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Why Bangalore Is India’s Top Luxury Homes Market

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Few cities can match Bangalore's real estate power. The Garden City of India has long since progressed from being the country's most preferred retirement destination to becoming its Information Technology capital - a city of entrepreneurs and the nouveau riche individuals.

In all respects, Bangalore is an extremely vibrant city with highly favourable demographics. The average age of the city's population has dropped dramatically from 60 plus to 30 plus in two decades and the average earning power of this population is arguably the highest when compared to the more established cities of India. As a result, Bangalore's real estate market dynamics are also unique when it comes to financial clout and corresponding lifestyle preferences.

Talking about the demographic triggers, Bangalore has only 42 per cent of local population. Hence, it is a truly cosmopolitan city. Bangalore has the most number of software professionals in the world

The city has produced the highest number of professionals working in the USA, and almost 60 per cent of the Indian population abroad are from Bangalore. Adding to the list, Bangalore boasts of 212 software companies, the highest in any city of India.

One of the major factors driving real estate consumption in Bangalore is the consistency of job creation, which surpasses all other Indian cities. In the last one decade, even after a serious slowdown in national and international economic growth, Bangalore has been consistent in generating the highest number of jobs for engineers and management graduates among all cities of India. It is a growing city both in terms of geographical expansion and in providing livelihood to educated young Indians; yet it has still not lost its lifestyle attractiveness quotient.

Bangalore’s Luxury Housing Hotspots
Bangalore is resplendent with areas that can be defined as 'posh' both in terms of cultural richness and density of wealth. Residents of Vittal Mallya Road, Richmond Road, Ulsoor Road, Sadashivnagar and the by-lanes of Cunningham Road have always cherished the experience of living in independent houses. While these houses are now giving way to apartment buildings, these locations still retain their profiling as addresses that announce status and prestige.

Indiranagar and Koramangala are the preferred destinations of first-generation rich entrepreneurs who value an evolved lifestyle that does not require them to compromise on space. Bangalore's elite continue to prefer these locations as against moving into newer areas which offer comparable lifestyle quotients, but lack the charm they are accustomed to.

The current rates for residential properties on Vittal Mallya Road range from Rs. 27,000-30,000/sq.ft. and go as high as Rs.42,000-45,000/sq.ft. in locations like Richmond Road, and  Rs.29,000-30,000/sq.ft. on Sankey Road.

Considering the limited supply, both now and in the foreseeable future, these are extremely high premium locations with no supply overhang whatsoever. As a result, the capital appreciation potential is considerable. While luxury apartment costs ranging between Rs 6 crore to Rs 30 crore may seem exorbitant, they are in fact very reasonable when compared to the rates going in premium locations of established cities like Delhi and Mumbai.

The space and lifestyle that the luxury projects in these areas offer against a backdrop of unsullied charm and grandeur is clearly lacking in most other cities. A luxury apartment in Indira Nagar and Koramangala is still an attainable reality with prices ranging from Rs. 9,000-12,000/sq.ft. No other premium locations of other major Indian cities offer such prices in the luxury segment.

Bangalore's newer luxury home destinations evolved primarily in the areas close to Satya Sai Ashram and the International Tech Park (ITPL), or Whitefield - a name whose genesis is still unclear. Established developers such as Adarsh, Chaitanya, Prestige and Total Environment built lavish lifestyle villas in this area, which offers the serenity and space that Bangalore's wealthy look for in luxury homes.

Examining the per-square-foot rate in light of these figures is not a realistic way of benchmarking the pricing, as it is difficult to put a price to the benefits of dedicated land and the open spaces available in these developments. Nevertheless, the actual figure often comes in at less than Rs. 10,000/sq.ft.

Reasonable prices for luxury homes of excellent construction quality in posh localities reflect a long-standing market reality in Bangalore - it has always been driven largely by genuine end users. Real estate prices in this city have never surpassed logic. In fact, the high development quality seen in Bangalore's real estate projects is not limited to top-notch developers, but extends to most of the ones active in this market. The residents of this city do not accept substandard products, and have always valued the high levels of quality that are not available in most other cities.

This is not to say that Bangalore is entirely devoid of investor activity. We see a lot of it reflected in the prices escalations in North Bangalore, specifically in areas like Hebbal and Yelahanka, where the action is high. However, considering the predominantly healthy market characteristics and the superior offerings involved, these areas and their adjacent locations are still reasonably priced, offer a generous lifestyle and rank very high in capital value appreciation.

The author, Om Ahuja, is CEO – Residential Services, JLL India