Thursday, April 12, 2012

Bangalore residential rentals stabilise


With the inventory levels going up across all micro markets, residential rentals are stable except in CBD and select other areas where high-end housing demand is predominantly driven by expatriates in the city. There are others who feel that rental market saw a hike by 20-30 per cent in the last one year before stabilising now.

In CBD areas, rentals are up by 8-10 per cent due to demand exceeding supply. There are realtors who say that the appreciation would be as high as 10-15 per cent due to the growing demand in central areas and the spurt in the influx of expatriates from Europe and US to the city.

The demand for leasing from expatriates is particularly for gated community development projects in proximity to international schools, says Farook Mahmood, CMD of Silverline Realty Pvt Ltd. The location varies depending on the work spot and availability of international schools for children. High end apartments in CBD areas and villas in areas like Whitefield drive demand where the rentals range from Rs 1 lakh to Rs 5 lakh per month.

Apartments in CBD areas command a higher price than other areas. Rentals range from Rs 20,000 to Rs 2 lakh per month for 2 BHK units depending on the location, proximity to landmark areas and amenities offered in the project. Similarly rentals for 3 BHK units range from Rs 45,000 to Rs 2 lakh per month, according to realtors.

A significant development is the expansion of commercial property market which in turn has boosted the demand for housing in the city. Even some of the call centre trainers are coming from abroad, according to realtors. Unlike earlier, the demand from expatriates for housing has gone up in and around the city.

For apartments, rentals are more or less stable except in a few areas where demand exceeds supply levels, says A Siddique Beary, director, Bearys group. Bangalore continued to top the charts with the highest office space absorption last year in the country with 11.53 million sq.ft. along with additional pre commitments of 5 million sq. ft for 2012. The influx of expatriates and the resultant demand for high end housing need not be overstressed further. The impact on high end housing especially from expatriates has resulted in rentals surging by 15-20 per cent in select areas, he adds.

According to Jones Lang LaSalle’s quarterly update, Bangalore market saw the absorption of 4,182 units in 1Q12 against 3,370 units in 4Q11, pushing the absorption rate up from 10.0% in 4Q11 to 11.0% in 1Q12. Unsold stock in the quarter totaled 32,978 units compared to 31,369 units in 4Q11, reflecting a vacancy rate of 51.1% down from 52.4% in 4Q11. This increase in demand was due to buyer sentiment shifting towards purchasing a property rather than paying high rents, as well as the entry of primarily investment buyers from other tier I and II cities.  XZ4UCQYVE5Y2

A total of 25 residential projects were launched across the city’s submarkets in 1Q12, offering 5,791 units in 1Q12 against 3,515 units in 4Q11. Meanwhile, eight residential projects comprising 1,009 units across different sub-markets were withdrawn from active stock as they were completely sold out.

Residential rents rose in 1Q12 due to the influx of people, mainly IT/ITES employees, into the city and are likely to increase further over the remainder of 2012 due to the expected improvement in IT/ITES employment.

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