Bottom Line: What has made Bangalore real estate market so very different? Has Bangalore been just blessed with climatic conditions, thriving economy of the region and talent pool or the developers in the city have been conscious to learn from the mistakes of other markets?
Bangalore real estate market has been the brand differentiator of Indian property landscape. Be it transparency, fair trade practices, construction quality, project delivery timelines or consumer satisfaction; the developers in the city have a much better track record.
What has made Bangalore real estate market so very different? Has Bangalore been just blessed with climatic conditions, thriving economy of the region and talent pool or the developers in the city have been conscious to learn from the mistakes of other markets?
In order to understand Bangalore it is imperative to assess the demand & supply equilibrium in the city, balance between commercial spaces and housing stocks, price point & median affordability and last, but not the least, the fair competition among the city-based developers.
Trivita Roy, Associate Director-Research & REIS, Jones Lang LaSalle India maintains there are multiple of factors to make Bangalore best investment destination. According to her, Bangalore is a stable market. It may not give the kind of returns that investors may get in other speculative markets, but it gives them the confidence that it is a stable market. So, Bangalore makes a safe market to invest. Second is the kind of quality, transparency and professionalism that a developer shows here is comparatively best in the country.
“A lot of developers here are listed companies. Also, even if they are not listed at least they have the processes in place that gives a confidence to the investors that it is a process-oriented market. And then the transparency and information availability in Bangalore is far more stronger compared to other markets of India,” says Roy.
Ashish Puravankara, Managing Director, Puravankara Projects points out that the developers in Bangalore have inherited a market where the demand is so high that they are not competing on demand. It is better to support each other on the issues that are affecting the industry. There is a huge demand in Bangalore and it is probably the only city in the world where the population has doubled in the last once decade.
“Most of the investment in Bangalore is for end use and it is a long-term investment; there is no speculative investment in Bangalore for capital appreciation. Just look at the demand of office spaces; it is the highest in Bangalore. The most important factor here is the cost of housing and if you compare the same quality of apartments in other cities you will find that Bangalore housing market is really value for money. What we are selling at 6,000 rupees per sq feet, you won’t find that at less than 17,000 to 18,000 thousand rupees in other metro cities,” says Puravankara.
J C Sharma, Vice Chairman & Managing Director, Sobha Limited adds that the overall culture of Bangalore as a city is very different. The way IT industry flourished here, the expectations of the customers were very different. The developers in this market just raised their bar to meet those expectations.
“The IT professionals wanted that kind of professionalism and transparency that they were providing to their customers. So, there has been healthy competition among the developers; they have been competing to provide quality projects. Professionalism in Bangalore market has been the best,” says Sharma.
What is also keeping the Bangalore property market realistic is that most of the housing stock in the city is below rupees 5000 per sq feet that is quite reasonably priced. The analysts fear that the moment price point goes to Rs. 7,000 or 8,000 per sq feet then that would lead to the saturation point. Of course, some of the secondary locations are reaching up to that price point.
Moreover, the new locations in North part of South-East part still have the potential to grow. Bangalore has been growing from all sides. In 2002 everyone thought Whitefield is not a good location to invest but those who invested are today enjoying. The way the commercial spaces are being added and the projected export of IT by 2020 worth 200 billion dollars from India in which the share of Bangalore is expected to be 40 per cent. So, when 2 million people will be catering to IT only, even a layman understanding of real estate would say that the growth has just begun.
By: Ravi Sinha