Tag Archives: NRI investment in Bangalore

NRI professionals still bullish on Bangalore

Posted on by Track2Realty
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Bottom Line: There are certain inherent magnetic forces that attract NRI professionals to Bangalore property market.

Bangalore City, Bangalore real estate market, India real estate news, Indian property market, NRI investment in Bangalore, Housing demand in silicon valley, Track2RealtyStatistics only tell half the truth when not corroborated with the overall reality. This is all the more true with the investment trends of the property market. Some of the recent NRI investment into the Indian property market justifies this theory. For example:

  • NRIs investment is shifting to Coimbatore and Kochi from Bangalore
  • Lower ticket size of Coimbatore and Kochi makes it more attractive destination than Bangalore 

However, this trend neither is just Bangalore specific; nor does it tell the comprehensive story. For example, in Delhi-NCR also, the NRI investment is shifting from luxury destination of Gurgaon to Noida. In the West, the NRI investment is shifting from Mumbai to Pune.

Does it mean that the leading cities like Bangalore are losing out to the emerging destination like Coimbatore and Kochi? “Not really,” maintains Nikhil Hawelia, Managing Director of Hawelia Group. According to him, this is not a Bangalore-specific trend but needs to be looked at the pan-India level which could answer as to why Bangalore is giving the impression of losing out in public perception.

“Among the NRIs we need to classify the difference between the retiring NRIs coming back to India and the professional NRIs who are shifting their bases back to the country of origin. Majority of the NRIs home-buyers today are professionals and they are still bullish on the traditional business destinations like Bangalore, Gurgaon or Mumbai. But the retiring NRIs are opting for Coimbatore, Noida or Pune for lower ticket size, cost of living, better climatic conditions or nostalgia of home towns,” explains Hawelia.

Manju Yagnik, Vice Chairperson, Nahar Group agrees that Bangalore is still top choice for the NRIs despite infrastructure bottlenecks. The major factor that attracts NRIs to invest in Bangalore is the booming IT sector, which is considered to be having the largest concentration of leading IT and ITeS companies.

“The infrastructure development in Karnataka including Bengaluru and other cities has 44 new projects in urban development worth Rs. 90,000 crores. Flyover and underpass projects including elevated roadways for Bengaluru will be worth Rs. 20,000 crores. The growing number of such IT/ITeS companies in Bangalore provide good job opportunities to NRIs who plan to settle down in India. Moreover, exponential growth in infrastructure and real estate sector also contributes positively towards influencing NRIs to invest in the property market,” says Yagnik.

Kaizad Hateria, Brand Custodian & Chief Customer Delight Officer, Rustomjee Group maintains that Bangalore has been the fastest-growing city of India since the past few decades. IT has been the major growth driver and is responsible for aggressive real estate development in the city. Being the IT hub of India, Bangalore has a multi-cultural population with good social infrastructure, excellent educational institutes and constantly upgrading physical infrastructure.

Bangalore has become a hub for NRIs & HNIs. Bangalore has a large base of expatriates who live in the city and working abroad, families of these residents are well travelled, cultured and have sophisticated tastes. Growth in the IT Industry and a rapidly increasing number of High Net-Worth Individuals and movement of expatriates has brought Bangalore real estate in to prime focus for NRIs,” says Hateria. 

Advantage Bangalore

Bangalore Number One choice of NRIs

NRI professionals still bullish over Bangalore for shifting into India

IT/ITeS professionals major chunk of NRIs settling in Bangalore

Only retiring NRIs opting for alternate locations

It is true that the majority of the NRIs are IT professionals who want the kind of professionalism and transparency that they are used to in the developed countries. That is also the reason why the demand for office space is in Bangalore for exceeds the national average.

Another critical factor in favour of Bangalore attracting the NRI buyers is the cost of housing. Decent houses in the Bangalore property market is today selling at 6,000 rupees per square feet, which would cost no less than 17,000 to 18,000 thousand rupees per square feet in other traditional business destinations for NRIs, like Mumbai or Gurgaon.

A high number of NRIs techies who are abroad currently are attracted to Bangalore, as they are sure to find a job on their return to India. Of late, State Cabinet has cleared 7300 crores action plan to be implemented over the next two years. The Karnataka Government has proposed infrastructure improvements at various locations like Peripheral Ring Road, Metro Rail, Signal Free ORR, High Speed Rail Link, Mono Rail, and Elevated Expressway.

Thus, while the retiring NRIs might be buying properties in Coimbatore or Kochi for lower ticket size, cost of living, better climatic conditions or simple by merit of the city being the home town, it does not reflect the large-scale trend. As a matter of fact, for the majority of the NRIs in general and the NRI techies in particular, Bangalore still stands as the Number One choice to buy a property and settle in the city.

By: Ravi Sinha

Bangalore likely to remain India’s top corporate real estate market

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Bottom Line: As India’s technology sector expands its horizons, Bangalore has emerged as a dominant growth frontier offering the country’s new economy sectors such as information technology, biotechnology, aerospace, research and development, clean energy and other services sectors, a new growth paradigm.

Bangalore City, Bangalore real estate market, India real estate news, Indian property market, NRI investment in Bangalore, Housing demand in silicon valley, Track2RealtyAccording to CBRE’s latest major report—Bangalore: The Star That Shines the Brightest—the city has led the country’s corporate real estate market among leading cities over the last five years in terms of office space stock as well as office space absorption trends.

Sustained demand for office space has consistently driven commercial real estate growth in the city that crossed a milestone in mid-2013—by becoming the first Indian office hub to join the global club for 100-million-sq. ft. office markets.

Furthermore, the year 2015 recorded the highest quantum of new office space supply of nearly 12.7 million sq. ft. The city’s overall commercial office stock stands at approximately 127 million sq. ft.; compared to other prominent commercial hubs such as Delhi National Capital Region (NCR) (95 million sq. ft.) and Mumbai (87 million sq. ft.)

Commenting on the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia said, “Buoyed by improved economic sentiments, steady corporate occupier interest, and its intrinsic strengths as a pioneering hub for technology, R&D, and shared services platforms—Bangalore is likely to maintain its leadership position in the country’s corporate real estate market in the long term. The successful implementation of the Government’s policy schemes, such as Digital India, Skill India, and Make in India, will be critical for the further development of the city’s business environment.”

As per an office occupier sentiments survey conducted by CBRE in India during 2015, Bangalore emerged as the most preferred market among Indian cities for occupier expansion strategies over the next two years. The city’s successful corporate space has been primarily driven by political stability over the years, the country’s largest expatriate population, and availability of top talent for business.

Other advantages offered by Bangalore have been its connectivity with other parts of the country, an extensive public transport system including its efficient bus network and partially operational Metro Rail (Phase I). Its well-established social infrastructure and good climate are other advantages that attract and retain businesses in Bangalore.

“Bangalore will continue to offer technology firms and allied sectors a stable business environment and access to a large, skilled labor pool. Consequently, while technology sectors and back-office operations will continue to remain the principle demand drivers, new sectors such as e-commerce, online start-up ventures and biotechnology will increasingly contribute to building the city’s commercial real estate skyline. These will play a positive role in supporting the long-term expansion of the city’s commercial office sector,” said Ram Chandnani, Managing Director – Transactions Services, CBRE South Asia.

In a little over two decades, prominent corporate firms have established a large footprint in the city and driven Bangalore’s commercial market forward. The availability of good quality office spaces at affordable rents as compared to office markets in Mumbai and Delhi NCR, and the cosmopolitan nature of the city, has further stimulated office space demand in recent years.

With the completion of numerous larger sized technology parks and Special Economic Zones (SEZs), Bangalore’s investment grade office stock grew exponentially from less than 20 million sq. ft. in the early 2000s to 127 million sq. ft. in 2015—at a compound annual growth rate (CAGR) of 13% over the last 15 years. This has placed the city well ahead of other leading Indian office hubs.

At present, corporate occupiers remain focused on the Outer Ring Road (ORR) stretch between Marathalli and Sarjapur Road; going forward, an incremental shift towards newer locations such as North Bangalore is expected. This is mainly owing to factors such as attractive lease rents, improving social / physical infrastructure and residential developments in the vicinity of the office clusters.

Bangalore rental yields defy national trend

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Track2Realty investigates what makes Bangalore rental yields highest in the country.

Bangalore City, Bangalore real estate market, India real estate news, Indian property market, NRI investment in Bangalore, Housing demand in silicon valley, Track2RealtyRamakant Sachdeva was recently transferred to Bangalore by his IT firm. The bachelor who had been living in a rented accommodation in Noida did not bother much. He had it in mind that he has to pay the rent more or less the same as he used to pay in Noida. As a matter of fact, he rather enjoyed his Bangalore transfer thinking that it is an opportunity to see a new city. However, his house hunt in the new city gave him a financial shock.

A man who was paying Rs. 12,000 as house rent for a 2BHK flat in Noida could not believe that he was asked to pay Rs. 35,000 for the same kind of apartment. An increase of 300 per cent in house rent threw his whole financial plans haywire.

“The cost of this flat is around Rs. 1 crore and they asked for Rs. 35000 as monthly rent. This is close to a rental yield of 3.5 per cent. I am not sure any other city in India is giving more than 2 per cent rental yield. This is unreasonable in a place like Sarjapur and the apartment is quite far away from the main road,” says the young IT professional.

Market analysts are not surprised. They are witness to the fact that Bangalore market has been defying the rental returns of other Indian metro cities for so many years now. They maintain that the absorption of office space is a true indicator of the rental yields of the given city.

As a matter of fact, the rental yield of 3.5% is on the lower side as per Bangalore standards. As per a report by Global Property Guide the rental yields in Bangalore are anywhere between 3.7 to 4.4 per cent. The report adds that this seemingly higher rental yields are nevertheless long way below the 2007 level where the yields had been in the range of 7.16 per cent to 9.92 per cent.

Trivita Roy Associate Director-Research & REIS, Jones Lang LaSalle India categorically says that if you compare it with other cities, the rents are far more affordable in Bangalore. “For similar projects if you go to any other city you will have to pay more. Also, from the owners’ standpoint since the prices are on lower side the rental returns are in the range of three to four percent.”

In Bangalore the absorption of office space has been more than 80 million square feet in the year 2015, which is way higher than other cities of India. It has been 50 million square feet in Gurgaon. In terms of the office space consumption per household Bangalore happens to be the only Indian city that is closer to the major global cities.

Ashish Puravankara, Managing Director of Puravakara Projects points out that in the last one decade the rental yields have taken a hit across the country, even touching one per cent in many places. The lower rental yields actually indicate tow things – either the capital values shooting up or the rentals not picking up at all. For me, the rental value represents the true nature of the housing demand.

“Somebody who has to live and cannot afford to buy a house will go for rental house. So, rental values are the true indicators of housing demand in the given market. The rental have grown at a steady rate but it is the pumping of money to buy a house in markets like Delhi or Mumbai that has led to rental returns shrinking up. In Bangalore it is higher because the capital values are more realistic,” says Puravankara.

In conclusion, there are strong economic fundamental behind the high rental yields of Bangalore that defy the average national rental yields. It may not be as high as some of the other global cities and may also not be at its peak today, yet the rental yields of Bangalore are more promising to any other key metro cities of India, including even the financial capital of Mumbai.