Redefining Growth: The Ascendance of North Bangalore
The Silicon City of India, Bangalore, has had an enchanting grip on discerning real estate investors for over half a century. The city’s journey to become an investment haven started in the 1970s, when the Indian government made proactive efforts to turn the city into an IT hub. Today, the city boasts a mature industrial ecosystem and an expansive talent pool made up of a large influx of highly competent individuals due to the presence of the best IT firms globally.
As a corollary, the city accounts for 87% of Karnataka’s domestic GDP, with 2 million individuals employed in what is the largest existing technology workforce in the country. While for the majority of this century the Eastern Corridor has been the main stage of economic progress and its revelations, the latter half of this decade has witnessed North Bangalore taking the centre stage, registering one of the highest growth rates the country has witnessed in recent history.
The presence of eminent business and IT parks such as Manyata Embassy Business Park and the KIADB Aerospace SEZ has resulted in successfully attracting the best MNCs and aerospace companies to the region. The region has turned into a connectivity hub, with roadways, flyovers, and upcoming metro rail seamlessly bridging the gap between the region and the rest of the city. Not only that, the region is also in proximity to Kempegowda International Airport, further boosting the economic growth of the locale.
In light of these factors, it is no wonder that, according to a recent study conducted by a leading real estate developer, the region is all set to add 3,50,000 new jobs to Bangalore’s ecosystem, accounting for 30% of the city’s office absorption by 2025. Another study by a leading real estate industry expert showcased that North Bangalore has moved ahead of the Eastern Corridor when it comes to rental yield. While the rental yield in North Bangalore was up from 3.38 % in Q3 FY2019 to 4.48 % in Q3 FY2023, the rental yield in Whitefield went up from 3.7% in FY2019 to 4.41% in FY2023.
The reason for the relatively lower increment in these prime areas can be as a result of higher capital values in these prime, established areas than those in prominent IT hubs in North Bangalore, with the difference in rentals being relatively insubstantial. According to industry experts, the reason for higher rental yields in North Bangalore is simply because of the booming business ecosystem of the area, which is complemented by a progressive infrastructure. On the other hand, infrastructural handicaps like waterlogging, bottleneck traffic, etc. in the Eastern IT corridor have severely affected the real estate market in the region. This is particularly true for certain pockets in Eastern Bangalore’s IT hubs that are plagued with regular flooding.
However, while rental yields are incontestably higher in Northern Bangalore, rental growth is increasing at a higher rate in the Eastern region, with prices for a standard 1,000 sq. ft. 2 BHK residence growing by 31% and 27% in Whitefield and Sarjapur, respectively, in a period of 9 months in 2023. On the other hand, the rental growth at Thanisandra Main Road has been a meagre 16% in the same period. Further rent has appreciated by 30 to 40% in most Eastern projects, with the best projects even registering a 50% rental appreciation.
The reason for this discrepancy in rental growth can be attributed to the presence of major IT belts in the eastern corridors. However, with the Karnataka government’s relentless efforts to transform Northern Bangalore into an aerospace and IT hub, it seems that the tide will soon turn in its favour. The region’s burgeoning ecosystem and progressive infrastructure has set the stage for continued growth, making North Bangalore a compelling focal point for investors and businesses alike.
