Second-home buyers zero in on Hebbal properties

 
Even in times of real-estate ebb, Hebbal is the new destination for those seeking high-end, premium addresses.
But why Hebbal? “Basically, you are targeting the second-home buyer who can’t afford to buy on Palace Road or in Sadashivanagar or in any of the other central locations,” says Cherag Ramakrishnan, CEO, Equinox Realty, who is developing a high-end residential unit, Water’s Edge, near Manyata Embassy Business Park. Besides Equinox, Mantri Developers, G:Corp, and Karle have also launched projects in the same vicinity. Golden Gate Properties is also slated to launch a high-end residential project in the area.
“There is a shortage of high-end space within the city limits, and here you have a destination that’s 15 to 20 minutes away from the city centre, and has land available,” adds Jitendra Virwani, CMD, Embassy Group. 

Bespoke projects from RMZ, Embassy, and Godrej Properties, priced above Rs 2 crore, have been launched along the Bellary highway after the Hebbal flyover. Century, Brigade and Salarpuria have also planned high-end projects in this area. Last year, Sobha launched its mega township project of 1,500 units — Sobha City — located off Bellary Road. The average per sqft rates that developers are quoting is in the range of Rs 5,000 per sqft to Rs 8,000 per sqft. “The airport has definitely magnetized this part of town as it attracts a lot of senior management of companies. Hence, you see the pricing in the area is line with the customer profile,” says Raj Menda, CMD, RMZ Corp. 

Interestingly, the spike in residential activity in the region has brought back some amount of investor demand, though developers reiterate that Bangalore’s residential market is very much end-user driven. “There has been a lot of interest from investors from Mumbai and Kolkata for high-end projects in Hebbal,” says Sudeep Chandran, owner, Terrafirma Developers, adding that 15% to 20% of offtake seen in Hebbal is by investors. However, there are no signs of bulk buying by investors, which could potentially create a price bubble. “The senior management of IT companies is looking at north Bangalore as an investment opportunity. As of now, they are investors. Once the developments are ready, many of them would become end-users,” explains Ram Chandnani, deputy MD of South India CBRE South Asia, a global real estate consultancy firm. Says Farook Mahmood, CMD, Silverline Group, “Bangalore is turning to be a very mature market, and our prices are still one of the lowest as compared to other metros.” 

 According to another global consultancy firm Cushman & Wakefield (C&W), “The purchases in Hebbal are mostly led by long-term investors and the prices have appreciated consequently.” Considering the first two quarters of 2012, C&W says, “Hebbal has witnessed a price appreciation of around 8% in the high-end residential segment.”
However, the city’s eastern micro-markets such as Marathahalli, Whitefield, and Old Airport Road have witnessed the highest price appreciation of 32% year on year, which is in the mid-segment residential market, according to C&W.

Building Growth in South

Sanjay Raj, CEO at Golden Gate Properties speaks to Subhajit Roy about the company’s business focus in South India and its expansion plans

Looking at the ongoing slowdown, what is your perception on the current situation? According to me there is sluggishness across the country but luckily in Bangalore we are having genuine buyers at right location and right price. Therefore, we will be able to meet the expected targets. At the same time, we have branched out into plotted development to keep the cash flow ringing. Moreover, we are also launching Rs. 25 to 30 lakh bracket apartment under affordable housing segment. In this way we are positioning ourselves in different asset classes to keep us growing as per our projections.

Brief us about your entire portfolio?
We have crossed 1.2 crore sq. ft of completed projects and have got several ongoing projects. This year, we have six launches and are on the verge of launching another three by October this year. Out of the three, one is going to be a plotted development near Hebbal. Though, as of now, we do not have any projects under small township category, we will be launching a project around Chikka-Tirupathi Road in the outskirts of Bangalore by December this year.

As most of your business is concentrated on Karnataka which faces difficulties in terms of environment related regulations, are you finding any difficulties for your business?
We have no complaints about the same and are kind of used to it. If the authorities can speed up the procedure and implement online submission, there will be immense cost benefit. Today, we have to wait for almost 12 - 18 months from a time a land is purchased to get the necessary approvals before the work is started. If the time period is cut short, the benefits can be passed on to the customers. The Government has encouraged the idea of online submission and if it is implemented things will be much better. I think lot of transparency is being achieved already in the real estate sector. However there are some grey areas that need to be addressed before the project is made in terms of land acquisition etc.

We would expect the government to initiate measures on allowing faster approval, reducing home loan rates and give some concession in terms of the affordable segments so that more people would be able to buy homes. There is a very huge demand for affordable housing and the sector needs more encouragement.

Have you started any kind of project in the affordable housing segment?
We would be launching a project comprising of 550 apartments mostly in the Electronic City of Bangalore which would cost Rs. 25 lakh per unit. As far as affordability is concerned, we are making apartment in the bracket of
Rs. 25 to 30 lakhs.

Do you have plans to extend your business beyond South India?
Right now our main focus is only Hyderabad and Bangalore. We might look at Chennai and are working on one transaction. If that works out, Chennai will be our next destination.

How do you maintain the liquidity and what is your annual turnover?
At present our turnover is around Rs. 360 crore and target a growth of 40 per cent. We have various verticals that include plotted developments, apartments, villas, and row houses. Each segment keeps getting us revenue. Right now, we have launched projects worth ` 1500 crore which will be the turnover for us in the coming 2 to 2½ years.

FSI in Indian cities is much lower than global average, are you happy with the kind of FSI you get in Bangalore?In Bangalore it is fine. We have no complaints as it helps us branch out little more out of the city.

Metro project guides realty market

Property prices have gone up along the metro route in Bangalore

Before the Namma Metro got commissioned, a double bedroom house in Baiyappanahalli was available on a rent of Rs 6,000 per month. The demand for houses was little and tenants could even bargain with potential landlords. 

But as the gleaming Namma Metro coaches roll into the brand new Baiyappanahalli station, connecting it to the central business district around MG Road in 10 to 15 minutes, rents have skyrocketed. The same two bedroom house now rents for Rs 15,000 to 20,000 per month.

K Sridhar, a member and former chairperson of the general council of Builders’ Association of India (BAI) in Bangalore, lives in Baiyappanahalli. He said the growth in real estate will be higher in the years ahead as the Namma Metro extends its reach through phase 2. 

“Even the purchase rates of built up properties and vacant plots have gone up. I have seen property sales worth Rs 2,500 per sq ft before Namma Metro entered the scene and pushed property prices to Rs Rs 5,500 per sq ft,” he said.

Besides providing fast connectivity, the rules have allowed increasing the floor area ratio (FAR) from 3.2 to 4 for properties in a 400-metre radius of metro stations.

Dinesh R, another member of BAI, said this was a major reason for growth in real estate. 

This means there can be more built up area as a proportion of the plot area. “The effect of the FAR relaxation is visible along stretches like CMH Road, MG Road where commercial office spaces will go vertical soon,” he said.

Property rates have increased not just in Baiyappanahalli, but also along the all corridor of Namma Metro’s Phase 1 lines - east-west corridor from Baiyappanahalli Terminal to Mysore Road (18.1 km) and along the north-south corridor from Hesaraghatta cross station to Puttenahalli cross (24.20 km). 

Phase 2 corridors run north to south from Puttenahalli to Anjanapura Township (NICE Road) and along the Kanakapura Road and from Hesarghatta Cross to Bangalore International Exhibition Center (BIEC) on Tumkur Road. The extension of the east-west corridor is also proposed on both ends, i.e. from the Mysore Road terminal to Kengeri and Baiyappanahalli to Whitefield. 

U A Vasanth Rao, general manager (finance), Bangalore Metro Rail Corporation Limited (BMRCL), said one of the main changes the Namma Metro is expected to bring is the so-called ‘transit oriented development’. 

This means once the first two phases of the Metro are running, people will increasingly look for job opportunities as well as living spaces within the proximity of metro lines. “With the FAR relaxation in place, the very look of commercial spaces and workplaces will change in coming years in the City,” he said.

But experts are sceptic about the real estate boom along the Namma Metro corridors. Some of them warn that basic facilities, especially drinking water, for development fuelled by metro lines and relaxation in building rules. 

Vasanth Rao said urban development should not deviate from existing or future master plans for the City. He said it was hard to predict if the growth was going to be good or bad for the quality of life. “One cannot predict the exact volume of growth along the Metro corridors. The real estate market will decide its course in coming years,” he said.

However, Sridhar expressed concern about permitting higher FAR in properties along some metro corridors, where basic resources were scarce. “Apartments with huge swimming pools and recreation areas are coming up. Forget water for pools, there is a big question about drinking water to these areas. Underground water levels have gone down and there is no hope of getting Cauvery water either,” he said. 

Milind K, a member of Bangalore Realtors Association of India (BRAI) said it’s high time the city planners should intervene and draw some lines on the sporadic bursts in real estate along the metro lines. “Otherwise, the City is going to witness an unplanned growth just like it happened during the 1990s because of the IT boom,” he said.