real estate-unreal prices

“Only” 56 lakhs – announces a property developer for duplex apartments on the outer ring road in Bangalore. The offering boasts of a home that “befits your style.” One can imagine that style demands of anyone who can calmly accept the adjective “only” with a whopping sum of 56 lakhs.
Another developer justifies the cost by listing out the high quality material used in construction and spells out what the “facilities” include:
> Swimming pool with toddler’s pool
> Well equipped gym with steam and Jacuzzi
> Wi-fi connectivity
> 24 hour hi-tech security system.
There are some that promise Thai and Italian styles of housing. Close to the cricket Stadium are some apartments that cost over 1 crore and there were hordes of disappointed prospects who could not get an apartment in the building! Such is the purchasing power among the residents of Bangalore today ( or perhaps it is “non-resident” money power)
A 30 year old argues that 40 or 50 lakhs is not a huge sum when you look at the facilities on offer.

He says that he can easily pay up the bank loan in 15 years and by then his property value would have doubled while he and his family would have had a safe and comfortable home. I guess that is the level of income youngsters today enjoy in Bangalore.
Land rates in the most sought after residential locations have reached an average of rs.3500 per sq.ft. Even in areas off Bannerghatta Road which still do not have proper roads and BWSSB water connection, rates have gone up to Rs.2,500 per sq.ft. There is no pressure on the builders or the government to provide the access roads or water supply. These youngsters make huge investments in real estate in anticipation of the infrastructure improving sooner or later. Many of these apartments do not even have space for visitor parking except the really premium ones like South city.
Another reason that people with high levels of income are willing to invest in property even at such high rates is the high rental demands. Rentals for two bedroom flats in Koramangala start upward of Rs.25,000 p.m. So it makes sense to these youngsters to invest in a property and shell out a little more toward instalment repayments.
For those that cannot afford these luxury apartments there are apartments priced between 12 and 15 lakhs. But most of them are of very small size, medium quality construction; they hardly have any parking space or good approach roads. These are usually in places where a large house of yore has been converted into an apartment building. They are in the old residential areas but can hardly boast of the modern facilities that the luxury apartments offer.
Even at high prizes there is a huge demand for land and apartments and almost within the first month of the offer most of them are sold. Apparently there are parties investing in these for speculation. Neelakantan has some interesting light to throw in an old post in his blog.
While a boom in housing is predictable offshoot of employment growth in any city, it is worrisome to see a lot of unplanned growth. A lot of agricultural land has been converted for residential purposes, many dry tanks have been covered up for making way for residential complexes and a lot of trees have been cleared to make way for houses and approach paths ( they can hardly be termed roads). All this has already had its damaging impact on the ecology. There is always some deviation in plan which is ignored for a small compensation to the officials and there are irregularities which always get regularised through payment of a fine unless very grave. And many of the new layouts in the new areas are not covered by the garbage clearing system of the corporation and house huge garbage dumps in one corner which is a major health hazard.
The construction boom cannot be contained given the demand for housing but what is possible is for all concerned to ensure that no laws are violated. It may still be possible to bring some method in all this madness if the rules are adhered to and strict penalties are imposed for their violation. We may still be able to save the city from doom due to unplanned chaotic growth.

9 Comments so far

  1. Mehak (unregistered) on May 23rd, 2006 @ 1:02 pm

    ohh man..real estate prices are going up n up…we started our search in June last year…first preference was BG my….Mantri/Purva/Ajmera/SouthCity…all those small time bg road , near vijaya bank colony have also hiked up their prices n providing nothing….
    Koramangala..soo damn crowded…bad roads…parking prob..BUT rentals are at an all time high….
    Sarjapur-ORR my…Sobha has come up with about 7 new projects…then there is Sun City, BL Kashyap builders,Springfields,Mantri Flora…and Adlabs IMAX is coming up after the Marathahalli bridge
    there is no water connection here..
    We have no water conn here..relying on bore wells n tankers….
    Seriously construction in this city has not been controlled at home…residential places been converted into offices and agri land into residential areas..
    ohh then JP nagar 7th phase or something…Puttenhalli..Bridage thingie..

  2. Mehak (unregistered) on May 23rd, 2006 @ 1:03 pm

    oh did u hear about Mantri’s new apts near Cubbon flat per that u can have a 360 deg view of the city…

  3. BangaloreGuy (unregistered) on May 23rd, 2006 @ 5:34 pm

    Lack of space, stupid government rules, immigration of people who tend to spend and earn big, all contributing to the explosion in the prices.

    Also, because some folks tend to own 81 sites, like that inspector

  4. BangaloreGuy (unregistered) on May 23rd, 2006 @ 5:44 pm

    Lack of space, stupid government rules, immigration of people who tend to spend and earn big, all contributing to the explosion in the prices.

    Also, because some folks tend to own 81 sites, like that inspector

  5. priyatam (unregistered) on May 23rd, 2006 @ 10:36 pm

    I dont think you guys know what the ‘real’ real estate property prices are playing in blore. Forget about flats and big 6 builders. Goto Farmlands within 25-45 kms from bangalore. I know friends (and I myself have purchased) specially lands within BMIC limits near mysore road which costed about 4-5 lacs per acre a year back and now its costing anywhere from 50 to 1 crore. Now you’r talking of 10x-20x increase in less than a year.

    That is REAL ESTATE.

    People who are into it are minting money and ironically most of them are ‘uneducated’ ‘politically influenced’ people. On the contrary the best white collar job fetches you a savings of over 2-5 lacs p.a. Real estate can fetch you 10 times if you can spend as little as few months in doing good research

  6. WA (unregistered) on May 24th, 2006 @ 4:24 am

    Scary stuff, especially if there is a downturn in the prices

  7. manuscrypts (unregistered) on May 26th, 2006 @ 5:41 pm

    make that some youngsters, on the level of income :)

  8. usha (unregistered) on May 26th, 2006 @ 7:08 pm

    Meha: Thanks for the additonal inputs. This is getting scarier and scarier!

    Bangaloreguy: I know, and all these land grabbers get these at throw away prices.

    Priyatam: I have heard similar stories like this. I agree on it being a very good investment opportunity – the best option available today. And i believe even in the banagalore apartment scenario, there are alot of players booking these just for resale.

    WA:Even with a downturn, the returns will always remain higher than bank interest. In the past few years, the drops have not been as steep as the rise. you are assured of a 20% return on your investment.

    Manuscrypts: I stand corrected. “some youngsters” enjoy that level of income.Thank you.

  9. isurfer (unregistered) on June 1st, 2006 @ 3:04 am

    It is true re: infrastructure problems and issues.
    But, in a country of world’s largest population
    do you think anyone would care ? Surely No !
    Any resource: land, water, air is a commodity
    in any overpopulated city/country. The demand will be high always and thus prices due to limited supply.

    So, just enjoy the ride if you can.
    Invest now and reap later not repent.

    The inflow of migrants to city hardly care for
    the city – ha ha !

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