Wide Array of options of affordable residential Property in Electronic City

The IT Hub of the city, offers residential projects to not just working people but also to families at prices which are affordable than other areas of the city where tech parks are situated such as Whitefield and Manyata Tech Park. 

A Property Consultant for one of the reputed company Sales mentions, “We cannot categorize all IT professionals as high-end buyers. A locality such as Whitefield has a higher number of expats and NRIs; therefore, the numbers of high-end projects coming up are far more. Localities around Manyata Tech Park are still considered as developing areas with less greenery. As compared to these, Electronic City is better developed and planned with a wide segment of mid-level IT professionals. In today’s market scenario, even mid-level IT professionals opt for affordable properties. All these factors have pushed demand for the below Rs 40 lakh segment in this micro-market.”

Many residential projects are at various stages of development in the stretch between Neeladri Road and Thogur in addition to Jigani road and other nearby areas.

New residential developments

Many property developers are offering 2, 3 and 4BHK units as well as villas and luxury high-risers which are commonly found in this area. The square feet of the villas are mostly 3000 square feet onwards. The projects which are being developed in Electronic City are offering state-of-the-art facilities and amenities and 24/7 security to woo the home-buyers.

Connectivity

With Bangalore traffic at an all-time high and the air filled with pollution, many employees are looking for house close to their workspaces as they try to avoid travelling in their self-owned automobiles. And this is where Electronic City is at its advantage as residing in Electronic City it is easily commutable to other parts of the city as well as to all the major public transport terminals in the city with its fantastic public transport services that ply frequently to the rest of the city.

Electronic City, being one of the earliest IT hubs, with several major Indian MNCs having their corporate offices, has been the constant focus of infrastructure development. Issues like bad roads, electricity and lack of basic infrastructure get addressed faster in Electronic City. Thus, today it houses the best educational institutions, medical facilities, markets and malls, making travel outside for the residents extremely need based.

Real-estate slow-down may see sellers slashing their prices to induce buyers

The investors who are comprised of property and private equity funds from affluent savers all across the world to invest in the real-estate market in India which saw a surge in between 2005 to 2008. With more than five to seven billion or even more spent in this sector many property developers are looking for an exit as they were promised double-digit returns during the years of the real-estate boom. 

The Indian partners had promised these companies who stepped in as joint ventures that they will acquire cheap labour, the partners were promised quick clearances and ready buyers from the Indian partners. But this was not completely true as there were many delays in approvals, cost escalation, softening property prices and picky buyers, the cycle of projects have stretched well beyond the life cycle of funds.

Many real-estate developers find themselves in a situation where a prominent Bangalore property developer is going through, he is stuck with 170 acres of land which is jointly owned with a private equity fund and because of this he is unable to buy out from the fund nor it can attract new investors about the bankability of a new project-be it commercial space or office space. But as in all these markets, you do find new investors like sharks ready to pounce on a distressed buyer by offering a beaten down price.

When it comes to refinancing of these transactions there has been a spree. They are selling a sizeable holding of their stake to other private equity funds, in rare cases the partners are lending from Indian non-banking finance companies, banks and large Indian business corporations to buy out their joint venture with those partners. Bank loans are generally granted where the risk is less when the venture is complete and most apartments are sold to buyers. Non-banking institutions grant credit by issuing non-convertible debentures given by the borrower who has to fork out 15-19% interest. 

There has been a flurry of projects in the mid, lower and affordable segments and not in luxury projects which was once the pinnacle of real-estate, and it is from that segment where most developers are trying to bail out off. 

So what will be the outcome when new investors come in?  A few Chinese funds announced deal would be at a discount, it is the reason why the prices of real-estate are unlikely to go up in a hurry. Prices may remain the same in the metropolitan cities but not everywhere. With the new law issued by the Central Government mentioning the real-estate developers should complete the projects on time to avoid a penalty, this would mean the prices would be slashed to increase supply in the short-term. If the market takes a long time to pick up then another set of investors would be left with burnt fingers.

NGT Buffer Zone order set to add-on more misery for Property Developers.

 The recent order from the National Green Tribunal has put property developers in a tough situation; with the NGT increasing the buffer-zone for construction of buildings which are situated close to lakes. Initially the buffer-zone between the lake and the building was 50 metres and with the recent order it has changed to 75 metres which has created a sense of panic in the real-estate community in Bangalore.

This order has not only made the lives of property builders hard, but it has also created a lot of implications. We could see an increase in project cost of roughly around 30%, which would mean more cost to be incurred by the property builders and they would have to re-design their already existing project which would create delays as they would also have to seek re-approval from the government for their new project plans and will end up paying the government necessary fees for those approval plans.

A few head honchos in the property development sector have voiced their concern against the recent order. With one Mr Koshy Varghese, Managing Director of Value Designbuild claiming that most builders have already purchased land or have agreed for joint development venture based on the city’s current by-laws, and with this new order they stand a lose roughly around thirty percent of their existing land and this will lower the morale of the builders to venture into new development projects.

With the Bengaluru government getting their hands onto archaic maps of the city’s planning, it has made everyone in the real-estate sector including homeowners panic. And the property developers are left with no option but to transfer the additional cost to potential home seekers.

Bengaluru city has always had exceptional real-estate market success in India, but in recent years it has seen a dip in sale of residential units. One of the reasons for a slump in sale of buildings is being slow job creation and very few salary hikes in software companies which have increased largely the burden on property developers who have taken huge loans from private equity funds and non-banking financial institutions.

With Bengaluru already showing signs of decrease in sales of residential units, this recent order will pile on more misery for property developers. According to LJ Hooker one of the top real estate agency total residential units sold in Bengaluru in the First quarter of 2016 was around 1,25,738 units.