Demand for Bangalore penthouse rentals slumps

Bangalore

A simple search on penthouses on rent in Bangalore throws up umpteen options. The super rich, who bought these trophy flats at a premium, are now fishing for tenants. Many penthouses with a good view, location and space have remained unoccupied for the last 4-6 months as owners are holding steady on rental rates even as demand has slumped.

Many landlords are keen on corporate leasing. But the prevailing cautious sentiments have forced companies to be prudent with high value tenancy deals. Besides, tenants have the option to rent a villa for the price of a penthouse.

"Penthouse is a premium product. The number of enquiries from expats has fallen after the slowdown. The rental values for penthouse flats are now 15-20% less compared to the 2007 levels," said M R Jaishankar, CMD of Brigade Group.

In Bangalore, penthouse sizes range from 3,000-5,000 sft. As penthouses rents are steep, MNCs are evaluating small configurations with lower rentals. "There is very little demand for penthouses demanding a rent of Rs 2.5-3 lakh per month," said Anuj Puri, country head, Jones Lang LaSalle India.

A 4,000-sft penthouse at Lakeside Habitat in Hebbal with an additional terrace space of 1,500 sft is priced at Rs 2.5 lakh a month. "One of the VPs of IBM vacated the flat. It has been lying vacant for the last 4 months. We will fill the vacancy. However, many tenants are negotiating on the rentals asking us not to increase rent when the contract comes up for renewal," said Siddique Beary, director of Beary's Group that developed Lakeside Habitat.

A 4-BHK penthouse in Prestige Acropolis measuring 3,100 sft commands a rent of Rs 1 lakh. A duplex penthouse in Sobha Ivory on St John's Road is available for rent at Rs 1.30 lakh. Penthouses in Embassy Habitat, Prestige Shantiniketan, Vaswani Exotica are lying vacant for a few months, say sources tracking the sector.

A 4,500-sft duplex penthouse in Nitesh Buckingham on Lavelle Road commands Rs 3.50 lakh as monthly rental. One in Mantri Sarovar in HSR Layout is available for Rs 82,000 a month. "The supply outstripped demand especially on the periphery. The incremental supply also indicates investor stock in the market," said Anand Narayanan, national director-residential in property consultancy Knight Frank India.

The rental yield on penthouse flats has reduced over time. "A rental yield of 4-5% is very optimistic. A 2% rental yield on capital value of Rs 10,000 per sft is more practical," he added.

As companies move away from perquisites to a cost-to-company structure (CTC), employees have more options. "This allows employees to consider smaller configurations at around Rs 1 lakh rent. When rent is as high as Rs 2 lakh, one would wonder if it would be more economical to purchase something. The rental market can stay afloat if there is an imminent capital value correction," said Prashanth Sambargi, partner at Mars Realty.

Source : www.magicbricks.com

Hosur Road offers affordable housing options

Bangalore

Hosur road, a locality in South Bangalore has emerged as one of the preferred affordable residential areas in Bangalore. Economic drivers of growth here are improved connectivity through the elevated Highway, proximity to malls, education and medical facilities and infrastructure development. In addition, the road is part of NH-7, and IT hub Electronic City runs along the same road.

One of the major reasons that this locality is witnessing an increase in demand for houses is the emergence of social infrastructure around South Bangalore like the NICE Road, and the upcoming Peripheral Ring road project. The presence of companies like Wipro, Quinnox Consultancy Services Ltd, Cresys Technologies, among others attracts professionals to this part of the city. Moreover, since eateries such as McDonald's, Little Italy, and Manchester United Restaurant are closeby, it is also another factor for people to live here.

S S Asokan, Executive Director, Shriram Properties believes that Hosur road market will take off within 5 to 7 years from today. "Industries, technology companies are coming up there. Electronic City will see a lot of better quality infrastructure," he added.

Although this area boasts of positive factors for growth, yet it also offers many affordable options. The capital value of apartments in this area are between Rs 2,500 to 3,200 per sq ft. Ramani Sastri, CMD, Sterling Developers pointed out that Janadhar on Hosur road has houses available in the range of Rs 5 to 7 lakh and the area would be between 415 and 700 sq ft.

Introduction of metro lines in South Bangalore will also boost demand for residential properties further. Prominent projects in this area are Ganga Vertica by Goel Ganga Group, Vakil En Casa by Vakil Housing Developers, Salarpuria Sattva Greenage by Salarpuria Group, Skylark Zenith by Skylark Mansions Pvt. Ltd, Sipani Grande by Lifestyle Homes, among others.

Source : www.magicbricks.com

Outlook positive for Bangalore North

Bangalore

After the airport was relocated to Devanahalli, the area became a much sought-after region for office development. Many corporates now have large chunks of land in the vicinity of the airport. Though development of these office spaces is yet to take off in a big way, there is a lot of buzz with the government also earmarking an aerospace park and IT park.

Infrastructure plans coupled with better connectivity is what will give this region the edge. The plan to make the Outer Ring Road (ORR) a signal-free seamless corridor will have far-reaching implications on growth along its route. The stretch from Hebbal flyover to Beninganahalli, in particular, has a lot of scope for commercial development. There are many residential projects along here and this will result in a reasonable number of commercial development too.

On the 3,000 acres of land on which the hardware, IT/BT and aerospace parks will be coming up near the international airport, there is also provision to develop residential facilities for people working in those industrial plants on about 250-300 acres of land.

The proposed high speed rail link, and signal free road which is being constructed, to the airport are the major factors driving demand in this region.

Residential catchments   

The Doddaballapur Road has emerged as a destination for residential clusters. The Greater Peenya Industrial Project along with the National Highways of India's elevated expressway has resulted in many residential projects emerging here. There will be a demand for affordable housing projects too from the industrial workforce here.

Though there is a supply of good housing projects in this region, it remains to be seen how the absorption takes place. The connectivity factor will have to be factored in.

Retail sector   

This part of the city is also witnessing a new retail market emerging. The New BEL Road is now a thriving high street shopping avenue. The Outer Ring Road (ORR) too is witnessing the emergence of retail outlets and chains to cater to the residential areas in the vicinity.

"The demand is there and the rentals are also quite high," says Sanjay Tiwari, brand manager of a store. "The introduction of FDI in multi-brand retail will lead to increased demand, which in turn will catalyse more investment opportunities in organised retail. A key differentiator of the retail sector is that it penetrates beyond the top seven cities, into areas where there is a significant shortage of wellplanned, well-developed and professionally-mana g ed shopping centres. In other words, the organised retail real estate market will spread more uniformly and more lucratively for all concerned," says Sanjay Dutt, CEO – Business, Jones Lang LaSalle India.

"The spread of organised retail's geographic footprint is a factor that retailers, depending on their product categories as well as short-term and long-term business objectives, will target. Hypermarkets will absorb the highest amount of retail real estate in Tier II and Tier III cities. Among these, they will focus on the top 35 cities – those with population bases of one million or more – in the first and second phases. Though the spread will happen in all regions, it will take place in clusters rather than in the form of carpet-bombing, since availability of retail logistics and infrastructure play a significant role," adds Sanjay.

All this will mean a sizeable chunk of the retail sector being located in the city, as its infrastructure and IT workforce will play a significant role.

Source : www.magicbricks.com

Bangalore

Despite the sluggishness in the real estate market, some recent land transactions indicate that land values remain resilient.

In one of the biggest land transactions in Bangalore in recent times, Ashok Piramal-promoted Peninsula Land has bought close to 4 acres in JP Nagar for Rs 123 crore in an all cash deal. That's Rs 30.75 crore for each acre or Rs 7,059 per sft.

"The transaction is significant as developers are showing the appetite to buy land at over Rs 7,000 per sft," said Farook Mahmood, CMD of brokerage firm Silverline Realty. Parts of South Bangalore command as much as Rs 8,000-12,000 per sft in some of the residential developments.

Rajesh Jaggi, MD of Peninsula Land, said the company was planning a high-end residential tower, with apartments starting at Rs 2.5 crore, in the JP Nagar property.

Bangalore-based developer RMZ Corp has been negotiating with Siemens to buy its 8-acre land in Koramangala. That transaction, if completed, may involve a total valuation of Rs 380 crore, or Rs 47.5 crore an acre. This is closer to the city centre than the Peninsula Land property. "We need clear land titles for the price we are paying. We are negotiating with Siemens on this," said Suresh Menda, VP of RMZ Corp. The land used to house a Siemens automotive components factory. If RMZ closes the Siemens deal, they intend to launch a high-end residential project at Rs 12,000 per sft. Nitesh Estates, Hiranandani Upscale and others are also said to have bid for the plot.

Land transactions in 2010 generally happened at much lower rates. Delhi-based developer DLF last year sold 15 acres in Whitefield to data management company NetApp for Rs 120 crore. That's Rs 8 crore an acre.

About six months ago, Mantri Developers bought 28 acres on Kanakapura Road at a per acre land value of about Rs 9 crore.

The company wants to use it to develop apartments priced at Rs 60-70 lakh.

Source : www.magicbricks.com