favourable policy framework for ITITES development.
Classification of Real Estate
Real Estate market is divided into 4 segments based on their Demand Drivers, Potential Business Dynamics and Profitability. The classifications are:
1.Commercial
2.Residential 3.Retail & 4.SEZ’s
Subdivisions…
Commercial
Office complexes IT Parks Shops Office buildings
Residential
Apartments Villas Row houses Plots
Retail
Malls Shopping centers
SEZ
Contd…
Commercial segment – creating office space Commercial development comprises building modern office complexes, IT Parks, shops, smaller office buildings, etc. The demand in this segment is currently driven mainly by the IT and ITES sectors. Residential segment – driven by housing needs The residential segment, the largest in the real estate sector in India, involves development of properties for housing and includes apartments, villas, row houses and bungalows. As part of residential real estate, developers also offer plots for buyers who wish to build their own homes. Retail segment – a mix of shopping and entertainment With the increasing shift of retail spending in India towards organised retail formats and the emergence of malls as destinations in themselves, retail development is emerging as a prominent segment of real estate development. Special Economic Zones –the hot spot of real estate development SEZs are emerging as the new frontier of real estate development in India, involving a mix of industrial, commercial, retail, entertainment and residential property as part of one single large project. We believe SEZs are a natural business extension of real estate developers, given their experience in developing large integrated townships.
Commercial Segment
Commercial:
Commercial development comprises building modern office complexes, IT Parks, shops, smaller office buildings, etc. The demand in this segment is currently driven mainly by the IT and ITES sectors. The Bangalore commercial property market is being totally dominated by the IT sector; all the other sectors are now being driven directly or indirectly by it. Bangalore has been categorized into two zones based on development, viz. Central Business District, Suburbs & IT.
Few Facts on Bangalore commercial..
Supply Bangalore currently has approximately 12.4 million sq. ft. of IT-ITES office space in the city. There are numerous IT parks currently under construction. These are expected to add approximately 15 million sq. ft. of IT-enabled office space by the end of the calendar year. Demand The total annual absorption of IT space has been estimated at approximately 6.96 million sq. ft. Office space leasing activity is expected to rise with new supply entering the market. There is an increasing demand for larger floor plates, built-to-suit premises and quality infrastructure, which are available only in the suburbs. Vacancy The vacancy level in the CBD is less than 3 percent as against 15 percent for peripheral locations like Whitefield and Electronics City. Vacancy levels have shown in CBD owing to easy availability of Grade A office space with lower rentals in the suburbs. Capital Values and Rental Rates Average rentals for Grade A office space is quoted at INR 60 per sq.ft per month in the Prime CBD area and INR 35 per sq.ft per month in the suburbs. Both capital and rental values have increased in the CBD and suburban areas. Rentals have dropped in the Whitefield area.
IT Parks in Bangalore
Area Govt sponsored International Technology Park (ITP) Electronic City Export Promotion Industrial Park IT Corridor Project Privately developed Operation total Under Construction Total Proposed Total 5.3 million sq. ft. 10.6 million sq. ft. 67 million sq. ft.( includes 1,450 acres proposed IT hardware park by Shapoorji Pallonji at Devanahalli) 69 acres 330 acres 288 acres 19,000 acres
List of major IT Parks…
S. No Project Developer Location Build up Area (sq. ft.) Avg Rental (per Sq. ft.) Status 1 2 3 Salarpuria GR Tech Park (Phase II) IBC Knowledge Park Ozone Tech Park Salarpuria India Builders Corporation Ozone Properties Next to ITPL, Whitefield Bannerghatta Road Hosur Road 1,200,000 700,000 450,000 30-35 37-38 30-35 Completed Completed Completed
4
RMZ Centennial
RMZ Corp
Brookfield
Campus I- 225,000 Campus II200,000 Campus III-200, 000 100,000 700,000 439,000 800,000
30
Completed
5 6 7 8
Technology Park SJR I Park Brigade Tech Park Salarpuria Softzone Salarpuria Touchstone
Prestige Group SJR Group Brigade Group Salarpuria
ORR EPIP Zone Whitefield Whitefield ORR
40 30-35 29 38
December 07 Phase I complete Completed December 07 December 07
9
Salarpuria
ORR
350,000
38
Contd..
10 Salarpuria Supreme Salarpuria ORR 200,000 28 Completed 11 12 13 RMZ Ecospace Bharat IT Park Bagmane Tech Park Janapriya Pride AMR Tech Park Manyata Tech Park Ecozen Business Park RMZ Corp Surya Constructions Bagmane Group Engineers Synidcate AMR Group Manyata Promoters. RMZ Corp ORR Sarjapur Road CV Raman Nagar ITPL Road Hosur Road Ring Road ORR 2,000,000 215,000 260,000 40 37 32-35 Completed December 2007 4th phase under construction. Under construction 1st Phase completed Under construction 30 Completed
14 15 16 17
300,000 800,000 6,000,000 110,000
35 30-35
18
19 20
Adarsh Tech Park ( Warm Shell)
Cessna Business Park Fortune Soft Tech
Adarsh Developers
Prestige Group Upkar Associates
ORR
ORR Whitefield
4,000,000
1,200,000 150,000
38
35 28
Under construction
Completed Completed
Commercial Selling Rate.
Location
Bannerghatta Road Brigade Road Brunton Road Commissariat Road Cunningham Road Dickenson Road Infantry Road Lavelle Road M.G.Road Old Madras Road Outer Ring Road Residency road Richmond Road Sarjapur Vittal Mally Road Whitefield Jayanagar Koramangala 5000 2500-4500 1000-4000 3000-3250 1800-1900 2500-4500 3500 2500-5000 2500-5000 2500-5000 2500-4500 2000-4700 2500-5000 3500-4500 2500-4000 3500-4500 2500-4500 3200-3500 2500-3750 2000-3000 2500-4000 4000-5000 3500-5500 3000-5000 2800-3750 2200-3500 2500-4500 2500-4500 2500-5000 2000-4000 2000-4000 4000-4500 4500+ 3000-3600 4500+ 2200-3000 3000 3500 4500+
2001
2002
2003
2004
2005
2500-4000 4500+ 4500+ 4500+ 4500+
2006
5000+ 4500+ 4500+ 4500+ 4000 4500+ 4500+ 4500+ 3500 3500-4000 4500+ 4700+ 3500 4500+ 2400 - 3200 4000 4000
2007
3000 - 4000 5500 - 9000 4500 - 6000 4500 - 5000 4500 - 5000 4000 - 5000 4000 - 5000 3000 - 4500 4000 - 9000 2500 - 4000 3500 - 4500 4500 - 5000 3500 - 5000 3500 - 4500 3000 - 5000 2600 - 3500 3000 - 4500 2500 - 4500
Retail Retail activity in Bangalore has mainly been concentrated on the high streets with Brigade Road, M.G. Road, and Commercial Street as the main retail streets of the city. Lately the retailing has also grown out of these streets and markets in suburbs like Jayanagar 4th block, Sampige Road, CMH road Indiranagar and Koramangala which are fast emerging as the retail destinations for suburban Bangalore. Hospitality The hospitality sector in the city mainly caters to the Business travelers. As per an estimate approximately 80% travelers to the city come here on business trips. Though the tourism sector growth also has had an influence on the influx of travelers in the city, it is business especially the IT sector, which is the major pulling factor
Retail Segement
Retail is a mix of shopping and entertainment
With the increasing shift of retail spending in India towards organised retail formats and the emergence of malls as destinations in themselves, retail development is emerging as a prominent segment of real estate development.
Retail activity in Bangalore has mainly been concentrated on the high streets with Brigade Road, M.G. Road, and Commercial Street as the main retail streets of the city and then it moved to other areas like Jayanagar 4th block, Sampige Road, CMH road Indiranagar and Koramangala. And now it is moving further into suburbs like whitefield and sarjapur which are fast emerging as the retail destinations for suburban Bangalore.
Retail Market in Bangalore
After leading the IT bandwagon, Bangalore is poised to grow as a Retail hub. Retail sector is vibrant with growth happening in all related areas like malls, hypermarkets or single brand luxury stores. Bangalore witnessing a retail revolution and by year end the retail stock is expected to reach a whooping 4 mn sqft. The family entertainment concept is fast picking up & new malls are complimated with cinemas, food courts & entertainment venus. India’s biggest mall is coming up in Sarjapur road with the area of 1.75 mn Sqft. (Mantri Developers) Organized Retail market is zooming ahead with an annual growth rate of 30%.
Upcoming malls in Bangalore
Name Forum II Sigma Grand Garuda Swagath Mall Mantri Mall Gopalan Mall Lido Mall (Hotel) Brigade mall Sobha Global Mall Big Bazzar UB City Mantri Mall Location Whitefield ORR Jaya Nagar Sampige road Old Madras road Ulsoor Road Malleshwaram Minarva Mills (Rajajinagar) Whitefield Vittal mallya road Sarjapur road Developer Presitge Estates & Projects ltd IDEB construction Euroamer garuda Projects Mantri Gopalan Gesco Corp Brigade Sobha Developers Vaswani Group UB - Presitge JV Mantri 1750000 End 2008 Project Size (Sqft) 500000 600000 60000 20000 720000 220000 650000 1000000 140000 Mid 2007 Completion Mid 2008 Mid 2008 End 2007
Areas of Growth
The city is seeing commercial market (IT) explosion on Northern, Southern, Eastern and South-East. Side with Airport Road and Sarjapur Road becoming the main commercial hubs after CBD. The overall cityscape is developing on South, West and South Western side with number of Software parks marking the new skylines of the city. With the take-off of the international airport project, Devanahalli and the route leading there are becoming favoured destinations of developers. North Bangalore is poised to become the key growth area with the thrust on Bellary Road, Yelahanka and Devanahalli. This growth has also triggered the growth in the residential market with high-end residential developments being developed in and around these software parks.
Residential Segment.
Residential segment is driven by the housing needs of people. The residential segment, consists the largest part in the real estate sector in India. It involves development of properties for housing and includes apartments, villas, row houses and bungalows. As part of residential real estate, developers also offer plots for buyers who wish to build their own homes.
Bangalore residential market.
Bangalore, the capital of Karnataka has a pop of 7 million & has emerged as the fastest growing city in Asia . Prime residential areas in central Bangalore continue to witness a steady demand. In an effort to counter the lack of premium quality accommodation in CBD leading developers are focusing on launching small projects with all modern facilities.
Many builder have launched new projects in and around North Bangalore. This area is attracting investors and endusers.
Bangalore expects an estimated 3000 units of various sizes and quality, to be added to this micro market within the next 18 months, in addition to the existing stock.
Big time players…
Sobha Purvankara Prestige Brigade Adarsh Mantri (Morgan stanly has invested in mantri) SJR Nitesh Estates (Sichen Bank has invested 250 Cr) Golden Gate Properties
New Players..
DLF B. Raheja Confident Group RNS ETA Godrej
Residential Rental Rates
Location
Airport Road Bellary Road Banashankari Bannerghatta road Cox/Fraser/ cooke town IN & around MG Road J.P.Nagar Jayanagar Lavelle Road Koramangala Malleshwaram Off M G Road Richmond Road SarjapurRoad SarjapurRoad - Villas Whitefield – Villas
For 2 B/R apartments
15,000-20,000 11,000-15,000 12,000-20,000 15,000-22,000 12,000-25,000 25,000-1,25,000 15,000-25,000 12,000-20,000 18,000-1,00,000 12,000-18,000 12,000-20,000 15,000-70,000 18,000-,1,00,000 12,000-18,000 -
For 3 B/R apartments
16,000-40,000 12000 - 25000 12,000-30,000 18,000-30,000 20,000-70,000 30,000-1,50,000 15,000-30,000 15,000-45,000 20,000-1,50,000 18,000-50,000 25,000-50,000 30,000-1,50,000 25,000-1,40,000 18,000-40,000 25,000-60,000 20,000-,1,35,000
Whitefield – Apartments
10,000-15,000
18000 - 25000
Approx. Selling Rate/Sqft
Location
Airport Road Banashankari Banaswadi outer ring road Bannerghatta Road Basavangudi Basaveshwarnagar Ballandar Sarjapur Road Ballary Road Ballary Road(Off) Benson Town Brookefield BTM/MICO Ltd Cambridge Road Cambridge Layout Chamrajpet Coffee Board Layout Cottonpet Coxtown /Fraser, Cooke Town, Cunningham Road 1800-2100 1500-2000 2200-2400 1500-2800 2100 1000 1200-1700 1800-2100 1350-2100 1750-2500 1200-1750 1150 1500-1600 1500-1800 1700 1000-1350 1200-1600 2500-2800 1800-2100 2500-2900 2500-3000 2500-3000 1350 1700-1800 1700-2000 1800-2500 1200-1850 2000-3000 2700-3000 2500-3000 2000-2500 900-1000 1500-3500 2000-3500 2000-3500
2003
1300-1900 1200
2004
1450-1900 1600-1900
2005
2200-3000 1500-2000
2006
2700-3500 2000-3000 2200-2400 2400-3500 2400-3500 3000-3250 2500-3500 2500 2500 3000-4000 2500-3000 2500-3000 5000 3500-4500 3200-3500 1800-2000 2800 3200-3500 4000-7000
2007*
2700 - 4000 2000 - 3200 2200 - 2600 2400 - 3800 2400 - 3700 2700 - 3400 2500 - 3600 2200 - 3200 2200 - 3000 3000 - 4300 2500 - 3200 2500 - 3300 3500 - 5500 3000 - 5500 2800 - 3600 1800 - 2200 2600 - 3000 3200 - 4000 4000 - 8000
Contd..
Location
Kalyan Nagar Kanakapura Road(upto metro) Off Kanakapura Road Koramangala Hanford Road Lavelle Road Lingarajapuram Madiwala Magadi Road Mahalakshmi Layout Malleshwaram Marathahalli Off M.G.Road Are Old Madras Road Out Ring Road -Sarjapur road Jn Padmanabh nagar Rajajinagar Raja Rajeshwari Nagar Residency road Richmond road 2500-4000 1200-2500 1375 1200-1500 1250-1600 900-1200 1800-2500 1500-2500 1800-2000 1100-1700 1600-2200 2500 1900-2200 2400-2800 2400-2800 1000-1100 1000-1400 1000-1500 1000-1400 1950-2400 2750-3750 2800-3000 3000-4000 1200-1300 1200-1500 1000-1500 1100-1500 2200-3000 1000-1600 3500-6500 2200 1450 1500-2500 2000-2500 850-1200 3000-4000 2300-3500
2003
2004
1000-1500 1200-1550
2005
1200-1700 1550-2000
2006
2500-3000 2000-2750 3125 3500-4000 5000-6000 7000-10000 2500-3000 2500-3500 2500 3000-3250 4000-6000 2300-2600 5000-7000 2500 3350 2800-3000 3800-4500 1800-2200 5000-7000 10000
2007
2400 - 3200 2200 - 2800 2800 - 3400 3500 - 5000 5000 - 7000 7000 - 13000 2500 - 3500 2500 - 4000 2500 - 3000 2500 - 3400 4000 - 6000 2300 - 3000 5000 - 10000 2200 - 2700 2700 - 3500 2800 - 3200 3500 - 4800 1800 - 2300 5000 - 9000 7000 - 12000
Contd..
Location
RMV Extension
R.T.Nagar Sadashiv nagar Sanjay nagar Sarjapur outer ring road Thanisandra Tumkur road Vijaynagar Ulsoor whitefield Wilson Garden Yelahanka 850-1200 1400-1700 1075 1330-1550 1800-2200 1300-1700 2000-2200 1150-1400 1350
2003
2004
1500-2500
1700-1900 2000-3000 1150-1400 1000-1700
2005
1800-3000
2000-2500 2500-3700 1500-2200 2350-2750 1700-1900 1800 1800-2500 2200-2500 2000-2500 1500-220 800-1100
2006
3000-4500
2500-3500 4500-9000 3200-4000 2000-2700 2000-3000 1800-2200 2500-3200 4500-6000 2200-2700 3500-4500 1800-2200
2007
3000 - 5500
2500 - 3800 4500 - 10000 3000 - 4200 2300 - 3200 2200 - 3300 1800 - 2200 2500 - 3400 4500 - 6000 2000 - 2700 3500 - 5000 2000 - 3000
SEZ’s in Bangalore
Karnataka has been proactive and Constantly on the path in making the ambience more conducive for investments and trade on the SEZ front. The proactive steps taken by the Government has resulted in encouraging the establishment of SEZ's in IT & ITES, Hardware, Apparel, Petrochemicals, etc, through both public and private initiatives.
List OF major SEZ's in Bangalore
Project (Developer)
Divyasree Infrastructure Chaitanaya Infrastructure Private Ltd. Bagmane Developers Private Ltd Concord Investments Bagmane Developers Pvt. Ltd.
Sector
IT/ITES IT/ITES IT/ITES IT/ITES IT/ITES
Location
Bellandur Amani Kane. Whitefield Main Road. Raman Nagar . Devanahalli C.V. Raman Nagar
Area
20.23 hectares 20.24 hectares 15.5 hectares 13.44 Hectares 12.14 Hectares
Primal Projects Pvt. Ltd
HCL Technologies Golden Gate Developers Private Ltd San Engineering & Locomotive Company Ltd Vikas Telecom Limited Cessna Garden Developers Pvt. Ltd.
IT/ITES
IT/ITES IT/ITES IT/ITES IT/ITES IT/ITES
Bellandur, Varthur Hobli.
Jigani Indl. Area. Jaala Hobli North. Sadaramangala Indl. Area, Whitefield. Devarabeesanahalli Village, Varthur Hobli. Marathahalli-Sarjapur Outer Ring Road.
12.65 Hectares
11.05 Hectares 26.30 Hectares 10 Hectares 36.85 Hectares 19.22 Hectares
Tanglin Developments Ltd. ITPL. Adarsh Prime Projects Pvt. Ltd. Manyatha Promoters Shmaraj and Co (India) Pvt. Ltd. Hewlett Packard Wipro Infotech
IT / ITES IT / ITES IT / ITES IT / ITES IT / ITES IT / ITES IT / ITES
Bangalore - Mysore Highway Whitefield Devarabeesanahalli, Boganahalli Nagawara & Rachenahalli Villages Khudalahalli, K.R. Puram Whitefield Main Road Electronics City
26.6 Hectares 10.8 Hectares 27.9 Hectares 22 Hectares 30 Hectares 7 Hectares 6.84 Hectares 36 Hectares 100 hectares 43 acres 15.732 hectares. 900 acres
Wipro Infotech
Biocon Limited Hinduja Investments Private Limited KBITS Ittina Properties Private Limited’s
IT / ITES
Bio Technology Textile and apparel Bio technology Hardware and software Aerospace industry
Sarjapur Road
Bommasandra Indl Area Doddamannugudde Electronics City Bagur Village, Hoskote Devanahalli
Bruhat Bangalore Mahanagara Palike
Bruhat Bangalore Mahanagara Palike
BDA Area Peripheral ring road Outer ring road
Bruhat Bangalore Mahanagara Palike
(Greater Bangalore)
Bruhat Bangalore Mahanagara Palike (BBMP) is the new administrative body for the city of Bangalore. The final notification on the formation was made by the Government of Karnataka on Jan 16 2007. The newly formed body would extend the urban area of Bangalore city to better manage the challenges posed by the exponential growth.
BBMP would include areas currently administered by 7 City Municipal Councils(CMC) Rajarajeshwarinagar, Dasarahalli, Bommanahalli, Krishnarajapuram, Mahadevapura, Byatarayanapura ,Yelahanka and One Town Municipal Council Kengeri and 111 villages around Bangalore in addition to the area currently administered by Bangalore Mahanagara Palika (BMP).
Contd..
Objective behind formation of greater bangalore is:(a) BBMP will have a seamless, effective and wellcoordinated management structure with administrative structures and legal framework that have undergone scrutiny. (b) Improve and co-ordinate infrastructure development for road and transportation network, water supply and Solid WasteManagement. (c) Strengthen administrative capacity to ensure better enforcement of various rules/regulations as also better co-ordination in service delivery. (d) Greater administrative capacity will make for better enforcement of rules and regulations. (e) Optimise expenditure on establishment.
Catalyst for development of market.
Rising interest rates were a concern initially, however, they have failed to deter end-users and the property prices may stay mostly unaffected in the medium term. Sarjapur Road/ Outer Ring Road in south-east Bangalore will continue to be a preferred location for IT/ITeS employees, due to the excellent connectivity to office destinations and theimproved infrastructure. The prime residential market in central Bangalore and its vicinity will continue to command high rental values due to the rise in demand and restricted supply. Efforts on improving Bangalore's infrastructure have received an impetus with various initiatives being undertaken by the government including development of the Peripheral Ring Road, the elevated highway from Silk Board Junction to Electronic City and re-laying of the Outer Ring Road from Hebbal to Old Madras Road. Underpasses are being constructed at critical junctions and the city will have metro rail connectivity by 2010. These initiatives will improve the access to suburban and peripheral locations, acting as a catalyst in the overall real estate growth of these micro Markets
Upcoming Areas…
Devanahalli
The new Bangalore International Airport at Devanahalli will put Bangalore city on the global destination and offer travelers facilities comparable with the best international airports. Due to coming up of BIA developers are lapping up land along the highway and beyond. 6 – Lane road is being developed connecting bangalore to devanahalli. Land prices are rising, where 1 acre was available at 1cr 1yr back is now quoted more than 3 cr.
Sarjapur Road & Electronic city
Most of the major builders have started project or bought lands for future development around sarjapur road This area is an intersection between devanahalli and electronic city Most of the IT companies have their establishment in Electronic City Govt has planned to develop a 1000 Acre HITEC City between Sarjapur Road and electronic city.