Garden City (Bangalore) In Growth Mode

News Posted - 2010-10-14, Last Updated - 2010-10-14

Bangalore: The city has regained its perch as a preferred destination for office and retail space, according to a Cushman & Wakefield report.

Bangalore is expected to see highest cumulative demand of 42.1 million sft during 2010-14, followed by Mumbai at 37.5 million sft and NCR at 32 million sft, said the India Real Estate Investment report 2010 titled, Riding the Wave-Re-emergence of Indian Realty Sector released on Wednesday. It also said, with the IT/ITeS sector back on track, the city will see a surge in office space.

Bangalore continues to be foremost in the office real estate sector and hold the largest share of the demand pie. It will be the only city where the demand would exceed the supply over the next five years. This is essentially because requirements of IT companies are much larger, said Cushman & Wakefield India’s executive director (investment services) Manish Aggarwal.

The pan India office space demand in the period under review is estimated to be 240 million sft of which the top three cities (Bengalore, NCR and Mumbai) comprise 46% of the total demand. The demand for retail sector is also expected to be the highest in Bangalore with approximately 7.6 million sft. However, the city ranks third in the hospitality sector and demand for room-nights is expected to be 9.8 million during the period. Across top seven cities in the country, the demand for room-nights will be 78 million between 2010 & 2014. The total room supply expected in the top 7 cities in the same period are 88,000. Chennai is leading the seven cities with the highest average growth of 19% in rooms supply over the next five years.

Overall, the demand for residential properties is estimated to be 4.25 million units in the same period with mid range and affordable sectors capturing 70% share. The report also states that Mumbai and NCR would account for 40% of the total residential demand, while the rest is expected to come from the top seven cities. Mumbai is likely to witness the highest cumulative demand of 8, 30, 000 units. After NCR and Mumbai, it is Pune that is expected to witness the highest demand in residential sector of 270,000 units during 2010-14.

The demand for retail space across the country is estimated to be 55 million sft and. NCR, Mumbai and Bangalore are expected to account for about 37% of the total demand. Bangalore is likely to witness the highest cumulative demand for mall space at approximately 7.7 million sq. ft by 2014, closely followed by Mumbai with demand anticipated at 6.5 million sq. ft. Source: Times News Network 9/10/10

The expressways and second ring road will create more well-connected localities, and add another dimension to the city’s real estate.

Rarely would a city have seen the sort of thrust on connectivity that you can see in Bangalore today. An international airport, metro rail, a second ring road, and three expressways are in the making. While the second ring road (Peripheral Ring Road), the expressways (Bangalore-Mysore Infrastructure Corridor), the new road to the international airport, and metro rail are some time away, the airport will soon be ready.

All over the world, a trend that has been noticed significantly, is that cities tend to grow towards major transport hubs. Be it a new international airport, a road transport hub or a port, mass transit infrastructure has drawn development towards it. Economic reasons and convenience in commuting, predominantly, are the reasons offered for this trend.

In Bangalore, it has been seen that all it takes is a good six-lane road to drive growth and development in the vicinity. The Outer Ring Road saw new localities emerge all around, thanks to the connectivity it offered from the other parts of the city. This road brought many localities considered 'far off' virtually into the city. "We are now in the city", was an often-heard comment from people living 12 km from the city centre after the Ring Road was ready.

So what do these new developments hold for the city?

International airport

The fact that the international airport is coming up in the north of the city holds more significance for the localities there than just the obvious. While surely land rates will see considerable increases as the project nears completion and the airport becomes functional, the roads leading to it will see a spurt in real estate activity around. The new expressway connecting the international airport from the Outer Ring Road will see more residential and commercial hubs being carved around. On the one hand, demand will come from the gamut of services needed to run an international airport, and on the other, good accessibility and consequent proximity to the city will drive demand from both investors and those looking for a house in the city.

The ambitious tunnel project (Minsk Square to Hebbal Flyover) to augment connectivity to the airport will mean many extensions in the northern parts of the city being just 20 minutes away. This again spells good news to those holding property in these localities.

Metro rail

The connectivity that this mass transit system entails holds promise for many located near the proposed stations. The State Government's initiative of increasing the floor area ratio in these areas to promote the use of the metro rail will see a lot of rejuvenation of existing buildings. In many cases, the yield in terms of rent will increase significantly with the higher rentals that the location will command and the additional space possible in the light of the increased floor area ratio permissible.

Peripheral Ring Road

This new road, with its linkages to the Outer Ring Road, will on the one hand decongest the Outer Ring Road, and create new localities in between on the other hand. It will add to the connectivity the Satellite Town Ring Road planned between the proposed five townships will bring. This is a key infrastructure project that is coming up just as many large IT organisations in the city will be looking for another round of expansions. Connectivity and large land parcels are just what campus development needs.

Bangalore-Mysore Infrastructure Corridor

This expressway to connect Mysore, along with its five townships, will be another catalyst in the development of the city's realty. The integrated townships and the expressway's connectivity will pull development on the other side. Given the city's draw and the fact that around four new IT organisations set up shop in the State, predominantly in Bangalore, every week, this corridor will see considerable and rapid development.

Changing skyline

A rather unique aspect of Bangalore's Central Business District (CBD) has been the fast-changing skyline. A good many large and landmark buildings have been pulled down for redevelopment in the early stages of their lifetime. Corporate offices to commercial centres, the fact that solid and occupied structures are pulled down, indicates the demand and potential seen in these localities. This, along with the new road infrastructure, will see the city's realty scene changing gears.

There are a good many reasons why property is always a sound investment. Demand and supply equations apart, Bangalore offers another unique one. Even if you buy property on the outskirts, your property comes closer to the city centre every time a major new road is planned. Source: Times Property