Bengaluru Residential Real Estate Spinning Around IT/ITeS Wheel

Also known as the 'Silicon Valley' of India, the IT and start-up spree has changed the face of Bengaluru real estate. While there is no stoppage to be seen in near future for Bengaluru realty, the residential market has taken the spillover benefit from ever growing demand for commercial spaces. Investors from different cities and nations are considering Bengaluru real estate to park their money and get handsome rental returns which are comparably lower than other global property markets. So what makes investors more interested in this Indian city than any other real estate market, here are few prominent reasons-

Ever-growing job market

Bengaluru is one of the largest outsourcing hubs for IT/ITes companies globally. Few of these have established their own setup, employing skilled man force from different parts of the country. Very recently, Infosys, JP Morgan, IBM, Accenture have acquired fresh space for building up their campuses and are speculating increase in headcount in near future. Being close to some of the premier institutes for engineering and marketing, Bengaluru is close to talent pool which makes it more attractive for multi-national companies who are keen on expanding their base in India. This migrant population drives the rental demand in the city, creating an opportunity for real estate investors to earn through their property investment.

In fact, 2016 had been the most successful year for the city real estate as it witnessed highest office space transactions in five years. While Outer Ring Road is unable to match the demand for ready to occupy office space, areas like Whitefield has stepped up to fill in the gap between demand and supply of ready office space. Startups and new enterprises prefer more organised office spaces in Indira Nagar, Koramangala which are also expensive places but add to the reputation of companies. Housing demand in these areas has always been high from expats due to well-developed infrastructure along with the availability of high-end international food joints and brands in close proximity.

Also read: Bengaluru, Mumbai Asia's Top Investment Bets In 2017

Government's interest in boosting city's economy

While the private companies are keen on setting up their headquarters in Bengaluru, it is the government's initiative which is making the entire ecosystem attractive and positive for foreign ventures. Very recently, the Japanese government has shown interest in developing Exclusive Township cum industrial park, to be called World Class Industrial Park. Interestingly, this proposal is the result of increment of Japanese investments in the city as over 1,000 nationals from Japan are staying here, highest in India. Apart from this, Bidadi Smart City is also set to take off as the master plan is already under development and is expected to attract more IT and ancillary honchos to set up their base in the city.

Strong housing demand

There has been an active price movement in Bengaluru real estate movement in last 45 months with demand spread across the city. Localities with maximum housing demand are the ones having booming job market along with fresh inventory and projects which are nearing completion. According to PropTiger data, there are over 8,000 projects active in the market with more than 75 per cent in the ready-to-move segment and over 1,000 under construction. The Outer Ring Road which has been a lifeline for Bengaluru city is one of the major boosters for housing investment in the city. Some of the upcoming big campuses along ORR will be Oracle, KPMG, Uber and Apple. All of these companies, once operational will also boost rental demand in nearby areas.

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 The other side of the realty

It's true that Bengaluru real estate market has shown marked improvement in terms of prices and is performing better than any other Indian market. However, the prevailing environmental condition in the city has created crises for the local residents. Once called the city of lakes, the uncontrolled real estate development has killed the natural ecosystem in Bengaluru making the situation worse with respect to drainage, traffic and ground water level. Some of the areas have no provisions for water supply and totally dependent on tank water supply. Investors who intend to earn money through rental income or even for the end-use need to ensure with the project developer about the various provisions made for basic needs. For instance, North Bengaluru faces severe water crises while Whitefield witnesses too much of pollution due to construction causing health problems for residents.