Why real estate prices are sky rocketting

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Ever wondered a flat which was just 40 lacs few years back is now being sold at 70 lacs. Specially in cities like Bangalore which is expanding 360 degree wise why real estate prices have increased at alarming rate. Well there is demand & supply curve which plays an important role to control real estate prices. But these days this is also controlled/manipulated to some extent thereby leading to atrocious price rise.

Going for 2nd/3rd… home
Right from the beginning of his career an IT guy dreamed of owning a beautiful house(villa/flat). After few initial years of his job he somehow managed to accumulate the down payment and finally he was able to fulfill his dream. But soon he realizes his 2nd dream… another house may be a bigger one. And then another house… the 3rd one .. may be purely for an investment purpose. If his bank balances would have permitted he might have materialized his 4th dream and who knows a 5th dream as well. Given that rupee, wrt dollars, has already depreciated by 20-25% in last few quarters NRIs are finding hard time not to buy any property.  Believe me, if situation is favorable then Indians are too good in that.

Builder tied-ups with agents
These days you might have noticed that project is in pre-launch state and you won't get flats of your choice. At least not in one go. Builder might try to sell you ground floor/non-vastu compliant units.   When a project is launched they generally get into tie up modes with big real estate agents. These guys in-turn block some of the flat units at launch price which will pretend some manipulated hyped demand. Further with ongoing bookings these guys keep on raising prices.


Builder-landowner joint development
These days places like Sarjapur, Electronic City, Whitfield(towards Old Madras Road), Kanakpura Road are witnessing new real estate projects which are basically joined venture of builder and land lords/owners. Builder mostly doesn't pay any money to landowners. Rather they are offered number of flats like 5/10/15 or may be more depending on how big their land was. Post construction these landowners will simply put all these flats on rent and will happily wait for 2/3 years or even more if its recession. Unlike builders they usually don't need immediate money to kick start another real estate project.  


Inflation & land scarcity
Investing in a plot and buying a flat are 2 different things which will have their prices going up but the driving force will be different in both the cases. A plot price appreciates because of land scarcity and not because of inflation. Until you've a house constructed on a plot, inflation will never come into picture as you have nothing in place like steel, bricks, cements, etc whose cost will increase due to inflation.  But a flat price appreciates mostly because of inflation and to a lower side because of land scarcity as well.
If you have an independent house that too in a gated society then push will be from both inflation as well as land scarcity and put together it'll fetch you very decent price in coming time.


IT and infrastructure development
Both of these things goes hand-to-hand. Well just for name sake I mentioned it as "IT" industry. It can be any other industries like pharmaceutical, banking, retail, etc. These days cities are witnessing their expansion and what used to be suburb few years back are considered main downtown areas. Specially cities like Bangalore which doesn't have any geographical limitation is really getting pushed to expand its city limit.



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Bangalore Intermediate Ring Roads(IRRs) to push residential growth

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Looks like Karnataka government is really keen in decongesting the traffic woes in the state capital. This is evident from the fact that they along with Bangalore Metropolitan Regional Development Authority (BMRDA) has plans to step up and start the development of two new IRRs(Intermediate Ring Roads).
Initially in 2006 government had restrictions which now seems to be taken back thereby allowing the construction and development activities to happen in Ramanagaram, Nandagudi, Sathanur and Solur.
With the plans in place to procure land for the IRRs will definitely act as a catalyst to boost the real estate demand in and around ORR (Outer Ring Road) and IRRs. BMRDA has plans to take this road infrastructure development activity in four stages.

Devanahalli to Attibele
This is going to be a 80-km stretch of the IRR construction activity starting from Devanahalli and going till Attibele. This 80 km long stretch will be connecting BIAL (Bangalore International Airport) and the Electronic city and the vicinity. This IRR will run through Hoskote and the already developed Whitefield. Also road leading to Hoskote has many residential options(to know more about Hoskote/Old Madras Road development refer link1 and link2). This area will push towards social and commercial infrastructure development. This whole construction is expected to cost around Rs1000 crores.

Attibele to Ramanagar
So far this is going to be the longest stretch of 128 km which will join  Ramanagaram with Attibele. This IRR is supposed to link Mysore Road and Electronic City and in between it'll pass through Kanakapura, Anekal, Jakkasandra and some other hubs as well. It's worth to note that Ramanagaram being a textile hub and has over Rs.1500 crores as investments will be benefited a lot because of this move. Even the Kanakpura Road and its vicinity like Uttarahalli and Bidadi will be seeing the real estate catchments. This stretch will also enhance the connectivity between NICE road and Satellite towns. Estimated project costs Rs.1600 crores.

Dabaspet to Devanahalli
This will be a 89-km IRR starting from Dabaspet till Devanahalli. This will cover Doddaballapur, which is indeed a lucrative real estate option for buyers and investors. Adjoining is the road leading to Nandi Hills which is also witnessing residential development.
Dabaspet area is an upcoming industrial hub given that KIADB (Karnataka Industrial Areas Development Board) is aiming to make this area as a industrial zone in four different phases. Think about a road connecting this BIAL and a industrial hub( with most of the current industries being only export-oriented). Given this demand in place a huge potential of development is being sensed over there. This area is bound tol attract real estate drifts. Fact that this area is still affordable will boost the demand of villas and plots. Estimated project costs Rs.1100 crores.

Ramanagar to Dabaspet
This will be last phase of the IRR and it'll be 70 km long stretch from Ramanagar to Dabaspet. With this in place Ramanagaram, a textile hub, will be connected to the Dabaspet(industrial area) and further this will lead to the international airport. Estimated project costs Rs.1078 crores.

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Hoskote to be developed as Satellite Town

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One after other many Bangalore suburbs are falling into Karnataka state government approval list which later on need to be developed as Satellite Town. After Anekal, Kanakpura, Ramanagara, Magadi, Nelamangala and Devanahalli being declared to be Satellite town now comes the turn of Hoskote. Bangalore city areas are already been congested and to decongest the state capital need is being felt to move towards developing towns around Bangalore. And Hoskote is another such destination. Also this will allow common people to leverage the fact that satellite town areas are yet to develop thus they are still very much under common people's affordability limit.

Most of these satellite towns have agricultural lands and earlier state government has opposed the notion of residential and commercial development here. But now they have realized the need of the hour and have decided to let real estate development for residential as well as for commercial purpose to happen in these areas.

State government this approval will enable developers to go for government permit to develop gated as well as non-gated layouts in these upcoming satellite towns thereby paving the way for another possible real estate boom. Off course this is a long term development plan and will definitely take 5-10 years of time from now to get things in place.

State government has already laid the foundation stone for around 17 projects worth around Rs.200 crores.

                                                                                                                           
Connectivity with Bangalore city and other townships
Along with Hoskote other satellite townships in-turn will be connected by two ring roads:
 Bangalore Metropolitan Region Satellite Townships Ring Road (BMR-STRR)
 Bangalore Metropolitan Region Intermediate Ring Road (BMR-IRR)

The BMR-STRR not only connects satellite townships but also links areas like Magadi, Kanakapura, Attibele, Dobspet, Anekal, Sarjapura, Ramanagaram, Hoskote, Devanahalli and Doddaballapur. Total stretch of BMR-STRR will be around 283 kms.


Real estate buzz in this area
Hoskote is already known for the presence of many warehouse industries. Already many real estate movement have started in this area. Confident developer have planned township projects like Canopus, Cygnus phase II, Auriga, Auriga phase II, Auriga phase III, Auriga phase IX, Auriga phase XII, Auriga phase XV, Auriga NRI and Auriga NRI III in and around this area.
To know more about Hoskote development refer this link.


Traffic decongestion
State chief minister has instructed the officials to clear traffic jam at Krishna Raja Puram within 3 months from now in order to have free traffic flow towards Hoskote.


Water issue being addressed
To address the water issue around 5 TMC ft amount of water needs to be supplied to southern parts of the state from Yettinahole (Sakleshpur in Hasan) which is a stream of Netravathi river.
Yettinahole project will be targeted to fill-up the lakes located in rural parts of Bangalore.
Government is also seeking the need to shift the Bangalore Rural Districts Deputy Commissioner's office from Bangalore to Hoskote (and other districts) which should facilitate the infrastructure development of these areas.


New BMTC bus depot
To facilitate the development towards Hoskote, state government has inaugurated a BMTC bus depot which is spread on 3 acres of land built at a cost of Rs.4.7 crores.
This new bus depot at Hoskote is capable of handling more than 150 bus being planned to schedule to various parts of Bangalore city.
To explore more on Bangalore Hoskote Bus Stop connectivity/route refer this link.


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Want to get a group discount on any specific specific property (villa/apartment/plot). Then join this Bangalore buyers group and express your interest in the interested property. In-case you are looking for a property which is not present there then feel free to add that to the list.


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