The southern region of Bengaluru is one of the upcoming zones in commercial and residential space. It is densely populated with good civic infrastructure and provision for basic amenities. The zone is also slowly and steadily developing a taste for commercial space and hence is a good investment option. It is well connected via road and with the development of the Metro rail, we will witness rapid growth of neighbouring areas with increased demand.
According to Vestian Research and Analysis, apartment projects are more popular in this market in comparison to villas. The presence of under-developed BDA plots is also considered a lucrative property choice. Research also reveals that more than 60% of the total residential stock in the micro-market fall in the Rs. 50 lakh - 1 crore price segment.
Ready-to-move-in option in the mid-segment category is prevalent across micro-markets of Hosur Road, Electronics City, Anekal, Jigani and Chandapura-Anekal Road, Kanakapura Road and off Bannerghatta Road.
The market offers apartments in unfurnished category while re-sale properties may be furnished, semi-furnished. Vestian’s research analysis observes that this residential category is popular amongst mid-level employees in IT / ITeS segment or first time buyers with specific requirements. The average age of the property buyer ranges between 32-35 years and comprises both the migrant and native population.
What counts
The purchasing decision of these buyers/ potential investors for this region is largely influenced by specific amenities (e.g. social infrastructure, location, connectivity, etc), property interest rates & price sensitivity. With the completion of large residential townships, supply of ready-to-move-in apartments has increased across the region.
Vestian anticipates an increase in residential absorption on Kanakapura Road and Bannerghatta Road due to completion of Metro rail works and high demand in office space absorption. Though a series of infrastructure initiatives have enhanced regional connectivity, traffic bottlenecks due to increased construction work pose a serious challenge to the connectivity of this region.
Commercial outlook & prospects
Consistent demand on Outer Ring Road has led to significant drop in the vacancy levels to 25% across Bengaluru South. Although in 2016, Electronics City was the most active commercial market in the area and Sarjapur Road was the only emerging commercial hotspot on Outer Ring Road, the tables have turned today.
Saturation of available space has led to a subsequent shift towards the Sarjapur micro-market. Rentals remain steady at Rs. 30-40 per sq. ft. for Grade A properties in Electronics City and Rs. 50-70 per sq. ft. on Bannerghatta Road.
Playing it safe
Vestian research analysis reveals that developers are playing it safe and are only completing construction for pre-committed spaces or for projects that are set to go on the floor.
Despite demand, a pragmatic approach is being adopted towards new supply to avoid inventory overhang; and also up-scale to the specific high-end workspace requirements of corporate tenants. Approximately 2.4 million sq. ft. is currently under-construction.
Commercial space
According to Vestian research analysis, South Bengaluru has 7.5 million sq. ft. of planned commercial space to be operational in the short- to medium-term. Price appreciation for the next 2-3 years will be in the range of 8-10%. Commercial uptake will lead to a surge in jobs in this region and in turn bolster the residential growth and social infrastructure across the region.
Although a series of infrastructure initiatives has enhanced regional connectivity, traffic bottlenecks resulting from increased construction work, pose short-term challenge to accessibility in this region.
