Strong residential, rental demand driving growth

Koramangala is one of the sub-markets within the secondary business district of Bengaluru, and one of the key office, retail and residential precincts of the city. It is almost six km from the central business district and well-connected with established schools, colleges, hospitals, malls and other entertainment options. As such, it is one of the most sought-after locations for residential properties. With the presence of a cosmopolitan population, established high streets featuring all major brands, pubs, cafes and fine dining, this location has everything at an accessible distance.

After being established as a key residential location, along with the presence of many popular colleges, Koramangala witnessed office space development. It now has close to two million sq ft of Grade A office space, which has a vacancy of less than one per cent. Shortage of leasable space in this sub-market has pushed the rents up by almost five to seven per cent quarter-on-quarter and about 10-15 per cent year-on-year. A few office projects are planned but the construction has not started.

Koramangala is also one of the favourite and most preferred locations for start-up firms. It also has many smart office or co-working office space operators who provide fully-fitted out office spaces and meeting rooms on hourly, daily or monthly basis. These are very cost-effective solutions for cost-sensitive start-ups and, thus, are getting very popular in Koramangala.

Mid-to-high end residential properties in Koramangala drive the demand for retail in this precinct. The presence of Bengaluru's first mall -The Forum Mall - clearly underscores this demand. The strong demand for retail has given rise to two well-established and popular high streets of Bengaluru - Koramangala 100 feet Road and Koramangala 80 feet Road. These roads are also well-connected to popular residential areas such as Indiranagar, Domlur and upcoming areas like HSR Layout and Sarjapura. As such, they witness good footfalls from both residents and office employees. These high streets are characterised by jewellery, apparel and fashion accessories stores, restaurants, etc. Retail rents in these high streets are appreciating by five-six per cent y-o-y, given the strong demand from retailers.

Residential demand always remains strong in Koramangala for renting and buying, so this market witnesses good demand from both investors and end-users. However, the demand for residential properties has slowed down across the city in the last six to nine months. Therefore, there was marginal price appreciation of three-five per cent in the past one year. Rental demand remains strong, with rental values having seen a good 10-15 per cent increase in the year. Under-construction projects in and around Koramangala are priced between Rs 8,000-11,500 per sq ft. Rental properties are available for Rs 22,000-Rs 1.5 lakh per month, depending on the size, quality and specifications of the properties.

The writer is associate director, research & real estate intelligence service, JLL India