Two months ago, a luxury unit at the Kingfisher Towers went for R39,000-a-sq-ft, pricing it above the R25 crore mark. Most luxury units in Bangalore's CBD area are now occupied and investors are looking to the suburbs where units are now being sold for more than R5 crore.
According to Karun Varma, managing director, Jones Lang LaSelle (Bangalore & Kochi), a real estate services firm, the rate of absorption is set to increase further as Bangalore's super luxury homes market is still economical than in Mumbai or Delhi.
A recent JLL report estimated the total value of ultra-luxury projects -- in various stages of construction in Bangalore -- at R6,000 crore. While NCR has the biggest chunk of such units (R5 crore and above) in the country with a 35-40% share, Mumbai has another 20%; Bangalore follows with 15-20%, said the JLL report.
But developers are betting on Bangalore because they feel the demand environment is much more stable in the IT city than elsewhere.
A recent report by Propequity, a real estate research firm, stated that while NCR registered a decline of 42% in residential unit absorption and Mumbai by 34% during January-August this year, Bangalore declined by just 3%.
"While 60% of the NCR and Mumbai markets is driven by investors and resultant speculation, Bangalore is an end-user market even in the luxury market," Varma said. According to him, the capital values for residential property in Bangalore have increased 25% from mid-2009, not factoring inflation.
"These are not necessarily first homes for these buyers," said Ram Chandani, head (south India), CB Richard Ellis, a real estate services firm. The Bangalore market is witnessing a new trend of the business class emerging out of the shadows cast by the professional lot, he said. Also, NRIs are buying luxury properties as their second homes on the outskirts and many villas with golf courses are also being picked up.
These luxury units are unusually big by Bangalore standards. Customers are now demanding residential units with an area of 4,500 sq ft to 7,000 sq ft. Most of these units are priced at around R10,000 per sq ft. "With infrastructure getting better in outskirts -especiallynorthBangalore- over the past couple of years, developers have come forward in large numbers to locate many such properties in that region," said Ravindra Pai, MD, Century Real Estate.
"As bungalows went out of the market, a huge vacuum was created, which the market never addressed for a long time. But the wealthy lot in Bangalore were always looking forward to such a trend,"said Jitu Virwani, CMD, Embassy Property Developments.
Bangalore being a market much more clued into global demand and supply, thanks to its IT exposure, the recession had taken a heavier toll on luxury housing demand, said Avinash Rao, regional director, Knight Frank, a real estate consultancy. There is also a change of mindset in accepting a non-CBD, non-bungalow property for luxury housing. "People in Bangalore have started accepting city outskirts with more open area for luxury housing," added Rao.