Boom time in Bangalore, demand for luxury homes hits a new high
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After a near-four-year lull, Bangalore's real estate market is enjoying a resurgence in the high-end residential property market, fuelled by a new-found demand on the city's outskirts.†
Two months ago, a luxury unit at the Kingfisher Towers went for R39,000-a-sq-ft, pricing it above the R25 crore mark. Most luxury units in Bangalore's CBD area are now occupied and investors are looking to the suburbs where units are now being sold for more than R5 crore.
According to Karun Varma, managing director, Jones Lang LaSelle (Bangalore & Kochi), a real estate services firm, the rate of absorption is set to increase further as †Bangalore's super luxury homes market is still economical than in Mumbai or Delhi.
A recent JLL report estimated the total value of ultra-luxury projects -- in various stages of construction in Bangalore -- at R6,000 crore. While NCR has the biggest chunk of such units (R5 crore and above) in the country with a 35-40% share, Mumbai has another 20%; Bangalore follows with 15-20%, said the JLL report. †
But developers are betting on Bangalore because they feel the demand environment is much more stable in the IT city than elsewhere.
A recent report by Propequity, a real estate research firm, stated that while NCR registered a decline of 42% in residential unit absorption and Mumbai by 34% during January-August this year, Bangalore declined by just 3%.
"While 60% of the NCR and Mumbai markets is driven by investors and resultant speculation, Bangalore is an end-user market even in the luxury market," Varma said. According to him, the capital values for residential property in Bangalore have increased 25% from mid-2009, not factoring inflation.††
"These are not necessarily first homes for these buyers," said Ram Chandani, head (south India), CB Richard Ellis, a real estate services firm. The Bangalore market is witnessing a new trend of the business class emerging out of the shadows cast by the professional lot, he said. Also, NRIs are buying luxury properties as their second homes on the outskirts and many villas with golf courses are also being picked up.