Bengaluru has seen stupendous growth over the years. It has been expanding radially, transforming several localities, once considered outskirts, to self-sustaining micro-markets within the city limits.
Hennur Road is one such area with tremendous real estate potential. This area is currently undergoing rapid transformation, with a mix of residential and commercial development. This precinct also has large ongoing and proposed five-star hotels and retail malls expected to start operation soon.
The locality is about seven km from MG Road in the central business district. Several information technology companies are eyeing this area to expand their offices. The residential segment has also seen a huge spurt in demand, with several reputed builders acquiring large tracts.
What favours the real estate sector on Hennur Road is its proximity to the prominent office complex of Manyata Tech Park and the Karle Town Centre. Upcoming commercial and retail developments and well-established social infrastructure have strengthened the investor sentiment and outlook for this location.
Hennur Road offers a wide spectrum of housing options, primarily catering to the mid- and upper-mid income segments, with prices at Rs 4,000-8,000 a sq ft. An attractive investment proposition over the medium to long term, the housing sector in this region is set to perform increasingly well. Appreciation during 2013-14 was six-eight per cent. With the growing demand for office space in this region, the returns on investment are expected to increase significantly. The prices for plots are Rs 4,500-6,500 a sq ft. The annual capital appreciation for plots has been comparatively higher at 8-10 per cent and expected to grow on similar lines. Investors should look at three-to-four years as a minimum investment horizon.
With significant office supply in the pipeline for this part of the city, the demand for housing will sustain in the near future, with the rise in its affluent employee base. A good portion of the demand is expected to drive house rents. At present, this varies between Rs 17,000 and Rs 30,000 a month for a 2BHK flat, depending on the society and amenities. In 2014, this market witnessed rental appreciation of four per cent. This is expected to increase five to six per cent.
The office sector at Hennur Road also looks set to perform exceedingly well, with many multi-national and national companies eyeing the region to set up base. The rental values for offices range between Rs 50 and Rs 58 a sq ft a month, higher than that of other projects on Outer Ring Road, Whitefield and Electronic City. Investing in a commercial space demands long-term commitment. Commercial properties here yield higher annual returns of 9-11 per cent, depending on the 'grade' of space.
The author is associate director - research & real estate intelligence service at JLL India
