Tag: Bangalore Real Estate

Commercial real estate: The perfect choice for investment

Bangalore – Investment in real estate is considered to be the best form of investment for any asset. The returns are highest and it is an asset which cannot be stolen. With this view, Indian market has always been driven to buy property more than invest in deposits, gold or any other form. The Indian mind set of investment in real estate has been inclined more towards residential due to the fact that there is an option of second home for buyers. Although most reports, experts and statistics are against this fact. Developers and experts from the sector express that commercial property as an investment motive is way better than residential.

For any investor, there are two most important things; initial cost of acquisition and return on investment. A good residential property may be lesser in pricebut is unable to yield higher returns. For instance, an average cost of a good 2 BHK unit in a good project in NCR will be around 30 – 35 lakhs and would fetch a rental of 25 – 30 thousand. Whereas, a 600 sq. ft. commercial property at a good location will cost around 40 – 50 lakhs and will provide a return of around 75 thousand monthly. This goes to show that the returns are higher in commercial properties over residential properties, even if cost is taken proportionally to the return.

M. K. Gupta, Chairman, KPDK Buildtech says “In commercial real estate it is more common for investors to pool their capital together and syndicate deals, you will also find that smaller private equity firms and finance companies are more inclined to do joint venture projects and provide the needed capital to complete the deal if the deal makes sense. So as a commercial real estate investor you have the potential to raise capital for a deal from the same traditional sources as residential real estate i.e. Traditional Financing and Hard Money, but in addition to that you can have access to capital through smaller private equity firms, hedge funds, private REITs, investment groups, etc.”.

Today, the trend of development has also started to drift a bit. As more and more buyers are interested in buying commercial property for investment, development in NCR is gaining momentum for commercial projects. Almost every region in NCR today has several commercial projects located in key places and offers various commercial spaces, some with assured returns as well. The concept of assured returns began with commercial real estate which ensures a buyer to buy and start earning. Therefore, a buyer earns before possession and also multiplies through capital appreciation with time. KushagrAnsal, Director, Ansal Housing says “There are three very prominent things with commercial real estate. One, the commercial real estate is valued differently. The income that a piece of commercial real estate produces is directly related to its usable square footage.

This isn’t always the case with residential. Secondly, commercial property helps diversify risk. For example, if you own an apartment building and you lose one of your 10 tenants, you only lose one-tenth of the income for that property, instead of the entire rent as you would if you lost a tenant in a single-family house. Finally, the cash flow is often greater with commercial real estate. The yield is often higher per square foot and on an initial investment basis than it is in residential. If you lease or rent a multi-unit commercialproperty, you have more tenants to generate income than you do with a single-family dwelling.

Source: The Economic Times

Bangalore attracts more private equity money investment

The real estate market in Bangalore attracted the maximum private equity (PE) investment in the country in the first half of 2014, beating the national capital Delhi as well as the commercial capital Mumbai, according to property consultancy firm Cushman & Wakefield.

Led by high demand for office spaces as well as steady demand for residential property, the city’s real estate market saw PE investments jump nearly 20 times yearon-year to Rs 2,005 crore. The city had received PE investments worth Rs 103 crore in the first six months of 2013.

While Mumbai received investments worth Rs 1,140 crore, Delhi-NCR got Rs 490 crore and Chennai Rs 200 crore during the same period. “Availability of investible leased office assets and stable yields kept the interest levels high,” said Sanjay Dutt, executive managing director, South Asia, at Cushman & Wakefield.

“The share in overall PE investments is expected to remain significant in the coming years for Bangalore,” he said, adding “Most of these assets have high occupancy rate and provide stable yields of approximately 9 per cent, making them highly attractive to investors.” Piramal Fund Management has just concluded a non-convertible debenture of Rs 100 crore with Century Real Estate Holdings against two projects in Bangalore. The deal was preceded by Tata Capital investing Rs 470 crore for about 15 per cent stake and a board seat in Shriram Properties and Vaswani Group raising Rs 100 crore from J P Morgan.

“It is easier to underwrite projects as the ticket size is reasonable in Bangalore,” said Khushru Jijina, managing director at Piramal Fund Management. “We close almost one or two transaction every month but there is reverse challenge of velocity that one has to be careful about.” Piramal Fund is looking to invest Rs 300-400 crore per deal in Bangalore compared with Rs 100 crore earlier.

Red Fort Capital is targeting midincome projects between Rs 60 lakh and Rs 4 core in Bangalore.

“While Mumbai and NCR is a high value and margin market, Bangalore is the most stable with demand driven by end users. The churn in capital is also faster as compared to other markets,” said Jasmeet Chhabra, managing director, Red Fort Capital.

Other funds looking for transaction opportunities in Bangalore include Milestone Capital Advisors, Motilal Oswal Private Equity, Xander, Shapoorji Pallonji and Blackstone. “We will invest 30-40 per cent of our total fund outlay in Bangalore market and are evaluating multiple transaction for our new Rs 500-crore fund that will be launched in coming months,” said Navin Kumar, ED, fund raising & investor relations, at Milestone Capital Advisors.
Source: The Economic Times

A High Rise in demand in residential and commercial properties in Bangalore

The demand for commercial property in Koramangala is high despite the sluggish demand for real estate in Bangalore and other major metros. Many residential buildings are being replaced with commercial towers with small offices, businesses and restaurants.

From Retail to Restaurants, this place is on a commercial high. Statistics reveal that the price rise is between 10 to 15 percent the last year and the trend is expected this year too. The average price for a commercial property is approximately ₹ 12000 to 14000 per sq.ft. The advantage of being located close to ORR and CBD is luring crowds.

Bangalore witnessed approximately 1.6 million sq.ft of grade A office supply in the last quarter of 2012. The supply was primarily focussed on peripheral locations of outer ring road due to excellent connectivity and growing residential catchments. The IT sector was dominant with over 60 percent of net leasing activity, followed by banking and financial institutions at around 9 percent of the total.

The demand for office space is likely to spike the rentals on outer ring road and whitefield. With more businesses moving to Koramangala, ORR and Whitefield, prices of residential housing is expected to spike. The tremendous growth of IT companies have revolutionised the real estate market of Bangalore and triggered massive infrastructure development. Among various developed localities in Bangalore, a lot of interest is generated about Infantry Road. So, let’s delve into this locality and learn what makes the area perfect for investment.

All the major localities like Commercial Street, Church Street, Shivaji Nagar and Lady Curzon Road are in the vicinity of Infantry Road. It is just half a kilometer away from the MG Road Metro Station. The area is even close to the Bangalore Cantonment Railway Station which is at a distance of 3 km and Shivaji Bus terminal about a kilometer away.

According to Jamal Ahmed, Mansions Real Estate connectivity of the area through buses has largely contributed to the locality’s real estate prospects. The area has seen four per cent appreciation in rental values as it is preferred by people working in the nearby areas.

Additionally, there are many industrial areas and business parks in and around Infantry Road, which makes it a brimming commercial hub. Companies like Sony Ericson and Cisco have their offices in the vicinity.

There is an array of housing options with many renowned developers holding a presence here. Prestige Group, Embassy Group, Nandini Builders and Hoysala Projects Private Limited these developers have targeted mainly the working professionals in the city thereby, offering housing options for different income groups.

Source: Aawas.in

Latest Property News on ‘Bangalore’

The high court on Tuesday ordered notice to the government, KIADB and Bangalore Urban DC on a petition filed over two acres of grant land in BKPalya, near Devanahalli.

A high court judge’s son is said to have received Rs 1.24 crore in compensation from KIADB in lieu of the land.
Justice AN Venugopala Gowda also requested advocate-general Prof Ravivarma Kumar and senior counsel PS Rajagopal to assist the court as amicus curiae on the issue, before adjourning the hearing to Wednesday. The judge requested them to enlighten whether the court can proceed against the DC, who is also a quasi-judicial authority.

The court also held that a copy of the petition was deemed to have been served on Phaniraj Kashyap, one of the respondents and son of sitting HC judge K Sreedhar Rao, since it was sent by registered post on August 5. Phaniraj, who filed a caveat, did not appear on Tuesday, which the court took note of.

The petitioners, who claimed to be legal heirs of the original allottee of the land, said it cannot be alienated within a stipulated time. Yet the land changed several hands before reaching Phaniraj during the non-alienation period. When they challenged it, their petition was rejected by the assistant commissioner, following which they moved the deputy commissioner.
The DC initially stayed the assistant commissioner’s order. “Phaniraj approached the DC personally and with influence from his father, succeeded in getting the stay order altered,” they alleged.The land was acquired for an IT park by the KIADB, which awarded Rs 1.24 crore in compensation to Phaniraj, ignoring the petitioners’ objections, they said. PS Rajagopal said the high court has jurisdiction to look into orders passed by DCs under Article 227 of the Constitution, and that the case can be referred to a magisterial inquiry.

Justice L Narayana Swamy on Tuesday disposed of a petition filed by M Raghu, BBMP junior engineer (South), asking the civic body to pass a fresh order in his case.
This was after the court noticed that as against the BBMP commissioner’s directive to suspend him on August 7, the additional commissioner had issued a suspension order on August 6 itself, over 22.88 tonnes of missing iron rods obtained during the demolition of Puttanna Kanagal Chitramandira, as there was no auction or records about storing the same.

Source: WWW.INDIANREALTYNEWS.COM

Mid income homes drive property sale in Bangalore

BANGALORE: Bangalore’s residential real estate market remains resilient despite global turmoil driven by demand for mid-end homes. The city saw 35,500 residential units launched during 2012 and around 8,000 units in Q1 2013.

“The quantum of new launches witnessed by the city in the past two years will restrict substantial upward movement. The year 2012 saw the absorption of approximately 36,000 residential units,” says a recent report by Knight Frank.

South Bangalore witnessed the highest number of new launches in 2012 taking up 48% of the total pie followed by North Bangalore at 33%. “Most of these projects are scheduled to be completed in 2015, thereby denoting the possibility of a glut of ready projects in the market in that period,” said the report.

As per the report, the residential prices in Bangalore moved in narrow ranges during 2012, barring locations like Hebbal, Whitefield, Tumkur Road and Magadi Road which witnessed price appreciation between 10-15% in Q1 2013 over the prices in Q1 2012. “The quantum of new launches witnessed by the city in the past two years will restrict substantial upward movement,” the report mentioned.

According to Knight Frank, during the year north Bangalore will continue to be one of the sought after residential markets owing to the various infrastructure initiatives underway.South Bangalore is also expected to see healthy absorption level owing to the IT/ITeS populace engaged with the office projects along the outer ring road. However, Whitefield, in the east, will continue to attract buyers, owing to its proximity to workplace centres and the presence of retail and social infrastructure.

Source: The Economic Times