From ET Realty
Indian realty market could see a revival in 2016, according to a report by property consultant JLL India and Royal Institute of Chartered Surveyors (RICS). More than 70% of the investors expect improvement in sales in the next 12 months, says the report. Bengaluru, in particular, is seeing a pick-up in realty. It has beaten the national capital region to become the second most preferred investment destination for investors, after Mumbai.
The demand, which is mainly being generated from the commercial real estate segment, is largely being driven by private equity (PE) players. “PE investors are attracted to Bengaluru, as it is a highly corporatised market with good quality tenancies. The IT firms pay decent rents, the lease terms are good and it’s a stabilised market where demand and supply has always been kept neck-to-neck,” says Juggy Marwaha, Managing Director, South, JLL India.
The average price growth in Bengaluru’s residential areas, in the last three years, has been around 23%, which is higher than the average price growth in all other major destinations Delhi NCR (18%), Mumbai (22%) and Pune (17%).
Areas such as Hebbal saw a 67% growth, with average property prices rising from Rs 4,250 per sq. ft in 2012 to Rs 7,100 per sq. ft in 2015. Even though, going forward, experts expect the price growth in residential properties to be muted, there are a few opportunities, in this segment as well. Mid-range residential projects, in particular, are in a sweet spot. This does not mean there are no opportunities for retail investors.
They can find affordable commercial units in North Bengaluru, which may turn out to be good investments, owing to the demand from e-Commerce businesses and startups in the area. “North Bengaluru (Thanisandra and Hebbal) has better prospects than East Bengaluru (Whitefield and Brookfield), owing to better infrastructure and metro connectivity,” says Satish B.N., Executive Director, South India, Knight Frank India.
“Owing to the new set of people joining the city’s IT brigade, the mid-range segment is doing better than other projects and investors can also looking at renting out the properties after purchase,” says Marwaha. The price appreciation in the mid-range segment (Rs 3,500-5,000 per sq. ft) is high because of the demand and availability of customers in the market. Thanisandra and Yelahanka in North Bengaluru are the upcoming areas.
“You can expect up to 35% price escalation in Thanisandra and up to 30% in Yelahanka, if you buy now and can hold for next 4-5 years,” says Marwaha. Other areas in the North such as Nagwara, Hoskote, Kanakpura are also good areas to invest in.