Infrastructure and development in the city’s outskirts will make localities here hotspots in the months ahead

Many of Bangalore's suburbs have become a part of the city and the creation of Greater Bangalore is testimony to this expansion. Various infrastructure and investment initiatives have made the outskirts of the city more attractive to both investors and buyers alike resulting in a sudden spurt in demand for residential and commercial property in these areas.

What is driving realty in the suburbs?

With the go-ahead for highrise constructions in the city and the FDI policy in real estate, major global real estate players have entered the realty scene. Huge spaces around Bangalore which were primarily isolated barren lands, are being developed for mammoth gated communities, villas, resorts and built-to-suit office spaces within tech parks, and SEZs.

Improved connectivity is the major factor that is driving property investments on the outskirts. A host of infrastructure projects were completed and some are in various stages of completion, driving the demand for property in the vicinity.

In North Bangalore, the coming up of the international airport, the widened Bellary Road with its signalfree access, and the mammoth proposed Peripheral Ring Road project have given rise to a host of tech parks, huge residential complexes and plotted layouts. In the south and south-east of the city, the Metro Rail project, widened Hosur Road, almost complete elevated expressway to Electronic City and the slew of road widening works on major arterial roads here have spurred high-rise residential enclaves, malls and office spaces.

Why invest in outskirts?

Widened roads which spell increased FAR, an impetus for more commercial property development and improved connectivity have spurred people into moving to quieter and less congested neighbourhoods along the highways. Also, the non-availability of residential dwellings and large office spaces in the Central Business District drove people into investing in land available for a relatively lower cost in the outskirts.

According to Rahul Pai, a real estate consultant, more people are buying property in the suburbs mainly because property prices here were affordable to most and those in the city were at a premium. Presently, there is a huge supply in the market with expansive residential gated communities available along Sarjapur Road and even in Devanahalli. With the real estate prices undergoing correction and with banks lowering their interest rates on home loans, this is the best time to buy either a plot of land or an apartment in these areas. An apartment bought from a reputed builder can give upto five percent rental returns and the capital appreciation is atleast six percent in this market scenario. In North Bangalore the property appreciation is pegged at a little more at eight percent after a couple of years when the markets pick up once again, he points out.

According to global property consultants Cushman & Wakefield's report, Bangalore recorded 18 percent growth in rentals after Kuala Lumpur (58 percent). The highest rental growth was witnessed in the Bangalore markets with the CBD/off CBD region recording 18 percent appreciation over last year owing to limited Grade-A supply coupled with relatively low vacancy and no scheduled supply, at Rs 86 per sqft rental.

While the suburbs recorded an average 14 percent annual increase in rental values at Rs 58 per sqft, the Sarjapur-Marathahalli ORR stretch projected an annual increase of nine percent in rental values costing Rs 48 per sqft.