Posted on Feb 16, 2013 by admin

With improved connectivity, social infrastructure and a range of amenities, suburbs are becoming lucrative destinations to invest in, says V Nagarajan

Improved connectivity, and social infrastructure with educational institutions and healthcare facilities, is instrumental in driving more people towards suburbs around the city. The spurt in the number of project launches over the years and the consistent capital value appreciation amply illustrates this trend. For investors in real estate, suburbs offer immense scope for capital appreciation.

The number of new residential project launches during the fourth quarter ranges from 314 on Mysore Road, to 2,718 on Hosur Road, 4,914 on Bellary Road (New International Airport Road), 1,278 in Whitefield and 3,000 units on Tumkur Road, according to a Jones Lang LaSalle report.

The price appreciation is the primary factor that drives investors to this segment. A project launched in Marathahalli at Rs 3,900 per sqft two years ago is now quoted at Rs 5,500 per sqft. Similarly, capital values in another project launched on Doddaballapur Road at Rs 1,700 per sqft almost doubled in a span of four years and now quotes at Rs 3,000 per sqft.

As land prices are relatively lower in the suburbs, developers can acquire land instead of opting for joint venture developments, and they can offer apartments at competitive prices, say industry sources. As Bangalore's suburbs have to expand, the first priority would be along the main roads like Tumkur Road, Mysore Road, Old Madras Road, Hosur Road, Kanakapura Road, Bannerghatta Road and Devanahalli. The connectivity to suburbs is good along these roads which is one reason for the surge in migration of people towards suburbs.

According to property consultants, investors in suburbs can expect at least 20 percent price appreciation every year and it may vary depending on the location with the upside going even up to 30 percent. In the last two years, the appreciation has been estimated at 40 percent in Whitefield alone for select projects. With the State government giving a thrust to infrastructure development in the vicinity, the north corridor will pick up in the coming months, say realtors.

With the Central Business District and Secondary Business District areas becoming unaffordable for some buyers, suburbs is the only option for mid-range segment", says N S Srinivasa Reddy, Asst Vice President - Research & REIS, Jones Lang LaSalle Property Consultants Pvt Ltd. "The commercial development has pushed the residential development in suburbs and the city's residential markets will exhibit continued and steady demand during this year", he adds.

Suburbs that are closer to IT hubs are witnessing prolific residential development and offer ample scope for investors to plunge into the market. A slew of commercial projects are in the pipeline on Bellary Road, say industry sources. Residential property developers in the midrange segment are focusing on such areas for housing development.

According to the Jones Lang LaSalle survey, 20 residential projects were launched across the city's sub-markets during the fourth quarter of last year, offering 12,318 units against 8,613 units the in third quarter. Meanwhile, 13 residential projects comprising 3,152 units in various sub-markets were withdrawn from active stock as they were completely sold out.

The Hosur Road sub-market, comprising Electronic City, Bannerghatta Road, Sarjapur Road and the south-eastern parts of the Outer Ring Road, was home to 22 percent of the total new launches in the fourth quarter last year, while Bellary Road sub-market accounted for 40 percent of the total new launches. The Tumkur Road sub-market accounted for 24 percent.

Capital values range from Rs 2,750 per sqft to Rs 3,450 per sqft depending on the location, developer, specification and amenities offered in the project. The yearon-year change varied from 6.1-7.8 percent depending on the suburb and rentals rose in the fourth quarter last year due to shortage of built units.

Spice North Greens project is conveniently located between the Bangalore city and the Bangalore International Airport.

Spice Residency is located at Hesaraghatta near the Tumkur Road.

Source: The Times of India, Bangalore on 16th february 2013