Saturday, June 09, 2007

Price correction in Bangalore residence realty

INDIATIMES NEWS NETWORK[ WEDNESDAY, JUNE 06, 2007 01:53:45 PM]
BANGALORE: The much-awaited price correction in the prime residential property market in Bangalore could be around the corner. The demand-supply mismatch in the city, that had fueled the sharp increase in the prices of premium residential property over the last one year, is expected to see a marginal fall thanks to the imminent supply in the market.

The existing demand for premium apartments in prime locations such as Richmond Town, Benson Town, Koramangala , Jayanagar, off M G Road, Cunningham Road, among others is expected to reduce with an increasing number of independent bungalows making way for small premium apartment complexes, according to a survey by real estate consultancy firm Cushman & Wakefield. This may also see the market stabilising in the near future.

With real estate prices surging in the past, the sector attracted huge investments leading to an increase in the number of plotted developments and villa projects in peripheral areas such as Sarjapur Road, Hosur Road, Bannerghatta Road near Jigani, Bellary Road, Doddaballapur Road and Hoskote. The survey states that this additional stock will help feed the current demand and stabilise the continuous rising values, over the next 8 to 12 months.

During the December 2006-May 2007 period, barring a few micromarkets like the Sarjapur Road/Outer Ring Road; Brunton Road/Lavelle Road and the RT Nagar-Yelahanka stretch which saw prices appreciate by over 10%, most pockets clocked a moderate rise in property prices (under 5% in a majority of localities), the survey states.

“The exceedingly high price points and spiraling interest rates during the last six months have contributed to a reduction in interest from speculative investors, resulting in a clear shift to a largely end-user-led demand. More price sensitive locations and developments in certain parts of the city would witness a rationalisation of capital values wherein the market is finally reaching price thresholds and new supply is being infused in the market at high prices,” said, Anurag Mathur, Deputy Managing Director, Cushman & Wakefield, India.

According to the survey, South-East Bangalore will see ample supply in the coming 12-18 months and this may contribute to a marginal correction in these localities. In this context it must be mentioned that the supply situation for villas in the current year in the Whitefield-Sarjapur belt alone stands at 2,500 villas. Approximately 1,40,000 units is expected to be delivered over the next two years.

OFFICE SPACE GETS PRICEY

Owning office space in Bangalore is no easy bargain. Capital value for commercial space in the much sought after central business district (CBD) has gone up by 29% when compared to the previous year, while the non-CBD locations have witnessed a 18% rise, reports M Rochan from Bangalore. According to a report by real estate consultancy firm Cushman & Wakefield, the rate for prime and grade ‘A’ commercial space in the CBD as on April, 2007 stands at Rs 6,200 per sq ft, a 29% increase when compared to April 2006, when it stood at Rs 4402.
“Bangalore as a corporate destination witnessed a boom primarily due to IT and was further fueled by ITeS, R&D and bio tech sectors,” said Anurag Mathur of Cushman & Wakefield.
This growing demand also showed that the quality office absorption in Bangalore stood at 11.42 million in sq ft in 2006 as against 1.08 million sq ft in 1999. Locations outside the CBD like Old Madras Road, C V Raman Nagar, Bannerghatta Road, Indiranagar and Koramangala have witnessed a 18% increase, with the capital value for office space standing Rs 4,500 per sq ft. Similarly, the going rate for office space located on the Peripheral Outer Ring Road is Rs 3,500 per sq ft.

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