Understanding the emerging Bengaluru realty market
The Bengaluru residential market can be classified broadly into five micro-markets. The residential market of the city is divided fairly across the four zones (north, south, east and west) in terms of launches and absorption, with the exception of central Bengaluru.
During the first half of 2014, central Bengaluru accounted for less than 1% of the total new launches, as high prices and unavailability of land parcels deterred developers from launching new projects. A prominent project recently launched in central Bengaluru is Sanyog by Mythreyi Properties at Wilson Garden.
South Bengaluru has consistently witnessed a majority of new launches in both the first halves of 2013 and 2014, although its share decreased slightly from 47% in the first half of 2013 to 45% in the first half of 2014. South Bengaluru has generally been a preferred residential destination for employees of the IT sector due to the presence of a large number of IT companies in IT/ITeS employment hubs such as Electronics City, Sarjapur Road and Bannerghatta Road. Social infrastructure like the availability of quality hospitals and popular retail malls are some of the major reasons for residential demand in this part of Bengaluru. Additionally, property prices are relatively cheaper in the peripheral locations in the south, compared to the other micro-markets.
During the first half of 2014, 71% of the units launched within the price bracket of ₹ 25 lakh to ₹ 50 lakh belonged to south Bengaluru.
Unlike south Bengaluru, the eastern and western parts of the city have been able to increase their share of new launches in the first half of 2014. While east Bengaluru’s share increased by 21% in the first half of 2014 over the share in the first half of 2013, west Bengaluru’s share increased by an impressive margin of 33%.
On the eastern front, corporates have made large investments in office spaces in locations like Whitefield and ORR East as infrastructure initiatives fructified in tandem. This has increased the attractiveness of east Bengaluru as a residential destination.
On the other hand, west Bengaluru has been witnessing a considerable amount of developer interest owing to improving infrastructure.
North Bengaluru observed a fall of 20% in new launches during the first half of 2014 over the share in the first half of 2013, as developers were deterred from launching fresh projects on the back of lacklustre response received by various projects launched during the second half of 2013.
On the absorption front, central Bengaluru has been able to maintain its momentum during the first half of 2014, although it is insignificant in terms of absolute numbers and share. Locations like Whitefield and Electronics City are witnessing renewed traction since the second half of 2013, while residential projects along the Outer Ring Road (ORR) continue to do well. This trend is expected to continue even in 2014. The share of north and west Bengaluru has observed the steepest fall in absorption during the first half of 2014, to the tune of 24% and 30% respectively. This can be attributed to the apprehension among buyers regarding a majority of projects being located beyond the established residential areas.