A study and vision of Bangalore housing sector in 2014

The rapid growth of Bangalore City in few decades in terms of infrastructure, educational institutes, social infrastructure, and the real estate sector is driven by the flourishing IT industry.

The city is now home to a large number of High Net-worth Individuals (HNIs) and is the third-largest real estate hub for HNIs who park their assets here and one of the topmost cities where NRIs want to settle down in the future.

Due to its multicultural ethos, the city attracts more populace and today the city houses around 10,000 individual dollar millionaires and also home to many NRIs who are professionals and settled down in the city, which drive the demand in the real estate sector especially the housing segment.

Particularly, in sub-markets like Whitefield, North Bangalore, Outer Ring Road, Central Business District (CBD), and Secondary Business District (SBD), the demand for high-end residential apartments in the city has increased.

Right now, the most optimistic and preferable residential micro-markets in the city are the North Bangalore, Whitefield, Sarjapur Road, and Outer Ring Road (ORR).

With many ups and downs in the sector, a study and outlook of different residential categories is given below:

High-end residential category
Property price - Rs.1.5 Crore and above
Residential Type - New villa, villaments, and row houses
Locations - Whitefield, North Bangalore, Sarjapura, and Outer Ring Road (ORR)
Study & Vision - Demand is likely to remain stable in the coming year

Mid-segment residential category
Property price - Rs.75 Lakh to Rs.1.5 Crore
Residential Type - Above 2 and 3 BHK luxurious apartments
Locations - Electronic City, ORR IT Corridor, Whitefield, and some areas in North Bangalore
Study & Vision – Demand driven by IT/ITeS professionals who look for home close to their office and focus on social infrastructures, educational institution, hospitals and many other facilities
 
Affordable residential category
Property price – Rs.50 lakh or below
Residential type – 1, 2, 3, BHK apartments
Locations – Outskirts of the city, Peripheral Ring Road (PRR), South Bangalore, North Bangalore, West Bangalore
Study & vision – The proposes infrastructure projects like Metro Rail drives the demand

Synopsis of reality market
In the fourth quarter of 2013 there was an increase in the absorption of residential sector against the third quarter of the same period. About 30 residential projects were launched in the fourth quarter of 2013 and a slight appreciation in capital value and the sales volume increased as the most of the projects were in completion stage.

Opinion about Bangalore Reality Market
It is likely that in the first half of the 2014 the growth of residential market will remain stable and a modest number of launches in residential projects will be witnessed, while leasing and capital values will remain stable and is expected to rise in second half of 2014.

Factors that drive the leasing and capital value of Bangalore residential segment:
•    Development in IT sector
•    Investment by more HNIs and NRIs in residential segment of the city
•    Proposed infrastructure projects by government like Elevated expressway, Metro Rail, and Peripheral Ring Road (PRR), many others
•    Projected SEZ and IT Parks in North Bangalore such as Devanahalli Business Park, ITIR in Devanahalli, Aerospace SEZ, Airport City and others

Land Loser has the right to make decision in Land Acquisition and Compensation

The new land acquisition law that has been enforced has comforted the landlords who have sold their land for public sector infrastructure projects in Bangalore City.

For example, if an agency requires a land of 2,000 Square Feet. in a location for any proposed public sector infrastructure project then the approaching agency should pay an average compensation cost existing in the area for an instance if land is required in MG Road, then the agency should Rs.27, 000 per Square Feet. as an average compensation keeping in mind the current market value and if it ranges between Rs.25, 000 and Rs.30, 000 per Square Feet.

Based on the new law, the land or property owner should get a compensation of Rs.54, 000 per Square Feet., as it says the land owner should get double the price of the market value. The new law also gives right to the land owner to argue with the approaching agency about the compensation cost if the land owner feels the deal is not fair. And, this dispute can be held at a proper platform solely formed by the government by providing documented substantiation.

The new law is regarded as favorable for farmers as the compensation cost for land owners is four times the market value and will also make sure that the land loser is provided with rehabilitation and resettlement. The provision in the new law also says that the land cannot be acquired without the approval of the land owners.

The idea of Transfer of Development Rights (TDR) under which the land owners can be given land as compensation instead of cost for the loss of land area that is acquired by the government for public purpose like for constructing flyovers, roadways and other infrastructure.

The new law in the foreseeable future may surely cause less conflict to a whole range of infrastructure projects in the row that includes road broadening, construction of flyovers and passageways, and elevated expressways.

Stipulation in the Law

• The new Land Acquisition Act says that in case the acquisition of land is less than 50 acres of area in cities and 100 acres in rural areas then the law will be discretionary.
• The TDR should be more attractive an approachable in such a way that land owners to choose TDR instead of compensation cost.

Adverse for Farm Sector

• Farm land will be gobbled through this new law.
• The compensation cost will attract the farmers to give away their lands.

Many farmers say that they don’t have any complaint to acquisition of land for Metro, rail, roads, and other necessary public sector projects by government. The government should also understand that no compensation can recover the food calamity in the anticipatable future.

Compensation for Land Loser

• Urban Areas - Compensation cost will be twice the market value of the property in addition to this 100 per cent solace on this amount.
• Rural Areas - Compensation cost will be four times the market value of the property
• Market Value - Value of the property registered at the sub-registrar offices, but it is still unclear in the market value whether the exiting market value or the regular market value will be considered.
• Discussions can he be held by the land owners if the deal is not fair and the discussion can be held in a forum formed by the government 

About The New Law

• The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 has substituted the 120-year-old Land Acquisition Act of 1894
• The President approved the new Land Acquisition Bill on September 27, 2013
• The Bill was introduced as  the out-of-date 1894 Act underwent several inadequacies, such as the resettlement of the land loser
• Fair compensation and compulsory rehabilitation and resettlement (R&R) for the land loser
• A study should be conducted on the land acquiring agencies about their plan to use the land and how the land owners are rehabilitated and resettled.

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