Growth on the cards

Growth on the cards
The property segment is gearing up to meet the growing expectations of entrepreneurs and homebuyers.
The Times of India

As the fastest growing cities in Asia, Bangalore is home to the world's top ten software corporations and the largest Indian software companies. No other city

across the country has evinced so much interest from residents and NRIs like Bangalore with its strategic location, socio-economic profile, a vast pool of

technical talent, congenial environment and business conditions. Defying political upheavals and infrastructure bottlenecks, Bangalore's realty market continues

its lead by luring more property developers and investors to its fold.
The state government has initiated several measures to speed up the much-needed infrastructure development. What is baffling both developers and housing

finance companies (HFCs) alike is the pace at which the demand has been consistently growing across all markets.
Home front
While the final comprehensive development plan is still awaited, sources in the industry say that homebuyers will see multiple options by the end of the year as

35 new projects are awaiting approvals to enter the market. Bangalore's annual home loan market has been estimated at Rs 9,000 crores, and HFCs and banks are

gearing up to meet the growing demand from homebuyers.
On the product front, there has been a sea change in terms of quality, improved specification and amenities offered by top-notch developers. Future homes will

be equipped with sophisticated electronic safety equipment, less dependant on manpower and what is more, with reduced maintenance cost. Right from

automated doors to automatic switching-off lights, the facilities will have to be incorporated at the planning stage itself as it involves certain amount of

cabling work, according to leading architects.
With demand for apartments and villas from NRIs reaching a new high, a few developers have started focusing on niche homes to replicate the lifestyle

experienced by them abroad. American homes will soon dot the skyline of Whitefield as some builders are creating the lifestyle, which US NRIs have been

accustomed to in the silicon valley. There is more to those yearning for villas. The facilities made available while building villas will soon be extended to

exclusive apartments appropriately termed as 'villas in skies'.
Office market
The office market absorption level so far this year has already touched 8.1 million sqft surpassing last year's aggregate of 7.25 million sqft. Significantly, the

absorption for the whole year is likely to reach a record level of nine million sqft, which is considered as the highest absorption level recorded in a year in any

Indian city so far, according to a report published by the CB Richard Ellis. The anticipated supply level in 2006 is said to be 7-8 million sqft out of which 60

percent will be to build-to-suit developments. Project turnaround time has been considerably brought down from 12-14 months hitherto to 8-9 months now

resulting in cost saving and at the same time meeting the time bound needs of MNCs and corporates to set up operations.
Retail
Retailing is gaining momentum with current vacancy levels pegged at 3.3 percent. It is expected that retail stock will touch 3.6 million sqft by end 2007. Besides

10-15 malls are under various stages of planning. A significant development is that the trend in mall development has now shifted to suburbs like J P Nagar,

Indiranagar, Jayanagar, Outer Ring Road and Sarjapur Road.
Hospitality
On the hospitality sector, there is a shortage of hotels where existing units cater to 60 percent of the actual requirements. With new hotels in association with

international chain in the pipeline, serviced apartments are gearing up in the interim to offer stopgap arrangements both in terms of cost and prolonged stay at

competitive cost.
Outlook
The yield on investment in commercial property is said to range from nine to 11 percent per annum with investors' overriding preference for leased properties

to MNCs and corporates. However, in recent times developers are positioning investment opportunities at less than nine percent, as the acquisition cost of land

has been very high. Sources say that 23 international companies with a majority of them based in US are seriously looking at investment in realty sector.
The entry of established developers from other cities will reinforce the faith in the market and improve the end product, feel realtors. Besides standalone

projects, they are keen to launch projects in joint venture with local developers.
The state government's investor friendly policies on SEZs will supplement the momentum generated earlier. A high level committee has recently given the

approval for product specific SEZ status to three projects comprising 12 million sqft commercial development. The cabinet has cleared US$ 3 billion investment

proposals that will trigger off a new wave of development in the real estate market.
The real estate market in the next three years will remain buoyant if the pace of demand and the number of players entering the market to confidently launch

new projects are any indication. The demand for office space will continue to be driven by IT and ITES sector in 2006 and 07. In addition to the growth of

existing MNCs in India, future years will see entry of tier two and three firms, both European and US, into India. While these firms may not be looking at

built-to-suit developments, they will be looking to set up facilities in readily available speculative developments. These firms will probably be the largest space

consumers in the years to come.
With a firm investment commitment by global giants like Microsoft, Cisco, Intel and HP in Bangalore, there is no denying that real estate demand will hit a new

high necessitating a multipronged strategy on the part of property developers and state government to meet the growing expectations of all sections of

society.