5 star and Paramount in its class reviews
by Prestige Project PrestigeprojectThe reason for this is
not that demand is higher in these markets or that builders are careful in
pricing. It is availability of cheaper land that makes all the
difference."Unlike in Mumbai, where scarcity of land makes it extremely
expensive, in Bangalore the land developer and the builder get into a JV, where
the developer is given an equity stake by land owners rather than purchasing
the land himself or using PE players to do the same," said Panda Vapor, MD
at property Prestige West Wood firm Lianas Foras.And it is this very model that has
permitted developers to still value apartments at least 30-35 percent cheaper
than Mumbai as the land developer also gets his revenue share as when the flats
are sold. Even Bank of America Merrill Lynch expects Bangalore real estate
sector growth to remain slow but steady over the next 12 months “with flat
residential volume for the second year in a row, while favorable office
demand-supply fundamentals will likely lead to a further fall in vacancy
levels."Another important point to note is that during 2007 through until
the end of the first quarter of financial year 2010, the Bangalore property
market had collapsed in line with the global economic/real estate slowdown.
While NCR and Mumbai
managed to recover quickly because of the huge investor demand, the Bangalore
market as a whole dropped by more than 30% during this time, which is why
prices are still relatively cheaper here as against the other two cities. And
the sudden surge in Bangalore properties only occurred in the last quarter of
Fylde to launches in the mid-income segment by large realty companies such as
Sabah Developers and Prestige Estates Projects, said Kapok. According to a
report by ICICI Securities, sales momentum for Prestige remains strong because
it has already booked sales worth Rs core Prestige West Wood Bangalore the first two months of the current quarter. Small
regional players such as Sabah Developers and Prestige have better balance
sheets than larger peers. Their stocks have also fared better because they
concentrate on certain areas, unlike players like DLF which tried to expand in
non-core markets and ultimately failed. The Mumbai and Delhi realty market, where
percent of the buyers are speculators, can easily be termed a bubble waiting to
pop. Bangalore, however, is relatively (not entirely) safe from speculators
where sales are largely driven by IT firms providing sturdy employment and
stable incomes to qualified professionals. But when the demand is genuine,
speculators can't keep off.
This is the precise
reason why private equity investments of at least Rs core this investor demand has also lead to
appreciation in capital values on the periphery of the metro as the total
required size of investment is much lower in the suburbs than for the Central
Business District areas. Sarjapur, Hoskote, Bided, Devanahalli and the new
international airport areas are considered Bangalore outskirts. Soft launch of
the Fern Residency at Sarjapur Road for Prestige has received strong response
with the company selling 450 apartments at Rs 5,000/sift (total of 1,300
apartments are to be sold). Another launch at Hebbel (Prestige Misty Waters) of
1mn sift at Rs5, 500/sift is attracting good enquiries," ICICI Securities
mentioned in its report. What it failed to acknowledge was the rising investor
interest in the outskirts of Bangalore, including areas like Hebbel and
Sarjapur? Dr Roy CJ, Chairman and
Managing Director, Confident Group, "In 2003 plots in BMRDA-approved
townships were around Rs 200 per shift In the year, they are Rs 2,800 per
shift, which means you would have received a ROI of 1,300 percent." And it
is this rate of return that has driven investors to these markets.
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