Bengaluru’s premium property segments see surge in investments

Bengaluru, the city known for its IT prowess, is experiencing a surge in investments in high-end plots of land and the real estate sector. Homebuyers are increasingly inclined towards acquiring deluxe plots in order to build their dream villas.

The population in Bengaluru has consistently grown over time. In metropolitan cities, individuals typically opt for apartments. However, there has been a shift in preference towards villas, villaments, and gated communities.

According to Sunil Pareek, Executive Director at Assetz Property Group, the regions of North Bengaluru, located near Devanahalli, and East Bengaluru, specifically Sarjapur Road, have experienced the highest level of demand in the Bengaluru market. In fact, more than 10,000 plots from Tier-1 organized developers have been sold in these areas within the past 3 years alone.

In the past, these locations were predominantly vast areas of agricultural land or had poorly planned residential developments. However, they are now transforming into highly promising IT hubs, encompassing hardware, electronics, and aerospace industries. Additionally, they have modernized assembly lines like Foxconn, as mentioned by Sunil Pareek.

He mentioned that the close vicinity to Bengaluru International Airport and the upcoming Metro corridor are also contributing to the increased investment desire in North Bengaluru.

As one of the leading contenders in the urban area, Assetz Property Group is preparing to introduce several fresh land projects in North Bengaluru and off-Sarjapur Road within the next half year.

According to Sunil Pareek, the consistent yearly rise of capital values in this particular area, ranging from 10 to 20 percent, presents an appealing motivation for prospective purchasers.

According to him, the level of demand is significantly high, and it might require a considerable amount of time for the production of quality goods to meet this demand.

"Enhanced brand and project choices are leading to quicker sales and higher prices, which is making the return on investment in plotted projects extremely appealing when measured using the internal rate of return (IRR)," he clarifies.

Navin Dhanuka, the Chief Executive Officer and Managing Director of ArisUnitern RE Solutions Pvt Ltd, stated in an interview with IANS that there is an increasing interest in plotted development. This is particularly evident in the current market as buyers are actively seeking to upgrade their properties, purchasing second homes, or desiring more lavish alternatives.

Even the top-notch developers in Bengaluru are now venturing into the development of plots to handle their finances. From the perspective of a buyer, the increase in value for plots is also significant in these markets, thus enticing numerous home buyers to choose plotted developments.

According to Navin Dhanuka, Hyderabad experienced the highest increase in plot prices from 2018 to 2021 with a Compound Annual Growth Rate (CAGR) of 21%. Chennai followed with an 18% appreciation rate, while Bengaluru showed a 13% growth, indicating the performance of this market.

According to his statement, considering the ongoing expansion, it is expected that planned advancements will accelerate further in the forthcoming years.

North Bengaluru is becoming a noticeable choice for both purchasers and constructors. As the region is experiencing numerous enhancements in infrastructure and the connections are also getting better. Buyers are enthusiastic about investing in land there because they can anticipate a promising future.

"If we discuss the markets in Bengaluru and Chennai, as well as the overall southern market, the demand is consistently growing because these markets have reached a certain level of stability. Because sales are strong in these markets, many developers are eagerly exploring the concept of plotted developments," he stated.

According to Karthik M V, the Senior Vice-President of Sales and Marketing at Vaishnavi Group, customers have come to recognize the significance of owning a home as a means of both financial and emotional security in recent times.

He stated that based on a study conducted by Housing.com, the prices of residential plots in Chennai and Bengaluru witnessed a compound annual growth rate (CAGR) of 18% and 13% from 2018 to 2021 respectively. This serves as evidence of the increasing preference of consumers towards this form of investment.

"According to him, customers favor plotted developments due to their affordable investment choices, the freedom to customize homes based on their preferences, and the numerous amenities available."

According to him, it additionally generates money through renting and enables deductions on taxes in the future, while granting full authority over the structure and appearance.

"It holds importance as customers are seeking larger and superior residential areas that meet their changing needs, have high-quality construction, provide a sense of communal living, and ample amounts of open areas," he stated.

He stated that the type of investment also becomes significant for the final buyers as the value of land has consistently risen over time, rendering the development of plots more lucrative while providing a secure investment option with significant returns.

He mentioned that both real estate developers and institutional investors are intending to make substantial investments in this sector, as they have observed a strong reaction to numerous project introductions over the past couple of years.

According to Karthik, the previously divided sector with smaller developers meeting the demand is now becoming more structured with the arrival of reputable developers and institutional investors.

Angad Bedi, the CEO of BCD Group, expressed that aspired projects are gaining immense popularity among individuals seeking to purchase homes. Many buyers in search of lavish properties are currently opting for land parcels.

"He explained that the primary factor contributing to this is the availability of an empty slate, ample room, and a great deal of freedom to create and build their desired extravagant dwelling."

According to him, the Southern market, particularly cities like Bengaluru and Chennai, are experiencing significant demand in terms of market share.

"The housing market in these areas is experiencing rapid and energetic growth, and buyers have a highly optimistic outlook. Additionally, because of the stability of the local economy, the presence of major multinational corporations, and ample job opportunities, people in the region have extra income to invest in properties," Bedi clarified.

According to him, due to these circumstances, there is a considerable amount of interest in planned developments since plots are experiencing increased value and can be easily converted into cash.

"We have numerous projects in that area as well, and because the region is rapidly growing, both buyers and developers feel hopeful about what lies ahead. Additionally, Sarjapur, an emerging IT hub in Bengaluru, is experiencing a significant surge in activity. Many buyers are investing in plots there, anticipating rapid development in the next 2-3 years," shared Bedi.