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Bangalore Luxury Homes... A Billion Dollar Market: JLL

Bangalore’s luxury residential market seen a major transformation in the recent past, with the Kingfisher Tower setting a new capital values benchmark (northwards of Rs. 30,000/sq.ft) in the super luxury category.

The new dynamics being seen now have been referred to as the ‘coming of age’ of Bangalore’s residential market, and I agree with this definition. We are certainly witnessing a remarkable maturing process here.
 
According to our data, residential property capital values in Bangalore have increased by 25% since the trough in mid–2009, not factoring inflation. Currently, the absorption of residential spaces in the city is skewed towards the Rs. 3000–7500/sq.ft. price band, but there is also significant momentum in the price band of Rs. 7500/sq.ft. (4) and above. The upcoming supply in this category of homes is a clear indication of this trend. The short-term economic inhibitors currently at play across the country have definitely had their effect on buyers’ sentiments, but Bangalore’s residential market is still one of the most resilient from a long haul perspective.
 
One of the reasons for this resiliency is that Bangalore’s luxury/premium homes developers have a tendency to think on their feet. They have been reinventing their offerings constantly in term of the amenities offered. From completely automated ‘smart’ homes to private pools and from extravagant landscaping to golf courses in the backyard, the differentiators are varied and unique.
 
CBD Charisma
 
While Bangalore’s CBD has traditionally been the location of choice for luxury homes, North Bangalore and Whitefield have emerged as strong alternative destinations for such projects.
 
Some of the luxury projects currently gracing Bangalore’s CBD include:
 
Prestige’s Edwardian
VanGogh’s Garden by Total Environment
Century’s Renata
Skyline’s Villa Maria
Brigade’s Rhapsody and Crescent
Nitesh Estates’ Logos
 
Approximately 130 units in these luxury residential projects, which are in different stages of construction and completion, are priced at Rs. 5 crores and above. These alone account for a 100 million dollar market just in Bangalore’s traditional luxury homes catchment.

In Focus Stories

The dearth of low-income housing and the rise in family homelessness

The growing shortage of affordable housing for low-income residents in the United States contributed to a 20% increase in family homelessness from 2007 to 2010, according to A Home by Any Other Name: Enhancing Shelters Addresses the Gap in Low-income Housing, a report released today by the Institute for Children, Poverty, and Homelessness (ICPH).

According to the most recent year for which data is available, there were only 5.4 million units renting at less than US$458 a month or 30% of the monthly income for a family of three at the Federal poverty line. At the same time there were 10.9 million households earning even less than the $18,310-a-year federal poverty line.

Making the situation worse for the poorest Americans, the U.S. Department of Housing and Urban Development estimates that higher-income renters live in close to 42% or 2.3 million of these affordable rental units.  This means that less than one-third of the poorest families have access to affordable housing.

The analysis posits that the lack of housing affordable to low-income renters is likely caused by a decline in public housing units without a corresponding rise in the number of federal vouchers through which renters pay no more than 30% of their income towards rent - a decrease in real earnings for the lowest-income workers, and an overall rise in the cost of rental housing.

Despite the growing affordability gap, the proportion of federal dollars spent on housing programs for low-income households has reached an all-time low, falling 20% since 1995. In 2012, those earning the minimum wage could not afford the fair market rent for a two-bedroom apartment anywhere in the United States.

"It is clear that the number of affordable rental units has not changed in three decades as the number of people who need affordable housing has skyrocketed," says Institute for Children, Poverty, and Homelessness Principal Policy Analyst Matthew Adams. "This gap is unsustainable."

This trend is consistent across the country. In 2011, of all the jurisdictions with available data, Los Angeles County had the largest gap between the need for and availability of subsidized housing 21,027 Section 8 vouchers, but 179,651 people on the waiting list, and 2,962 public housing vouchers with 121,393 people on the waiting list.

For the past 30 years, the local, state, and federal governments have spent billions of dollars to create a system of shelters and transitional housing. More than 1.6 million people lived in homeless shelters throughout the year in 2010. The ICPH report suggests that shelters are a new form of low-income and supportive housing, and should be treated as such by offering increased job training, education, and independent-living and life skills, becoming sites of "work plus housing."

"The lack of affordable housing in the United States means that for many families, homeless shelters have become a surrogate for low-income housing," says Ralph da Costa Nunez, president of the Institute for Children, Poverty and Homelessness (ICPH). "Shelters should be seen as tools, not as roadblocks, for these families working to restore their independence."

Domestic News

Realty cash crunch may end soon: CREDAI

Sending positive signs from easing the cash crunch for the realty sector, Secretary for Financial Services Mr D.K. Mittal asked the commercial banks to focus on funding partially completed projects on a priority basis and development of projects in small towns.
 
Presiding over a joint meeting of Indian Bankers Association (IBA) and developers apex body CREDAI at SBI in Mumbai, Mr Mittal asked the realty industry to conduct a survey of unsold housing stock in cities in batches so that a decision would be taken on unlocking their value.
 
He also asked CREDAI to come with norms for development in consultation with the NHB and standards for funding the projects.
 
He told CREDAI to work on rating the real estate projects for the benefit of bankers as well as buyers.

Can service sector revive Indian Office Property Market?: JLL

Recently, the annual GDP number (6.5% GDP growth during FY April 2011-March 2012) released by the Reserve Bank of India resulted in a negative sentiment throughout the real estate industry. Consistent with this, in 1H12, the demand for commercial real estate moderated on the back of office occupiers that remained cautious about their expansion plans.

However, the economy’s service sector has still experienced strong growth and is advancing at a rate of 8.5% in FY12. This indicates that a major slowdown in office real estate demand is not likely to occur - the service sector generates the highest demand for office space in the country.

Over the years, the service sector has been the growth engine of the Indian economy. Its growth rate has outperformed the overall growth rate of the country’s GDP, which includes the service, agricultural and industrial sectors - the three major sectors of the economy.

The service sector is comprised of the following industries:

Banking, financial services and insurance (BFSI)
Information technology
Consulting
Trade, and
Communication
These are the major drivers of demand for commercial real estate in the country. The service sector has also been one of the country’s core sectors over the past decade, as its contribution to GDP has significantly increased from 50% in FY96 to 63% in FY12. In FY12, when all other sectors (including industrial and agricultural) performed very poorly at an average of 3.1%, the service sector recorded a healthy growth rate of 8.5%.

CHD Developers launches Golf Themed project at Dwarka Expressway