Latest Property News on 'Bangalore'

Bangalore Real Estate- Grounded by Economic Slump

The real estate sector in Bangalore, affected by the recession, is in a dreadful situation. A sector that was riding high on the economic boom till recently finds itself grounded by the economic slump.This has left a large number of developers in the lurch even as customers wait with bated breath for the completion of projects. The sudden downturn in the last three months has not only forced developers to postpone the launch of new projects, but also delay those under construction. The gap between demand and supply has widened as sales have come down in the last six months, and especially so from September. “Let alone new launches, it will take a long time for the developers to clear the glut in the market. It will take a minimum of one year for the industry to overcome the slowdown even after measures have been initiated by the Reserve Bank of India (RBI) and Union Government,” an industry insider said.

In an effort to attract buyers, the developers are re-positioning the price by removing extra amenities to bring down the project cost. Though developers are offering discounts up to 10 per cent on the projects, some big companies, burdened with huge overheads, are struggling to bring down the rate. A few developers are also offering plots along with a housing unit, an unusual move in an industry that has become price-sensitive. Though figures on the number of unsold flats are hard to come by as no surveys have been taken up by the industry, sources estimate they run in tens of thousands. When the IT sector was bullish, the north-east, east and south-east parts of the city witnessed large-scale development — residential, office and retail — especially in K.R. Puram, Marathahalli and Sarjapur, as well as Bannerghatta Road, Kanakapura Road, J.P. Nagar and Jayanagar.While the tightening money flow has hit the industry badly, analysts say the downward trend started with the Reserve Bank of India’s (RBI) increasing the risk weightage for the real estate sector a few months ago. Read More »

Real Estate Severely Hit in Bangalore

Real estate development in Bangalore and some of the other important cities of the State such as Mangalore, Mysore and Hubli-Dharwad has been severely hit with hardly any buyers for apartments. The global meltdown is said to be having a disastrous effect on real estate business in Bangalore, one of the fastest growing cities. Housing here has now entered the buyer’s market, in contrast to what prevailed during the boom period when people desirous of shelter were at the mercy of sellers. Apartment prices, particularly on the outskirts of Bangalore, have taken a major beating given the fact that discounts, freebies and even a special interest rates for housing loans (with a certain per cent of the interest paid by the seller) are not bringing in customers. Sources in the housing sector told The Hindu that “indications showed that the people now feel that real estate prices have touched realistic levels, given the response to advertisements for apartments over the past fortnight”. It is another matter that the discounts being offered on the outskirts of the city, ranging between 15 to 35 per cent, based on the location of the property and the amenities provided therein, have not produced the desired responses. People are now in a “wait and watch” mode with the hope that the real estate market takes a further dip and they can step in at that time.

There are nearly 10 major and about 100 small apartment builders in Bangalore, with very few of them extending their operations to tier-two cities. Apartments are in demand only in Bangalore as independent houses are not very expensive in tier-two cities. Most builders are facing a crisis with hardly any buyers for apartments. This has had a cascading effect on material suppliers to the building sector, with builders unable to clear their dues. Some of them have gone back to the old system of bartering their flats to settle dues of suppliers. The apartment price band about a year ago was between Rs. 2,500 and Rs. 12,000 a sq.ft. The maximum hit is in the luxury segment — between Rs. 5,000 and Rs. 12,000 — although apartment builders in the core areas of the city such as Sadashivanagar , Malleshwaram, Cantonment areas, Koramangala and Indiranagar are still holding on to their price tags. The supply here is less than the demand and consequently builders have been dictating prices, more so, with the land values being very high in these pockets. However, apartments on the outskirts of the city — Hosur Road and all areas adjoining Electronics City, Sarjapur Road, Whitefield , Marathahalli, Yelahanka, Hebbal and Kengeri have been affected with the supply being higher than the demand. While flats in the core areas of the city are purchased for immediate occupation, those on the outskirts are normally termed as speculative investments. Read More »

Real estate crunch Affects IIM Bangalore

Faced with the prospect of escalating real estate costs and the lack of adequate finances, the Indian Institute of Management-Bangalore (IIM-B) is experimenting with “off-campus housing” to accommodate additional students from the next academic year. If the experiment works, it may set a precedent for other IIMs. With its campus in Bannerghatta already brimming, the institute has decided to take 50 apartments (150 rooms) on lease in a nearby residential building called Ajmera Complex. The plan is to lodge students from the one-year full time Executive Post Graduate Programme in Management (EPGP) — to be launched in April 2009 — in the leased apartments.

“Unless we experiment, we wouldn’t know if this is the way ahead,” reasoned Pankaj Chandra, Director of IIM-B, on the initiative. IIM-B may also accommodate some students from the Post Graduate Programme (PGP) and doctoral programme at off-campus locations. The institute is planning a bus service from its premises to the off-campus housing to make it convenient for students to travel. Read More »

Global Crisis Shakes Real Estate Bangalore

The global financial crisis seems to have hit the realty business severely, especially in Bangalore. Uncertainty in the Indian equity market and speculation over property prices have put the developers in a grim situation. Over 450 flats on Bangalore’s outskirts are still vacant despite advertisements and other promotion campaigns.

Kumar Gera, chairman of the Confederation of Real Estate Developers Association of India (CREDAI) said, “We are feeling the ripples of global slowdown. There is a 30 per cent drop in new projects this year compared to last year. It will stabilise only if the market returns to its sound health. Otherwise, the entire market will be affected badly.” Bangalore-based tier II developers are the worst hit, as their properties have not been sold in the past six months. Prakash, MD of Frontline Developers said, “I had constructed two apartments, both having 25 flats each and they have been up for sale for the last eight months. So far, I have been able to sell only four apartments.” Read More »

BIEC, CII and DMAG to hold real estate exhibitions

Confederation of Indian Industry (CII), Deutsche Messe Hannover, Germany and Bangalore International Exhibition Centre (BIEC) together will hold “BuildArch 2008” and “Build Up 2008” international exhibition, which will be held at BIEC in Bangalore from October 21 to 24. The events will provide a podium for the realty players to discuss issues pertaining to the real estate industry. The exhibition will feature over 200 exhibitors including overseas participation to the extent of 36 % spread across ten countries including Austria, Belgium, France, Germany, Spain & UAE. Key facet of the exhibition includes country-group pavilions from Australia, Italy and Korea. BuildArch 2008 & BuildUp 2008 will be held every alternate year henceforth.

BuildArch 2008 and BuildUp 2008 is set to have a grand opening in Bangalore with its inauguration with Shri Jaipal Reddy, Hon’ble Minister of Urban Development, Govt. of India delivering the inaugural address and Shri B S Yediyurappa, Hon’ble Chief Minister of Karnataka delivering the key note address. Addressing a press conference here today, Mr. J. P. Nayak, Chairman - BuildArch 2008 and President (Operations) - Larsen & Toubro Limited said,“ The absence of a quality global platform in India for local players to know and see for themselves what is currently cutting edge in the world of building materials, construction technology and architecture has finally been addressed. With the forum now available, one will see a flow of new technologies and ideas flowing into the Indian market which is healthy for the industry in the long run. We are happy to bring BuildArch to you and hope the audience and the industry finds it of value.” Speaking to media, Mr. Irfan Razack, Chairman - BuildUp 2008 and Chairman and Managing Director, Prestige Projects Private Limited said, “While there have been real estate industry events there has been none on this scale, breadth and focus. The decision to make it concurrent with BuildArch increases the combined value to an industry player or our target audience and we welcome the industry to utilize the platform to share knowledge and find better ways to learn from each other and collaborate. This is very important in the current industry context as well.” Read More »

Bangalore firms turning to budget housing to beat crisis

The global financial crisis has hit the Indian real estate sector. Property consultant Cushman & Wakefield (C&W) says the realty sector will be impacted for the next 2-3 years and JonesLangLaSalleMeghraj (JLLM) issued a statement recently saying, “The global economic meltdown is, beyond doubt, taking its toll on India’s realty sector. We can safely expect the current dynamics to prevail to varying degrees for another 14-18 months. Residential, office and retail have all been impacted at various levels.”

In Bangalore, the residential market is witnessing a slowdown as potential buyers wait in anticipation that home prices, which have dropped over the last year, will continue to decline. Developers are doing everything possible to boost sales — discounts in prices couched in schemes such as bearing 2-3% of the interest cost, flexible rates for parking, floor rise pricing as well as throwing in freebies, including semi-furnished homes. Consultant Asipac Projects says land prices in most Bangalore suburbs continued to soften, with asking prices in the east, south-east and the south down 10-25%. According to Asipac, prices of residential projects in the technology hub of Whitefield and in Marathalli were 10-18% lower than the 2006 peak levels. Barring the Koramangala suburb, prices across segments in south were down 12-25% from 2006 peaks, it said. Prices in the central and north-west areas were stable while north and north-east saw continued upward movement, perhaps due to opening of the airport, the report said. Read More »

Bangalore developer to raise $300M

MetroCorp, a Bangalore-based developer, is reportedly close to raising $300 million (about Rs 1,400 crore) from leading global financial institutions, including Prudential Corporation Asia and Warburg Pincus. MetroCorp, has three projects under execution, and has lined up a bouquet of 21 projects across India, ranging from residential and commercial to integrated townships to special economic zones.

According to the investors in the Indian realty, most mid size developers, be it at the regional levels have taken over a lot of load. The developers have got more projects than they can execute. Century Group, another Bangalore-based land bank and real estate developer, mopped up $300 million from leading fund houses Goldman Sachs and Fortress. There have been many real estate investments in Bangalore in the recent past. Morgan Stanley’s real estate investment arm made its entry into India with its first investment of about $68 million in a Bangalore-based realty firm Mantri Developers Private Ltd. Och-Ziff Capital Management Group, a leading global hedge fund, is believed to be picked up 25 per cent stake in Nitesh for $55-60 million. Red Fort Capital, a Cayman Islands based real estate private equity fund, tied up with Bangalore-based Prestige Group for a $250 million township project.

Realty demand slowing down in Bangalore

According to a recent survey there has been a slowdown in demand by 6% to 7% in Bangalore. Bangalore South stands out is preferred area for investment followed closely by Bangalore North and East. Together, these three account for 77 per cent of the demand from Bangalore. While taken as a percentage of total demand, there has been absolutely no variance in the demand within sub-cities, indicating that the property hotspots and the demand equation within different sub-cities had stabilised in the last few months.

Another finding on the demand for properties on rent indicates the demand for rental properties is maximum in Bangalore South (33 per cent of total), followed by Bangalore East (29 per cent) and Bangalore North (17 per cent). The demand for residential properties on rent in Bangalore South is thrice the demand in Bangalore Central and twice the demand in Bangalore North. There has been a drop in the demand for rent in most of Bangalore sub-cities during the review period, ranging between 1-10 per cent.

Luxury homes coming up in Bangalore, to cost upto Rs 25 cr

Bangalore city is getting ready for luxe homes that cost a cool $3-5 million. That’s a whopping Rs 15 crore to Rs 25 crore for an apartment. The onslaught on the super-premium condo category is being crafted by leading global luxury hospitality chains, business tycoons like Vijay Mallya and Donald Trump and real-estate developers. Typically, each residence would have a built-up area ranging between 2,500 and 5,000 sqft. The penthouses might go up to 9,000 sqft, with swimming pool. At Rs 20,000 to Rs 25,000 per sqft, it should lighten your bank balance by Rs 15 crore to Rs 25 crore.

Globally, such houses come with a 24-hour concierge service, housekeeping, sommelier service, access to food and beverage, all for a monthly charge that could start at $1000 (Rs 50,000) and going up to over $10,000 (Rs 5 lakh). End-users can buy these properties and then lease them back to the operators for defined periods and earn up to 12% of the total cost of the home as rentals. Industry analysts say most buyers are likely to be expats and NRIs used to such lifestyle. Developers feel there is also a growing number of Indian CEOs and high-net worth individuals who are demanding the most luxurious homes — most appealing interiors, the ultimate in-service and absolute exclusivity — all of which a branded residence can offer.

Sunil Mantri to invest in Karnataka

Mumbai based real estate developer Sunil Mantri Realty Ltd (SMRL) will invest around Rs 20,000 crore across the country in the next eight years, a top official of the company said. The company launched a residential project ‘Mantri Royale’ in Bangalore. Sunil Mantri, chairman of SMRL, said the projects would be part-funded through a mix of internal accruals and debt.

SMRL is investing in Karnataka and Tier II and Tier III cities. He said the projects with an overall outlay of Rs 2,500 crore would be promoted in Karnataka in the next five years. The company’s equity in Karnataka projects would be around Rs 500 crore and another Rs 500 crore will be a debt fund while the remaining funds would come from customer advances. He said the company would launch two residential projects in 2008 and six mega township projects each with minimum of 25 acres in 2009 in Bangalore. Read More »