Final Report

Market Research and Assessment of Capital Values and Rental Values for Proposed Development near Electronic City,
Bangalore, Karnataka, India
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MARKET RESEARCH AND ASSESSMENT OF CAPITAL VALUES AND RENTAL VALUES FOR PROPOSED DEVELOPMENT NEAR ELECTRONIC CITY, BANGALORE, KARNATAKA, INDIA
FINAL REPORT
SUBMITTED TO
VALUE AND BUDGET HOUSING CORPORATION LIMITED (VBHC)
Submitted by
Jones Lang LaSalle Property Consultants India Private Limited

Level 3, Concorde, UB City, #24, Vittal Mallya Road Bangalore - 560 001 Ph: +91 80 4118 2900, Fax: +91 80 4118 2901 Internet: www.joneslanglassale.co.in
JANUARY 2011
Market Research and Assessment of Capital Values and Rental Values for Proposed Development near Electronic City, Bangalore, Karnataka, India
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CONTROLLED COPY
Report for
Submitted to
Value and Budget Housing Corporation Limited (VBHC)

Document Number: Document Status: Date: Document prepared by: Document approved by: No. of copies circulated: 2010/10/MARKET ASSESSMENT/UK/BLR/276 Revision 1.0 January 13, 2011 Y. Umakanth Deepa Hurali 02
Circulation Copy 01: Value and Budget Housing Corporation Limited (VBHC) Copy 02: Office Copy Contact Information For further information please contact: Mr. Girish K. S. MRICS Senior Vice President - Strategic Consulting Jones Lang LaSalle Property Consultants India Private Limited Level 3, Concorde, UB City, # 24, Vittal Mallya Road Bangalore - 560 001 Ph: +91 80 4118 2900, Fax: +91 80 4118 2901 Mobile: +91 99001 54567 E-mail: girish.ks@ap.jll.com
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TABLE OF CONTENTS
EXECUTIVE SUMMARY .................................................................................................. 07 1 INTRODUCTION ....................................................................................................... 18
1.1 1.2 1.3 1.4 1.5 BACKGROUND ...........................................................................................................18 OBJECTIVE AND SCOPE OF W ORK ..............................................................................18 REPORT STRUCTURE .................................................................................................19 LIMITATIONS ..............................................................................................................19 DISCLAIMER ..............................................................................................................19
PROFILE OF BANGALORE CITY ................................................................................ 21

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 CITY SNAPSHOT ........................................................................................................21 REGIONAL CONNECTIVITY ..........................................................................................22 FUNCTIONAL BASE OF CITY ........................................................................................24 DEMOGRAPHIC CHARACTERISTICS ..............................................................................24 SOCIO-ECONOMIC CHARACTERISTICS .........................................................................25 ECONOMIC ACTIVITIES ...............................................................................................28 KEY INFRASTRUCTURE INITIATIVES .............................................................................30 GROWTH TRENDS ......................................................................................................36
REAL ESTATE MACRO-MARKET REVIEW ................................................................. 39

3.1 3.2 3.3 3.4 GENERAL SECTOR TRENDS ........................................................................................39 RESIDENTIAL SECTOR TRENDS ...................................................................................40 AFFORDABLE HOUSING ..............................................................................................46 CONCLUSION .............................................................................................................54
PROJECT SITE ANALYSIS AND APPLICABLE DCR..................................................... 56

4.1 4.2 4.3 4.4 4.5 LOCATION OF THE PROJECT SITE................................................................................56 PROJECT SITE DESCRIPTION AND ITS SURROUNDINGS .................................................57 CATCHMENT ASSESSMENT .........................................................................................61 SWOT ANALYSIS FOR THE PROJECT SITE ...................................................................63 APPLICABLE DEVELOPMENT CONTROLS AND REGULATIONS .........................................64
REAL ESTATE MICRO-MARKET REVIEW ................................................................... 65

5.1 5.2 5.3 GENERAL ..................................................................................................................65 RESIDENTIAL SUB-SECTOR - APARTMENTS .................................................................66 RESIDENTIAL SUB-SECTOR - AFFORDABLE HOUSING ...................................................68
CONCLUSIONS AND RECOMMENDATIONS ................................................................. 70

6.1 6.2 6.3 FUTURE OUTLOOK FOR THE MICRO-MARKET ...............................................................70 ACHIEVABLE CAPITAL VALUE FOR THE PROPOSED APARTMENT DEVELOPMENT .............71 ACHIEVABLE RENTALS FOR THE PROPOSED APARTMENT DEVELOPMENT ......................72
ANNEXURE......................................................................................................... 75
7.1 ANNEXURE - 1: INVENTORY AND DETAILS OF SELECT RESIDENTIAL PROJECTS IN THE MICRO-MARKET OF THE PROJECT SITE .................................................................................75 7.2 ANNEXURE - 2: INVENTORY AND DETAILS OF SELECT RESIDENTIAL PROJECTS UNDER AFFORDABLE HOUSING SEGMENT IN THE MICRO-MARKET OF THE PROJECT SITE ....................78 7.3 ANNEXURE - 3: GEOGRAPHIC DISTRIBUTION OF SELECT RESIDENTIAL PROJECTS IN THE MICRO-MARKET OF THE PROJECT SITE .................................................................................79
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LIST OF TABLES
Table 2.1: Salient Features of Bangalore City................................................................................. 21 Table 2.2: Population Details and Growth Trends in Population of Bangalore City........................ 25 Table 2.3: City-wise Rankings - Per Capita Income and Savings per Household .......................... 26 Table 2.4: City-Wise Rankings - Economy Index and Reside Index............................................... 27 Table 2.5: Status on House Ownership and Rental Housing in Bangalore .................................... 28 Table 2.6: Software Export of Bangalore with respect to the State and Nation.............................. 29 Table 2.7: Salient Features of Major Infrastructure Projects in Bangalore ..................................... 31 Table 3.1: Major Residential Development Zones in Bangalore ..................................................... 41 Table 3.2 Year-Wise Residential Rates across various Micro Markets location (Grade-A, B&C Category).......................................................................................................................................... 43 Table 3.3 Year-Wise Residential Rates across various Micro Markets location (Grade-A Category) .......................................................................................................................................................... 44 Table 3.4 Income and Dwelling Size for Affordable Housing Project.............................................. 46 Table 3.5 Inventory and Details of Affordable Housing Projects in Bangalore ............................... 49 Table 4.1: Distance of the Project Site from Important Landmarks in the Bangalore ..................... 56 Table 4.2: Salient Features of Project Site ...................................................................................... 57 Table 4.3: Immediate Surroundings of Project Site......................................................................... 58 Table 4.4: Catchment Details of the Project Site............................................................................. 61 Table 4.5: Key Demographic and Socio-Economic Features of the Primary and Secondary Catchment........................................................................................................................................ 63 Table 4.6: SWOT Analysis for the Project Site................................................................................ 63 Table 4.7: Applicable DCR for Project Site...................................................................................... 64 Table 5.1: Characteristics of the Micro-Market of the Project Site .................................................. 65 Table 5.2: Overview of the Micro-Market Situation under Residential Sub-Sector......................... 65 Table 5.3: Grade-wise Supply of Residential Apartment Units in Micro-Market with 100% Absorption ........................................................................................................................................ 66 Table 5.4: Grade-wise Supply of Residential Apartment Units Micro-Market with Vacancy .......... 66 Table 5.5: Historic Market Trends for Residential Apartment Developments in the Micro-Market of the Project Site................................................................................................................................. 67 Table 6.1: Attributes and Rationale for Premium and Discount Factors used for Price Adjustment .......................................................................................................................................................... 71 Table 6.2: Projected Base Price for the Proposed Apartments on the Project Site........................ 72 Table 6.3: Prevailing Rentals in Primary and Secondary Catchment of Project Site...................... 72 Table 6.4: Projected Rentals for the Proposed Apartment on the Project Site for 2-BHK Apartment Unit ................................................................................................................................................... 73 Table 6.5: Projected Rentals for the Proposed Apartment on the Project Site for 1-BHK Apartment Unit ................................................................................................................................................... 74
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LIST OF MAPS
Map 2.1: Regional Setting Map of Bangalore.................................................................................. 22 Map 2.2: Bangalore Region Map ..................................................................................................... 23 Map 2.3: Major Industrial Estates and IT&ITES Hubs in Bangalore ............................................... 30 Map 2.4: Major Infrastructure Initiative Projects in Bangalore......................................................... 36 Map 2.5: Growth Trends and Growth Corridors of the Bangalore City ........................................... 37 Map 3.1: Overview of the Real Estate Macro-Market Trends in Bangalore City............................. 39 Map 3.2: Residential Zones in Bangalore City ................................................................................ 40 Map 3.3: Locations of Affordable Housing Projects in Bangalore City............................................ 54 Map 4.1: Location of Project Site with respect to the City............................................................... 56 Map 4.2: Location of the Project Site and its Surroundings ............................................................ 60 Map 4.3: Catchment Delineation Map for Project Site .................................................................... 62 Map 4.4: Landuse Map showing Project Site .................................................................................. 64
ABBREVIATIONS
APA BBMP BDA BEL BETL BHK BIAL BMA BMIC BMRCL BMRDA BMTC BPO BT BTS BUA BUA BWSSB CAGR CBD CCTVs CDP DCR DHIFC EWS FAR GDP GoI GoK HUDCO INR IRR ISRO IT ITES JNNURM KBITS KIADB km KSRTC Anekal Planning Authority Bruhat Bangalore Mahanagara Palike Bangalore Development Authority Bharat Electronics Limited Bangalore Elevated Tollway Ltd Bed Room- Hall- Kitchen Bangalore International Airport Limited Bangalore Metropolitan Area Bangalore Mysore Infrastructure Corridor Bangalore Metro Rail Corporation Limited Bangalore Metropolitan Regional Development Bangalore Metropolitan Transport Corporation Business Process Outsourcing Biotechnology Build-to-Suit Bangalore Urban Agglomeration Built-Up Area Bangalore Water Supply and Sewerage Board Compound Annual Growth Rate Central Business District Closed-circuit television Comprehensive Development Plan Development Controls & Regulations Dubai International Financial Centre Economically Weaker Section Floor Area Ratio Gross Domestic Product Government of India Government of Karnataka Housing And Urban Development Corporation Ltd. Indian National Rupees Intermediate Ring Road Indian Space Research Organization Information Technology IT enabled Services Jawaharlal Nehru National Urban Renewal Mission Karnataka Biotechnology and Information Technology Karnataka Industrial Area Development Board kilo-metre Karnataka State Road Transport Corporation
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LIG MIG MOEF NCC NGEF NH NHAI NUHHP ORR RFP SEC SEZs SPV sq. ft. sq. m STP STPI STRR SWOT USD USP UTs Y-o-Y
Lower Income Group Middle Income Group Ministry of Environment and Forests Nagarjuna Construction Corporation The New Government Electrical Factory National Highway National Highway Authority of India National Urban Housing & Habitat Policy Outer Ring Road Request for Proposal Socio-economic Classification Special Economic Zones special purpose vehicle square feet square metre Sewerage Treatment Plant Software Technology Parks of India Satellite Town Ring Road Strength-Weakness-Opportunity-Threat United States Dollar Unique Selling Proposition Union Territories Year-on-Year
CONVERSION OF UNITS
1 hectare 1 acre 1 acre 1 sq. km 1 sq. m 1 sq. m 1 meter 1 meter 1 cent 1 acre 2.4711 acres 43560 sq. ft. 4046.9 sq. m 247.11 acres 1.196 sq. yards 10.764 sq. ft. 1.0936 yards 3.28 ft 435.6 sq. ft 40 guntas
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EXECUTIVE SUMMARY
BACKGROUND
Value and Budget Housing Corporation Limited (hereinafter referred to as VBHC) is developing its first project named as Vaibhava on a plot measuring an area of about 19.90 acres located on Chandapura Anekal Road, south of Electronic City, Bangalore, Karnataka, India (hereinafter referred to as the Project). VBHC is developing this residential apartment complex through a Special Purpose Company (SPC) 1 , comprising Studio Apartments (carpet area of 251 sq. ft.; super built-up area of 354 sq. ft.); 1-BHK Apartments (carpet area of 340-360 sq. ft.; super built-up area of 456-476 sq. ft.); and 2-BHK Apartments (carpet area of 481-500 sq. ft.; super built-up area of 620-640 sq. ft.). In this regard, VBHC has commissioned Jones Lang LaSalle Property Consultants India Private Limited 2 (hereinafter referred to as Jones Lang LaSalle) to provide an independent, expert assessment of the marketability of the Project being developed by VBHC. The objective of the market research and assessment is to provide potential buyers of apartment with supplementary information, which may be of assistance in making the decision. Notwithstanding the foregoing, this Report should be treated as additional information only and shall not constitute formal advice rendered directly to the prospective purchaser. The readers of this Report are encouraged to carefully read the Disclaimer Statement below to understand the purpose and objective of this Report to the prospective buyers.
BANGALORE - MOST HAPPENING CITY IN SOUTH INDIA

Bangalore, the capital city and the largest city of the Karnataka State is now popularly known as the Silicon Valley of India and has become one of Asias fastest growing cities since emergence of IT-ITES industry. Karnataka State itself is globally known for its vibrant economy and investment potential. Bangalore was popularly known as a Pensioners Paradise, and Garden city for its delicate blossoms and greenery that imparts a unique beauty to it. The growth of IT-ITES in the city, which is the largest contributor to India's software exports, has led to Bangalore to be recognized as the Silicon Valley of India. It is now regarded as a high-tech city with office or development centers of a number of mega software companies having wholly owned subsidiaries or joint ventures in Bangalore, including IBM, Hewlett-Packard, Texas Instruments, Oracle, Novell, Fujitsu, and Digital Equipment. Bangalore is also headquarters to a large number of Indian software companies. Bangalore produces more than 35% of all software that India currently exports. In a short time, Bangalore has experienced rapid growth and international recognition in the field of software development. This has resulted in placing the city at a promising position in the international market for software. After establishing itself as an IT and BPO hub, Bangalore has successfully attracted the Biotech industry. Bangalore currently houses approximately 47% of the total biotechnology companies in India. The city also attracts people from all over the world for its excellent schools and universities, such as the Indian Institute of Science, National Institute of Mental Health and Neuro-Physics, the
1
Name of the SPC is VBHDC Bangalore Value Homes Private Limited (VBHC-Bangalore). VBHC- Bangalore has two share holders, VBHC, which holds the majority stake, and HDFC Portfolio Management Services, which owns the remaining equity. 2 Jones Lang LaSalle, the Indian operations of Jones Lang LaSalle (NYSE: JLL), is the only real estate money management and services firm named to FORTUNE magazine's "100 Best Companies to Work For" and Forbes magazine's "400 Best Big Companies". It is the premiere and largest real estate Services Company in India, with an extensive geographic footprint across ten cities (Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and staff strength of over 3,000. The company provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property management, capital markets, residential, hotels and retail advisory. For further information, please visit www.joneslanglassale.co.in. Brief profile of the team members who authored this Report is given at the end of this report.
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Indian Space Research Organization, Indian Institute of Management and Indian Institute of Aerophysics. Bangalore is even gaining the status of the Floriculture Capital due to the present boost of the flower export from the city. Due to the rich stone resources Bangalore is also known the Stone City, especially for its granite deposits.
DEMOGRAPHIC & SOCIO-ECONOMIC CHARACTERISTICS

Bangalore developed into a preferred location for high technology industries such as electronics, IT, telecommunications and emerged as a globally integrated center of high technology research and production during 1990s. This has resulted in sudden population increase of Bangalore Urban Agglomeration with decadal growth touching the figure of 38% with a population of 5.68 million as per Census 2001. estimated present population is about 8 million. Bangalore has the second highest literacy rate (83.91%) for an Indian metropolis, after Mumbai. The per-capita income of population of the city at present is INR 88,991 per annum. Bangalore has about 33.4% of SEC A and B population in city, which is third highest in comparison to other major cities in India, next only to Mumbai and Hyderabad. Bangalore is India's fourth largest FMCG and clothing and footwear market. The city is the third-largest hub for high net worth individuals (HNWI/ HNIs), after Mumbai and Delhi. IT population forms about 5% of the total population of Urban Bangalore (550,000 IT Professionals - 1/3rd of total IT professionals in the Country). Overall the socio-economic profile of the city provides information about the fact that the market is lucrative for the development of organized retail sector. Bangalore has very high Youthfulness Index (20% population: 18-24 years, 14%: 25-35 years). More than half of the employees in IT/ITES sector are below the age of 28. Bangalore stands No. 6 in Economy Index and No. 27 in Reside-In Index out of 112 cities surveyed is good (Top City: 1). "Economy" Index reflects the economic conditions in a particular city, opportunities to start a new business, investment etc while Reside-In Index reflect a city's suitability for residing based on the subheads, health, education, environment, safety, public facilities, entertainment and housing. Continued influx of working population to Bangalore City and lack of adequate response of the Government to meet the growing housing needs have gradually widened the demand-supply-gap resulting in exponential increase in capital values of residential units making less affordable to buy a home for large segment of the population. This has resulted in increasing demand for rented
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accommodation both in terms of volume and price. At present, due to the rapid pace of urbanization, rental housing has provided much needed room for maneuver for individuals and households and also responsive to changes in individual and household life-cycles and is an asset for tenants as well as landlords. An assessment of housing ownership and rental housing status in Bangalore during the year 2000-01 indicates about 39% of households had house ownership while 56% of the households were found to be in rented accommodation. However, considering the incremental increase in number of households during the period from 2000-01 and 2008-09, about 23% of this incremental households could attain house ownership while significant two-third of the incremental households resorted to rental accommodation during the same period. The above findings clearly demonstrates increasing demand for the rental housing in the city and reduced affordability of the population to have house ownership due to high capital values. Consequence of above imbalance is expected to increase both volume and pricing of rented housing in the city. During the 1990s, Bangalore developed into a preferred location for hi-tech industries such as electronics, information technology and telecommunications and emerged as a globally integrated centre of technology research and production. This has resulted in significant in-migration of intellectual / knowledge population from various parts of the country contributing to the decadal growth of 38%. Karnataka is among the top five industrialized states in the country and is the science capital of India with more than 100 R&D centres and majority of them are in Bangalore. Bangalore has been contributing almost 33-37% of national software export revenues over the last decade and thus is rightfully tagged as the IT Capital of India. The physical growth in Bangalore is fuelled by the IT-ITES and the Bio-Tech sector. There are nearly 2,000+ STPI registered companies in the city. These companies are contributing INR 726,690 million, which is nearly 32.68% of the national revenues for software exports. IT/ITES sector is growing at a compounded annual average growth rate of 25.67% over the past three years. Some of the major industrial estates and IT& ITES hubs in Bangalore is shown in the map below.
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After establishing itself as an IT and BPO hub, Bangalore has successfully attracted the Biotech industry. Bangalore currently houses approximately 47% of the total biotechnology companies in India. The Karnataka governments various initiatives such as a biotech policy, fiscal incentives and proposed biotech park in Bangalore are likely to aid the process. Karnataka is one of the few states to come out with a clear-cut biotechnology policy called The Millennium Biotech Policy, while the Centre is still dithering to formulate such a policy at the national level. Karnatakas policy promises to establish a biotech corridor and the state has also set up a Vision Group on Biotechnology to provide an impetus to the growth of the sector through other initiatives.
INFRASTRUCTURE INITIATIVES
There are various proactive measures taken up by the GoK in augmenting & expanding the city physical infrastructure and developing major infrastructure projects to encourage overall economic development. The map below presents some of the key existing and proposed road network of the Bangalore City, which have been the factors fueling the physical growth of the city. Also existing and proposed infrastructure projects have been highlighted.
GENERAL REAL ESTATE MARKET TRENDS

In the last decade, Bangalore has gained a special significance in the real estate market. The boom in Information Technology was largely responsible in triggering the real estate activities in city. Other than IT and ITES, other sectors like automobile, garments, finance and real estate also have shown phenomenal growth in the past 5 years. The increasing demand for commercial sector reflected in generation of more employment, increasing people with higher disposable incomes, need for better residential enclaves and different formats of retail, leisure and
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entertainment. The spur of activities led to increase in spread of city catchment. The map below presents the overview of the real estate sector trends in Bangalore.
Bangalore has grown in radial direction along the main corridors. The centre is the CBD (Central Business District) followed by ring of SBD (Secondary Business District) developments and further is the PD (peripheral districts) comprising of developments in suburban areas. Following are the prime areas witnessing different real estate activities High-end corporate offices & retail developments: CBD Area (MG Road, Brigade Road, Commercial Street, Residency Road, Langford Town, Cunningham road, Richmond road etc). IT/ ITES Offices & SEZs: towards Eastern and Southern suburban areas: Electronic City, Whitefield, ORR, Sarjapur Road, Hebbal etc. Corporate / Office: CBD and SBD areas: Koramangala, Indiranagar, Jayanagar, Bannerghatta Road etc. Residential: Hebbal, Sahakarnagar, Yelahanka, Jalahalli, Kengeri, Rajajinagar, JP Nagar, Banashankari, Jayanagar, Koramangala, Indiranagar, HSR Layout, Brookefield, Whitefield, Sarjapur road, Hosur road, Bannerghatta road, Kanakpura road etc. Industrial: Peenya, Yeshwantpur, Rajajinagar Industrial Suburb, Jigini, Bommasandra
PROJECT SITE
The Project Site measures an area of about 19.90 acres, located towards the southern quadrant of city and is located at a distance of about 5 km off Hosur Main Road (NH-7). The Project Site is located under the jurisdiction of Bangalore Metropolitan Regional Development (BMRDA), under Anekal Planning Authority (APA), revenue administration of Byagadadenahalli Village, Kasaba (Anekal), which forms a part of the Anekal Taluk. The map below presents location of the Project Site with respect to the city.
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The Project Site has two access roads, wherein the primary access is through Chandapura Anekal Main Road, which is about 30 m wide (Right of Way). The above said road connects the Hosur Road (NH-7) at a distance of 5 km from the Project Site. While the secondary access road is kutcha village road with the width of 7 m, connects Byagadadenahalli Village in the south of the Project Site. The Project Site is fairly regular in shape and has a frontage of approximately 150 m on the eastern side, towards the Chandapura Anekal Main Road and 410 m on the western side. The Project Site has power lines, water supply and drainage & sewerage facilities. Some of the salient features of the Project Site are summarized in the table below: Area Access 19.90 acres (i.e. 866,837 sq. ft. approximately) Chandapura Anekal Main Road
Existing Access Road Access is through two approach roads namely the Chandapura Anekal Main Road and Byagadadenahalli Village road which is on eastern and western side of the Project Site with the width of 30.0 m and 7.0 m. Shape Visibility Contiguity Fairly regular in shape Visible from the approach road (Chandapura Anekal Main Road) and secondary access road Contiguous in nature
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Topography Frontage Land use
Flat terrain The property has frontage of Approx. 150 m on the eastern side, towards Chandapura Anekal Main Road and 410 m on western side. Residential Use (As informed by VBHC)
Google map below shows the location of the Project Site and its surroundings.
SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis has been done for the Project Site based on location, infrastructure, linkages, frontage and potential usage and is presented below: Strengths Location is on Chandapura Anekal Main Road - easy access of public transport Site is contiguous with excellent frontage and visibility Two main approach roads towards east and west Good Access road - 30 m wide road Opportunities Proximity to Electronic City, proposed SEZ projects, Jigni Industrial areas offers captive demand for the proposed development on the Project Site. The size of Project Site explores possible options for largescale integrated real estate development. Surya city and many plotted developments have already created visibility of the area for home-seekers Weaknesses Large distance from city CBD and also the site is located 5.0 km off Hosur Road The immediate surrounding lacks social infrastructure which can be addressed through project amenities Social index of the region is poor presently Threats Competition from other newly launched projects like Janaadhar Shubha, Shriram Smrithi, Pride Horizon and Concorde South Scape which are focusing on affordable category of apartments.
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FUTURE OUTLOOK FOR THE MICRO-MARKET

As stated earlier, the micro-market of the Project Site comprises areas in and around the Electronic City and Bommasandra Industrial area. Hosur Road is the main growth corridor for the micro-market of the Project Site. Hosur Road is the part of NH-7, which connects the Bangalore City and Hosur in Tamil Nadu. Hosur Road has been witnessing developments due to high commercial activity ever since KEONICS Electronic City Phase 1 (spread over 332 acres) planned during 1976- 1980. The first Software Technology Parks of India (STPI) was set up in Electronics City in 1981-85 and now prominent companies like Infosys, Wipro, Siemens, Motorola have their operations in the campus developments within the Electronic City. KIADB acquired additional 320 acres as part of the Electronics City - Phase 2 & Phase 3 development. The land was allocated to various IT/ITES, Biotech and other related industries. Development of Electronics City has induced development of many commercial complexes and IT parks along Hosur Main Road, translating the micro-market of the Project Site into one of the economic hubs of the city. These commercial developments gradually generated substantial demand for the residential sub-sector in the micro-market, which eventually led to construction of various apartment projects. In-terms of physical growth potentials, the micro-market of the Project Site enjoys growth drivers similar to that of Bannerghatta Road, Sarjapur Road, Marathalli Sarjapur Outer Ring Road, Kanakapura Main Road and Whitefield, which have been witnessing significant growth in terms real estate development primarily driven by IT-ITES related development. All these locations lie on the South, Southeast and Eastern quadrant of the Bangalore City in the close proximity of IT&ITES and industrial development.
Looking at the historic growth evolution of locations like Bannerghatta Road, Sarjapur Road, Marathalli Sarjapur Outer Ring Road, Kanakapura Main Road, over last 4-5 years, Hosur Road and the areas within the micro-market of the Project Site is expected to undergo similar evolution and transformation over next 2-3 years. With the operation of the Elevated Expressway connecting Silk Board Junction and the Electronics City, the travel time from the city (Silk Board Junction) has reduced from 45-50 minutes to just 10 minutes. With this improved connectivity and other infrastructure initiatives of the Government and development agencies in the city like Peripheral Ring Road, the micro-market is expected to have excellent connectivity from different parts of the city over next 2-3 years.
Further, the micro-market has good social infrastructure such as healthcare, schools, recreation (resorts) and general retail when compared to other development corridors in the city. This is also expected to offer competitive advantage for the micro-market over other developing micro-markets in the city for residential development. Considering the growth of commercial activities in the region and also the proposed 4 SEZs projects namely; Biocon, WIPRO, HCL Technologies and Karnataka Biotechnology and Information Technology (KBITS), covering about 89.19 hectares (220.39 acres) will further augment economic drivers of this micro-market, which is expected to have positive impact in terms of demand growth and price appreciation for the real estate products over next 2-3 years.
ACHIEVABLE PRICING FOR THE PROPOSED APARTMENT DEVELOPMENT

Proposed residential apartment units on the Project Site have been evaluated with respect to the detailed market assessment carried out within the micro-market pertaining to similar developments. Prevalent price range for conventional as well as affordable housing segment has been considered for determining the average benchmark price for the proposed residential apartment development on the Project Site. The average benchmark price determined above is considered for potential price adjustments for various attributes like location, accessibility, developers profile, size of the development,
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product offering, present project status, site attributes, etc. among others, to determine achievable pricing for the proposed residential apartment development on the Project Site. The price adjustments have been carried out in terms of premium and/or discount on attributes of the Project Site with respect to the competing projects in the micro-market. There are 5 projects under affordable housing segment in the micro-market, bringing total supply of 2,812 units. Average present price of these projects range between INR 1700-1800 per sq. ft. Building specifications and amenities play a vital role in marketing residential products in Bangalore. The decision making of the end-users largely depend on superior building specifications, comparable to the buildings of Grade A developers in the city and level of civic amenities provided within the residential development. Considering both building specifications and level of amenities provided/envisaged, Janaadhar Shubha may not be a comparable to the building specifications and level of amenities provided/envisaged in VBHC Project. Excluding Janaadhar Shubha, the micro-market has 4 projects under affordable housing segment, bringing total supply of 1,672 units. Average present price (on weighted average basis) of these projects range between INR 2,000-2,100 per sq. ft. Accordingly, INR 2,000 per sq. ft. is considered as the average benchmark price for the micro-market of the Project Site. Based on various assumptions and price adjustments, Jones Lang LaSalle is of the opinion that the achievable pricing for the residential apartment on the Project Site will be INR 2,000 per sq. ft (applied over the saleable/super built-up area). This achievable pricing is for a residential apartment product for affordable housing project for apartment development. It may be noted that the above achievable pricing is as on the date of assessment (October 2010) and the indicated price is only the base price for the unit saleable area of the apartment. Other charges like parking, club membership, deposits payable to civic authorities, etc. are chargeable over and above the base price. Details of such charges are covered in Page 45 of the detailed report. In the case of year wise price increase, Hosur Road micro market has an average CAGR of 7% per annum in residential apartment projects whereas, Bangalore City has CAGR of 13%. Considering the factors like city average appreciation, Hosur Road micro market average price appreciation, proposed IT&ITES commercial development, improved / proposed urban infrastructure projects towards the micro-market and future outlook, a CAGR of 10% is considered for future projection. The details pertaining to the same are mentioned in the table below: Year 2010 2011 2012 2013 Projected Capital Value (INR per sq. ft.) 2,000 2,200 2,420 2,662 10% 10% 10% 200 220 242 Suggested Annual Increase Price Increase over Previous Year (INR per sq. ft.)
Note: Please note that the above projected pricing is for a residential apartment product under affordable housing segment. It may be noted that the above achievable pricing is only the base price for the unit saleable area of the apartment. Other charges like parking, club membership, deposits payable to civic authorities, etc. are chargeable over and above the base price. Details of such charges are covered in Page 45 of the detailed report.
ACHIEVABLE RENTALS FOR THE PROPOSED APARTMENT DEVELOPMENT

The achievable rentals for the proposed development on the Project Site is determined by carrying out appropriate price adjustments on the average rentals of similar residential projects in the micro-market of the Project Site. The table below summarizes prevailing rentals in some of the sub-markets within the micro-market of the Project Site for a typical 2-BHK unit.
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SI. 1. 2. 3. 4. 5.
Location Chanadapur Anekal Surrounding (Surya City) Jigini Road Electronic City Begur Road BTM Layout
Rental Range (INR per month) 2,500 to 3,000 3,000 to 4,500 6,000 to 11,000 5,500 to 7,000 10,000 to 15,000
Unit Size (sq. ft) 600 to 700 800 to 1,000 1,000 to 1,400 1,000 to 1,200 1,000 to 1,200
Source: Real Estate Market Research and Analysis; Jones Lang LaSalle; October 2010
Based on the assumptions as mentioned above and price adjustments, the Consultants are of the opinion that the achievable rental value for a 2-BHK apartment unit will be INR 3,300 per month. In addition, the tenant is expected to pay for Maintenance Charges as determined by the Resident Welfare Association of the Project Site. There is no rental trend available for the apartments in the micro-market. Considering the fact that the market typically maintains the capital value & rental value gap, average annual increase of 10% (same as capital values) is considered for projecting the rentals for future. The table below presents project rental values for the proposed apartment development (2-BHK unit) on the Project Site. Year 2010 2011 2012 2013 Projected Rental Value (INR per Unit) 3,300 3,630 3,993 4,392 10% 10% 10% 330 363 399 Suggested Annual Increase Price Increase over Previous Year (INR per Unit)
Note: In addition to above rentals, the tenant is expected to pay for Maintenance Charges as determined by the Resident Welfare Association of the Project Site.
Since there are no instances of renting of 1-BHK apartment units in the micro-market, the rentals for 1-BHK apartment units is calculated based on the yield rate (ratio of annual rental value to capital value expressed in percentage). As stated earlier, typically yield rate of residential projects in Bangalore range from 3-4%. Established micro-markets offer about 4% yield rate, which may go up to 5% in select SBD micro-markets. Most of the suburban and developing micro-markets typically offer 3-4%. Considering the saleable area of different type of apartment units proposed in the Project Site and the recommended achievable capital value & rental value for the Project Site, yield rate for the apartment units proposed in the Project Site is calculated. 2-BHK apartment units proposed in the Project Site have carpet area ranging between 481-500 sq. ft. and super built-up area ranging between 620-640 sq. ft. Considering achievable capital value of INR 2,000 per sq. ft. as recommended above, the total average capital value of a 2-BHK apartment unit in the Project Site works out to INR 1,260,000 per apartment unit. Considering achievable rental value of INR 3,300 per month, the annual rental value works out INR 39,600 per 2-BHK apartment unit. Accordingly, the yield rate for a 2-BHK apartment unit works out to 3.14%, which is well within the typical yield rate range for residential apartments in the city (i.e. 3-4%). 1-BHK apartment units proposed in the Project Site have carpet area ranging between 340-360 sq. ft. and super built-up area ranging between 456-476 sq. ft. Considering achievable capital value of INR 2,000 per sq. ft. as recommended above, the total average capital value of a 1-BHK apartment unit in the Project Site works out to INR 932,000 per apartment unit. Considering the yield rate of 3.14% as worked out for 2-BHK apartment unit in the Project Site, the achievable rental value for a 1-BHK apartment unit works out to INR 2,441 per month, rounded off to INR
Final Report - 17 -
2,450 per month. Considering annual appreciation of 10%, the table below presents project rental values for the proposed apartment development (1-BHK unit) on the Project Site. Year 2010 2011 2012 2013 Projected Rental Value (INR per Unit) 2,450 2,695 2,965 3,261 10% 10% 10% 245 270 296 Suggested Annual Increase Price Increase over Previous Year (INR per Unit)
Considering the achievable capital value of INR 2,000 per sq. ft. as recommended above, rental value at average yield of 3-4% per annum and capital appreciation of about 10-12% year-on-year, the gross yield over 5 years will be in the range of 12-15%. Any increase in price appreciation over years than estimated, due to various growth potentials of the micro-market highlighted above, will have significant upside in the returns to a purchaser.
DISCLAIMER This Report has been authored by Jones Lang LaSalle acting on the instructions of VBHC. Jones Lang LaSalle was instructed by VBHC to provide an independent, expert assessment of the marketability of the Project being developed by VBHC as Vaibhava situated near Electronics City, Bangalore. This Report has been formulated by Jones Lang LaSalle independent of any inputs (other than information specifically sought for) from VBHC and VBHC has not in any manner influenced the findings of this Report. The prospective purchaser may however note that VBHC has paid JLL professional fees for the formulation of this Report. Notwithstanding the foregoing, this Report should be treated as additional information and not be taken as a substitute for comprehensive due diligence to be exercised by a prospective purchaser including visiting the project site and evaluating the suitability of the Project to their specific needs, their ability to meet the financial commitment either through purchase or through loan servicing and the availability of third party financing. It is specifically noted that while the Report contains certain views regarding the possible marketability of the Project in the future, prospective purchasers are encouraged to evaluate the Project based on their personal requirements rather than from the perspective of future real estate price appreciation. This Report does not constitute any commitment whatsoever from VBHC and shall not give rise to any claims whatsoever from any prospective purchaser regarding the veracity or otherwise of this Report. This Report is provided for information only. This Report shall not constitute formal advice rendered directly to the prospective purchaser.
Final Report - 18 -
1
1.1
INTRODUCTION
BACKGROUND
Value and Budget Housing Corporation Limited (hereinafter referred to as VBHC) is developing its first project named as Vaibhava on a plot measuring an area of about 19.90 acres located on Chandapura Anekal Road, south of Electronic City, Bangalore, Karnataka, India (hereinafter referred to as the Project). VBHC is developing this residential apartment complex through a Special Purpose Company (SPC)3, comprising Studio Apartments (carpet area of 251 sq. ft.; super built-up area of 354 sq. ft.); 1-BHK Apartments (carpet area of 340-360 sq. ft.; super built-up area of 456-476 sq. ft.); and 2BHK Apartments (carpet area of 481-500 sq. ft.; super built-up area of 620-640 sq. ft.). In this regard, VBHC has commissioned Jones Lang LaSalle Property Consultants India Private Limited 4 (hereinafter referred to as Jones Lang LaSalle) to provide an independent, expert assessment of the marketability of the Project being developed by VBHC.
1.2
OBJECTIVE AND SCOPE OF WORK

The objective of the market research and assessment is to provide potential buyers of apartment with supplementary information, which may be of assistance in making the decision5. Following is the scope of work covered under this Report: City Level Assessment Brief city overview, infrastructure development initiatives in the city and future growth direction; and Macro-market assessment of residential sub-sector focusing apartments under budget and value home segment. Micro-Market Level Assessment Site analysis, SWOT analysis and micro-market delineation (with respect to the Project Site) and analysis; Real estate micro-market scan including mapping of core residential real estate developments, focus on apartments under budget and value home segment; Provide micro-market research findings for the micro-market of the Project Site covering demand drivers, supply dynamics, absorption, vacancy rates, pricing, etc. (pricing to cover both capital and rental values); and Suggestions on achievable and projected rental and capital values for proposed apartment typologies on the Project Site and any other conclusions/recommendations based on market assessment.
Name of the SPC is VBHDC Bangalore Value Homes Private Limited (VBHC-Bangalore). VBHC- Bangalore has two share holders, VBHC, which holds the majority stake, and HDFC Portfolio Management Services, which owns the remaining equity. 4 Jones Lang LaSalle, the Indian operations of Jones Lang LaSalle (NYSE: JLL), is the only real estate money management and services firm named to FORTUNE magazine's "100 Best Companies to Work For" and Forbes magazine's "400 Best Big Companies". It is the premiere and largest real estate Services Company in India, with an extensive geographic footprint across ten cities (Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and staff strength of over 3,000. The company provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property management, capital markets, residential, hotels and retail advisory. For further information, please visit www.joneslanglassale.co.in. Brief profile of the team members who authored this Report is given at the end of this report. 5 Notwithstanding the foregoing, this Report should be treated as additional information only and shall not constitute formal advice rendered directly to the prospective purchaser. The readers of this Report are encouraged to carefully read the Disclaimer Statement below to understand the purpose and objective of this Report to the prospective buyers.
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1.3
REPORT STRUCTURE
This report has the following structure and contents: Introduction: This chapter describes the assignment and project details in brief, scope of work, approach & methodology adopted for the assignment, report structure, limitations while carrying out the assignment and disclaimer statements. Profile of Bangalore City: This chapter presents profile of Bangalore City in brief highlighting location attributes of the city, regional linkages & connectivity, demographic and economic characteristics, infrastructure development of the city along with a commentary on the general growth trends. Real Estate Macro-Market Review: This chapter presents overview of Bangalore real estate market highlighting the inherent potential of the Bangalore City for of residential sub-sector focusing apartments under budget and value home segment. Project Site Analysis and Applicable Development Controls & Regulations: This chapter presents a description of the Project Site and its neighborhood in terms of location, linkages, salient features, etc., site surroundings and the site SWOT. This chapter also outlines applicable DCR for the Project Site. Real Estate Micro-Market Review: This chapter presents an overview of the prevalent micro-market scenario of the Project area. In addition, this chapter presents in-depth assessment of the real estate market trend for residential sub-sector focusing on apartments under budget and value home segment. Conclusions and Recommendations: This chapter summarizes the outcome of the findings of the site analysis, macro- & micro-market assessment and suggestive achievable and projected capital and rental values for the proposed apartment typologies on the Project.
1.4
LIMITATIONS
Following are the limitations to this assignment: The interpretation of real estate key trends is based on market survey and interactions with limited key players in real estate market, viz. developers, brokers and investors. Hence, they are reflective of situations prevalent at the time of assessment. All facts & figures, findings, conclusions of the macro- and micro-market assessment are captured from key players in the real estate market as indicated above. Hence, they are indicative of situations prevalent at the time of assessment.
1.5
DISCLAIMER
This Report has been authored by Jones Lang LaSalle acting on the instructions of VBHC. Jones Lang LaSalle was instructed by VBHC to provide an independent, expert assessment of the marketability of the Project being developed by VBHC as Vaibhava situated near Electronics City, Bangalore. This Report has been formulated by Jones Lang LaSalle independent of any inputs (other than information specifically sought for) from VBHC and VBHC has not in any manner influenced the findings of this Report. The prospective purchaser may however note that VBHC has paid JLL professional fees for the formulation of this Report.
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Notwithstanding the foregoing, this Report should be treated as additional information and not be taken as a substitute for comprehensive due diligence to be exercised by a prospective purchaser including visiting the project site and evaluating the suitability of the Project to their specific needs, their ability to meet the financial commitment either through purchase or through loan servicing and the availability of third party financing. It is specifically noted that while the Report contains certain views regarding the possible marketability of the Project in the future, prospective purchasers are encouraged to evaluate the Project based on their personal requirements rather than from the perspective of future real estate price appreciation. This Report does not constitute any commitment whatsoever from VBHC and shall not give rise to any claims whatsoever from any prospective purchaser regarding the veracity or otherwise of this Report. This Report is provided for information only. This Report shall not constitute formal advice rendered directly to the prospective purchaser.
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2
2.1
PROFILE OF BANGALORE CITY

CITY SNAPSHOT
Bangalore, the capital city and the largest city of the Karnataka State is now popularly known as the Silicon Valley of India and has become one of Asias fastest growing cities since emergence of IT-ITES industry. Karnataka State itself is globally known for its vibrant economy and investment potential. The table below presents salient features of Bangalore City. Table 2.1: Salient Features of Bangalore City City Population (2001 Census) Bangalore 5.68 Million
Estimated Population (2010) 7.79 Million (Projected)6 Area Municipal Area (BBMP): 741 sq. km Planning Area (Bangalore Development Authority): 1,307 sq. km Development Area (Bangalore Metropolitan Regional Development Authority): 2,190 sq. km 770 37 E Longitude and 120 8 N Latitude. Elevation: 920 m above the mean sea level. Air: The city has an international airport with regular flights from & to important destinations both in India and abroad. Bangalore International Airport started its operations of Phase 1 in April 2008 Road: The city is strategically located on NH-4 (Chennai-BangalorePune), NH-7 (Bangalore-Hyderabad), NH-48 (Mangalore), NH 207 (Chikaballapur), & NH-209 (Coimbatore) and State Highways to other cities in the State. Rail: The city has three railway stations, viz. Central, Cantonment and Yeshwantpur. The city is well connected to all major Indian cities by rail network. Tropical Savanna climate March to May (warmest months) December to February (coldest months) June to September (rainy - southwest monsoon) November to December (rainy - northeast monsoon) Highest maximum temperature of 33 degree C Lowest minimum temperature of 14 degree C Regional language: Kannada English, Hindi, Telugu and Tamil are widely spoken and understood. Greater Bangalore Municipal Corporation (Bruhat Bangalore Mahanagara Palike) Administrative Capital, IT capital of the country 35.0 km
Geographic Location Connectivity and Linkages
Climate
Temperature Languages City Administrator City Functions Distance of International Airport from CBD
As per Revised Master Plan-2015, Bangalore
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Key Advantages of Bangalore
Availability of world class skilled manpower Location advantage - good connectivity and linkages Salubrious climate Reform oriented governance Cosmopolitan culture Excellent social, education & health facilities Telecom connectivity Presence of multinational companies Fastest growing city in Asia and availability of Grade A properties
2.2
REGIONAL CONNECTIVITY
Bangalore is bound by Kolar District on the northeast, Tumkur District on northwest, Mandya District on the southwest and state of Tamil Nadu on the southeast. The regional setting of Bangalore City is shown below: Map 2.1: Regional Setting Map of Bangalore
The following map shows the major corridors of Bangalore and the areas governed by various jurisdiction bodies.
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Map 2.2: Bangalore Region Map
Bangalore is very well connected to the other regional areas as indicated in map above. The city has access to other parts of state and neighboring states and few countries by roadways, railways and airways. Road: Bangalore has 2 major National Highways that connect the city to other metro cities like Mumbai, Chennai (NH-4). Hyderabad (NH-7). The state highways connect the city to other cities in Karnataka like Mysore, Mangalore, Tumkur, etc. The Bangalore Metropolitan Transport Corporation (BMTC) handles all the buses plying within the city, and the Karnataka State Road Transport Corporation (KSRTC) operates the buses within the state as well as outside the state. The KSRTC and private companies operate bus services to all major cities in South India, and even to Mumbai and Pune. Railways: There are three major railway stations in Bangalore, viz. City Railway Station, Cantonment Railway Station, and Yeshwanthpur Railway
Hubli
NH-4
Mangalore
NH-7
Bangalore
NH-4
Mysore
Mumbai
Hyderabad Hubli Goa
NH-7
Bangalore Mangalore
Mysore
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Station. The main station, i.e. City Railway Station is well connected to all major Indian cities. There are number of daily express trains to and from Bangalore thus making the city accessible from every metropolitan city in the country and also from other major cities. Airways: Bangalore International Airport at Devanahalli started its phase-I operation in April 2008. It is located at a distance of about 35 km from the Central Business District (CBD). Over the past year, BIA has handled 8.7 million passengers (national and international business travelers) and over 120,000 aircraft movements. The airport is expected to handle about 10 million passengers per annum by 2010. There are 11 domestic airlines (including two freighters) to important cities like Kolkata, Mumbai, Delhi, Hyderabad, Chennai, Ahmedabad, Goa, Cochin, Mangalore, Pune and Thiruvananthapuram. Bangalore also has 20 international airlines to Muscat, Dubai, Sharjah, New York, London, Mauritius and Singapore etc.
2.3
FUNCTIONAL BASE OF CITY

Bangalore was popularly known as a Pensioners Paradise, and Garden city for its delicate blossoms and greenery that imparts a unique beauty to it. The growth of Information Technology (IT) in the city, which is the largest contributor to India's software exports, has led to Bangalore to be recognized as the Silicon Valley of India. It is now regarded as a high-tech city with office or development centers of a number of mega software companies having wholly owned subsidiaries or joint ventures in Bangalore, including IBM, Hewlett-Packard, Texas Instruments, Oracle, Novell, Fujitsu, and Digital Equipment. Bangalore is also headquarters to a large number of Indian software companies. Bangalore produces more than 35% of all software that India currently exports. In a short time, Bangalore has experienced rapid growth and international recognition in the field of software development. This has resulted in placing the city at a promising position in the international market for software. After establishing itself as an IT and BPO hub, Bangalore has successfully attracted the Biotech industry. Bangalore currently houses approximately 47% of the total biotechnology companies in India. The city also attracts people from all over the world for its excellent schools and universities, such as the Indian Institute of Science, National Institute of Mental Health and Neuro-Physics, the Indian Space Research Organization, Indian Institute of Management and Indian Institute of Aero-physics. Bangalore is even gaining the status of the Floriculture Capital due to the present boost of the flower export from the city. Due to the rich stone resources Bangalore is also known the Stone City, especially for its granite deposits.
2.4
DEMOGRAPHIC CHARACTERISTICS
Population Growth Bangalore has been witnessing industrialization way back from early 20th century when the princely state of Mysore took pioneering steps to promote industry in the state sector. During the post independence period, Bangalore attracted massive investments from the Government of India (GoI) for building large-scale knowledge-based public sector research and production facilities as well as the nations most sensitive and advanced military and space research facilities. Later, during 1980s, due to soaring real estate prices and overcrowding in Mumbai, there was an influx of Mumbai industrialists, who relocated high-tech aspects of their businesses to Bangalore. During the 1990s, Bangalore developed into a preferred location for high technology industries such as electronics, IT, telecommunications and emerged as a globally integrated center of high technology research and production. This has resulted in sudden
Final Report - 25 -
population explosion of Bangalore Urban Agglomeration with decadal growth touching the figure of 38% with a population of 5.68 million as per Census 2001. The decadal population figures and the growth rate from year 1951 to 2001 have been given in the table and the projected population till 2021 is shown in the charts below:
Population Growth Trend 12 P p la n(InM n ) o u tio illio s 10 8.01 8 6 4.13 4 2 0 1981 1991 2001 2007 Year 2011 2015 2021 2.94 5.68 6.17
As per Revised Master Plan (Projected Population) 9.96

8.85
The demographic profile of Bangalore has changed rapidly over the last decade due to the massive in-migration of people into the city following the IT boom. This in-migration has included persons from various parts of the state and country, cutting across different income groups and cultural backgrounds. It has added to the multicultural flavor of the city and been one of the main drivers of latest trends and lifestyles entering the city. In this sense, Bangalore is perhaps one of the most cosmopolitan cities in the South India region. Table 2.2: Population Details and Growth Trends in Population of Bangalore City Census Year 1951 1961 1971 1981 1991 2001 2011*
*Estimated Source: Census of India, 2001
Population (Million) 0.80 1.21 1.68 2.94 4.13 5.68 8.01
Decadal Growth (%age) -51.25 38.84 75.00 40.48 37.53 41.02
In the year 2007, during the preparation of Revised Master Plan- 2015, Bangalore, the entire Bangalore Urban Agglomeration area was resurveyed by the Bangalore Development Authority, indicating the population as 6.16 million.
2.5
SOCIO-ECONOMIC CHARACTERISTICS
Literacy Rate Bangalore has the second highest literacy rate (83.91%) for an Indian metropolis, after Mumbai. Out of this, male literate accounted for 88.36% and 78.98% for females. Number of households in the city is estimated to be 1.29 million. The average household size is 3.86, which is a reduction from 4.5 that existed in 2006 (Source: Skyline India 2008-09).
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Per Capita Income The per-capita income of population of the city at present is INR 88,991 per annum. SEC Distribution in City Bangalore has about 33.4% of SEC A and B population in city, which is third highest in comparison to other major cities in India, next only to Mumbai and Hyderabad, as presented in the chart below.
SEC Share across Cities

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Bangalore Chennai Hyderabad Mumbai Delhi SEC E SEC D SEC C SEC B SEC A
Consumer Population Bangalore is India's fourth largest FMCG and clothing and footwear market. The city is the third-largest hub for high net worth individuals (HNWI/ HNIs), after Mumbai and Delhi. IT population forms about 5% of the total population of Urban Bangalore (550,000 IT Professionals - 1/3rd of total IT professionals in the Country). Overall the socio-economic profile of the city provides information about the fact that the market is lucrative for the development of organized retail sector. Youthfulness Index Very high (20% population: 18-24 years, 14%: 25-35 years). More than half of the employees in IT/ITES sector are below the age of 28. Bangalore has higher percentage of about 37% of consumer population (SEC A and B) in comparison to other metro cities in India. Bangalore position on Economy Index and Reside-In Index out of 112 cities surveyed is good (Top city: 1). "Economy" Index reflects the economic conditions in a particular city, opportunities to start a new business, investment etc while Reside-In Index reflect a city's suitability for residing based on the sub-heads, Health, Education, Environment, Safety, Public Facilities, Entertainment and Housing. The following tables present city-wise ranking based on Per Capita Income & Savings per Household and Economy Index & Reside Index. Table 2.3: City-wise Rankings - Per Capita Income and Savings per Household Cities Bangalore Chennai Annual Per capita income of Urban Household 88,991 87,446 Annual capita savings of Urban Household 28,355 19,455 %age of Savings 32 % 22%
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Cities Delhi Hyderabad Mumbai
Annual Per capita income of Urban Household 78,660 69,493 123,032
Annual capita savings of Urban Household 17,962 20,386 16,510
%age of Savings 23% 29% 13%
Source: Skyline India 2008-09
Table 2.4: City-Wise Rankings - Economy Index and Reside Index Cities Bangalore Chennai Delhi Hyderabad Mumbai Cosmopolitan Index Very High High Very High Very High Very High Ranking based on Economy Index 6 14 18 27 2 Ranking based on Reside-In Index 27 19 52 49 24
Source: Skyline India 2008-09
Rented Housing The cosmopolitan nature and the employment opportunity in the city have resulted in the influx of people from other States to Bangalore. Growth of IT-ITES and other knowledge based sectors have significantly contributed to the large-scale influx of white-collar employees to the city from different States of India and abroad. As a result, Bangalore City has received over 0.76 million people as a fresh influx during the year 1991-2001, constituting about 13.4% of total population. Of these, 47% have come from outside Karnataka. Bangalores total migrant population as on 2001 was about 2.09 million, a little less than the total migrant influx in Delhi or Mumbai over the past decades. Unlike in most other metropolises, the bulk of influx of population is from the urban areas of the other states, about 61% over the past 5 years. Even historically, Bangalore has attracted higher proportion of people from urban areas (59%) compared to other major cities in the country. It is noteworthy that the neighboring states like Tamil Nadu, Andhra Pradesh and Kerala have contributed three fourths of migrant population. This continued influx of working population to Bangalore City and lack of adequate response of the Government to meet the growing housing needs have gradually widened the demand-supply-gap resulting in exponential increase in capital values of residential units making less affordable to buy a home for large segment of the population. This has resulted in increasing demand for rented accommodation both in terms of volume and price. At present, due to the rapid pace of urbanization, rental housing7 has provided much needed room for maneuver for individuals and households and also responsive to changes in individual and household life-cycles and is an asset for tenants as well as landlords. Three consequences are particularly significant, viz. a) access to affordable and well located rental housing is influential in determining the extent to which new migrants are able to secure an economic foothold in the city and consolidate their urban status; b) a majority of individuals and households progress from renting to owning, with a significant proportion going on to produce accommodation for rent - in doing so, landlords are not
7
The term rental housing is used to denote the totality of the process of the letting of accommodation by landlords and the payment of rent for rights over the use of the accommodation that is rented by tenants. The rental housing market refers to the various rental housing submarkets - such as those by income group, production and exchange systems, or by type of settlement and provider.
Final Report - 28 -
only putting their assets to productive use but are also providing a service to tenants; and c) rental accommodation is critical for those who do not intend being permanent urban residents - it is clear, therefore, that tenure as to be viewed more broadly than it has been. The following table presents housing ownership and rental housing status in Bangalore during the period 2000-01 and 2008-09. Table 2.5: Status on House Ownership and Rental Housing in Bangalore Particulars Total No. of Households House Ownership No. of Households Percentage Rented Housing No. of Households Percentage Others No. of Households Percentage 48,829 4% 85,751 5% 36,922 10% 751,405 54% 988,252 56% 236,847 67% 594,874 43% 675,842 39% 80,968 23% Year 2000-01 1,395,108 Year 2008-09 1,749,845 Incremental Increase 354,737
Source: City Skyline 2008-09 India and Directorate of Economic and Statistics, Karnataka
As seen from the table above, about 39% of households had house ownership while 56% of the households were found to be in rented accommodation. However, considering the incremental increase in number of households during the period from 2000-01 and 200809, about 23% of this incremental households could attain house ownership while significant two-third of the incremental households resorted to rental accommodation during the same period. The above findings clearly demonstrates increasing demand for the rental housing in the city and reduced affordability of the population to have house ownership due to high capital values. Consequence of above imbalance is expected to increase both volume and pricing of rented housing in the city. According to the Mercers World wide Quality of Living Survey 2010 for 221 cities globally, Bangalore is the best placed at 140th rank this year, an improvement of two ranks from the year 2009.
2.6
ECONOMIC ACTIVITIES
Industrialization in Bangalore started during the early 20th century when princely state of Mysore took pioneering steps to promote industrial growth in the state. After independence in 1947 for four decades, the GoI made substantial investment in building the citys largescale knowledge-based public sector research and production facilities as well as the Nations most sensitive and advanced military and space research facilities. Between 1956 and 1960, large public sector undertakings like Bharat Electronics Limited and Hindustan Aeronautics Limited were established by the GoI in Bangalore, along with National Defence Research Laboratories. In the 1970s, the Indian Space Research Organizations (ISRO) and Bharat Heavy Electrical Limited were also located here. In the 1980s, due to soaring real estate costs and overcrowding in Mumbai, there was an influx of Mumbai industrialists who relocated the hi-tech aspects of their businesses to Bangalore.
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During the 1990s, Bangalore developed into a preferred location for hi-tech industries such as electronics, information technology and telecommunications and emerged as a globally integrated centre of technology research and production. Presently this has resulted in significant in-migration of intellectual / knowledge population from various parts of the country contributing to the decadal growth of 38%. Karnataka is among the top five industrialized states in the country and is the science capital of India with more than 100 R&D centres and majority of them are in Bangalore. Bangalore has been contributing almost 33-37% of national software export revenues over the last decade and thus is rightfully tagged as the Information Technology (IT) Capital of India. The physical growth in Bangalore is fuelled by the IT-ITES and the Bio-Tech sector. There are nearly 2,000+ STPI registered companies in the city. These companies are contributing INR 726,690 million, which is nearly 32.68% of the national revenues for software exports. IT/ITES sector is growing at a compounded annual average growth rate of 25.67% over the past three years. The software export of Bangalore with respect to Karnataka and the nation is shown in table below. Table 2.6: Software Export of Bangalore with respect to the State and Nation Year Software Export (INR Million) Bangalore 2004-05 2005-06 2006-07 2007-08 2008-09 267,200 366,330 472,500 591,420 726,690 Karnataka 276,000 376,000 487,000 608,000 749,290 India 740,190 1,009,650 1,442,140 1,841,400 2,223,600 Sectoral Contribution (BanglKarnataka) 96.81% 97.43% 97.02% 97.27% 96.98% Sectoral Contribution (Bangl-India) 36.10% 36.28% 32.76% 32.12% 32.68% Sectoral Contribution (Karnataka- India) 37.29% 37.24% 33.77% 33.02% 33.70%
Source: Software Technology Park of India, Dept. of IT, Ministry of Communication & IT, Govt. of India.
Some of the major industrial estates and IT& ITES hubs in Bangalore are shown in the following map:
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Map 2.3: Major Industrial Estates and IT&ITES Hubs in Bangalore
Source: Real Estate Market Research & Analysis; Jones Lang LaSalle; October 2010
After establishing itself as an IT and BPO hub, Bangalore has successfully attracted the Biotech industry. Bangalore currently houses approximately 47% of the total biotechnology companies in India. The Karnataka governments various initiatives such as a biotech policy, fiscal incentives and proposed biotech park in Bangalore are likely to aid the process. Karnataka is one of the few states to come out with a clear-cut biotechnology policy called The Millennium Biotech Policy, while the Centre is still dithering to formulate such a policy at the national level. Karnatakas policy promises to establish a biotech corridor and the state has also set up a Vision Group on Biotechnology to provide an impetus to the growth of the sector through other initiatives.
2.7
KEY INFRASTRUCTURE INITIATIVES

There are various proactive measures taken up by the GoK in augmenting & expanding the city physical infrastructure and developing major infrastructure projects to encourage overall economic development. The following table summarizes salient features of some of the major infrastructure projects in the city.
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Table 2.7: Salient Features of Major Infrastructure Projects in Bangalore Name of the Infrastructure Initiative Bangalore International Airport Executing Agency Development Phase Location Area / Coverage 4,050 acres
Bangalore International Airport Limited
Operations of Terminal 1 commenced in May 2008. Devanahalli The expansion of the existing T1 has been designed to enhance the operational performance in order to handle the increase of passenger traffic between now and 2015. The traffic is estimated to increase from the current 10.6 million passengers p/a to approximately 17 million passengers. The expansion is scheduled to be completed in 18 months from the commencement of construction (September 2010) at an estimated cost of USD 214 million. The project is part of an overall proposal for up-gradation, operation Bellary Road from Hebbal Junction and maintenance of 534.72 km to 556.84 km of the Hyderabadto Trumpet Inter-Change at BIA Bangalore section under Phase VII of the National Highway Development Project. The proposed project is 22.12 km long elevated six-lane expressway which will eliminate the traffic signals on-route to BIA. It is estimated to be built at a cost of INR 6,800 million on a BuildOperate-Transfer (BOT) basis, the project has been given to Navayuga Engineering Co. Ltd. The construction is expected to start from early 2011 and completed by 2013 PRR 1: 65 km stretch connecting Hosur Road and Tumkur Road Bangalore running through the north-eastern quadrant of Bangalore cutting across Bellary Road. PRR 2: This is the second phase connecting Hosur Road and Tumkur Road covering the south-western quadrant of the city for a length of 51 km Expected to boost connectivity to BIA from various parts of the city. Status: Final stages of land acquisition. Construction work expected to commence in the next 3-4 months. Date of Completion: 30 months from the start date of construction i.e.
Elevated Expressway to BIA
NHAI under Phase VII of the National Highway Development Project. Project awarded to NEC Ltd.
22.12 km long elevated sixlane expressway
Peripheral Ring Road
Bangalore Development Authority
109 km
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Name of the Infrastructure Initiative
Executing Agency
Development Phase
Location
Area / Coverage
mid 2013 Estimated Budget: Approximately INR 30,000 million Metro - Rail Bangalore Metro-Rail Corridor (Phase-I) Corporation Limited Phase-I (East-West Corridor of 18.1 km in length and it will start Bangalore at Byappanahalli (NGEF Complex) and terminate at Mysore Road. It would cover Indiranagar, CMH Road, Swami Vivekananda Road, M.G. Road, Ambedkar Road, Post Office Road, K.G. Road, Majestic, KSRTC Bus Stand, Bangalore City Railway Station, Magadi Road, Toll-gate, Chord Road, Vijayanagar, Mysore Road up to Ring Road Junction North-South Corridor of 4.9 km will start at Yeshwantpur and terminate at Jayanagar. It would cover Chord Road, Mahakavi Kuvempu Junction, Swastik, Platform Road, KSRTC Bus Stand, Chickpet, City Market, K.R. Road, Vani Vilas Road, Lalbagh, R.V. Road, South End Circle and Jayanagar. The Extended Phase I is along the North-South corridor. The Yeshwanthpur station is further linked to the Hessaraghatta station which is 5.6 km away and RV Station to Puttenahalli is 3.7 km. Status: Part of Phase 1 between Byappanahalli and MG Road is proposed to be operational by first quarter 2011. Rest of the work is under progress The Karnataka government approved the second phase of the Bangalore Bangalore Metro project in 4th Q 2010 at a cost of INR 147,740 million. Phase-II of Metro Rail Corridor comprises 51 km with 47 metro station, involving northwest corridor of 4.02 km in length and it will start from Madavara - Hesarghatta, Southeast corridor of 6.79 km will start from Puttenahalli - Anjanapura, Southwest corridor of 7.70 km along mysore road till kengeri, Northeastern corridor of 11.60 km starting from Byappanahalli - ITPL and northern corridor of 21.0 km starting from IIM-B - Nagavar. 42.3 km
Metro-Rail Corridor (PhaseII)
Bangalore Metro-Rail Corporation Limited
51.0
Final Report - 33 -
Name of the Infrastructure Initiative BangaloreElectronic City Elevated Toll Expressway
Executing Agency
Development Phase
Location
Area / Coverage
National Highway Authority of India (NHAI) Consortium of Soma Enterprises Limited, Nagarjuna Construction Company and Maytas Infra Private Limited
The Bangalore Elevated Tollway is a 9.985 kilometers (6 mi) long elevated, tolled, access-controlled expressway on Hosur road in Bangalore. The project is a part of the BETL (Bangalore Elevated Tollway Ltd)- consortium consisting of Soma Enterprise Ltd, Nagarjuna Construction Corporation (NCC), and Maytas Infra Pvt Ltd. The project as part of the National Highways Development Project and the Elevated Highways Project. It was initiated in early 2006, and was inaugurated on 22 January 2010. Phase-I: This phase started in the year 28th April 1999 and it is stated that the whole corridor project has been divided into "stand alone" development projects. These distinct project phases are expected to be commissioned over a period of 13 years. Status: Work in progress. Certain stretches are already operational
Hosur road: The project starts 9.985 km before Bomanahalli signal after the Central Silk Board flyover and goes on up to Electronic City. It goes above the BMIC flyover on Hosur Road.
BangaloreMysore Infrastructure Corridor
Kalyani Group of companies, VHB International Limited, SAB International Ltd
Southern Section of the Outer Peripheral Road: 41 km connecting NH-7 and NH-4 Bangalore-Mysore Expressway: 111 km connecting Mysore and Bangalore Link Road: 9 km connecting the Bangalore-Mysore Expressway to SH-17 Elevated Link Road: 3 km of elevated expressway connecting the link road to downtown Bangalore Electronic city off Hosur Road 64 acres
Bangalore Helix
Department of IT, BT and S&T, GoK
Infrastructure available: 1. Institute of Bioinformatics and Applied Biotechnology 2. Centre for Human Genetics Proposed Incubation Centre and instrumentation facility 1. In 14 acres 2. Govt. of India has provided USD 3 million for instruments Proposed Biotech Cluster 1. 50 acres with investment of USD 50 million on PPP mode 2. SEZ status granted 3. M/s. Deloitte Touche Pvt. Ltd. appointed as PMC
High-Speed Rail
Bangalore Airport Rail Link
The HSRL will have a length of about 34 km from the Bangalore MG Road to BIA with 3 stops at MG 40 hectare
Final Report - 34 -
Name of the Infrastructure Initiative Link
Executing Agency
Development Phase
Location
Area / Coverage
Limited (SPV: BIAL, BMRCL, Greater Bangalore City Corporation, BDA and GoK)
city centre to the International Airport passing through Cubbon Road, Hebbal and Yelahanka Road (City Center check-in station), Hebbal (Check-in station), Yelahanka (pick-up station) and BIA Terminal Station. Cost estimated at INR 66,890 million Status: DPR Completed; Five consortia are short listed in response to Request for Qualification submitted; Request for Proposal (RFP) is provided to short listed consortia; Proposals to be submitted during end of September 2010. Land identification for acquisition is complete. Gazette Notification to be issued for identified land for acquisition. 185 km - including the overlap on STRR and Nelamangala bypass. Connects many industrial and residential establishments located on the outer periphery of Bangalore. Status: Alignment is finalized; Tenders to be floated; Land acquisition is yet to commence. 367 km length connecting 7 major towns Proposed to connects the BMRDA New Townships: Nandagudi, Solur, Bidadi, Satahanur, Ramanagaram Connects each Town Ring Road of BMRDA Towns and lies beyond IRR Status: Survey completed. Techno Economic Feasibility study completed. Awaiting cabinet approval Government of Karnataka through Infrastructure Development Department (IDD), intends to develop Monorail/Light Rail Transit System services, which would function as a feeder services to Metro rail The 60.0 km feeder network for Metro Rail is being planned on Swiss Challenge method through Malaysian firm Scomi Geodesic Consortium - decision yet to be taken Lies between STRR and PRR 4182 acres across Bangalore periphery Passes through Tattekere, Harohalli, Bidadi, Nelamangala, Thippagondanahalli. Devanahalli, Nallur, Hoskote and Sarjapur 7 major towns: Devanahalli, 6303 acres Dobbuspet, Magadi, Ramanagara, Kanakapura, Anekal, Hoskote and Doddaballpur
Intermediate Ring National Highways Road (IRR) Authority of India
Satellite Town Ring Road
Bangalore Metropolitan Region Development Authority
Mono Rail (Under Bangalore Airport Rail Link Integrated Mass Limited Transport System)
Hebbal to J P Nagar (Bannerghatta Road) along the western portion of Outer Ring Road (31.0 km) Peripheral Ring Road to Toll Gate along Magadi Road (9.0 km) Kathriguppe Road /Ring Road Junction to National College
NA
Final Report - 35 -
Name of the Infrastructure Initiative
Executing Agency
Development Phase
Location
Area / Coverage
The first phase planned from Majestic to Agara lake (15 km) Status: Global tenders for PPP to be floated
(5.0 km) Hosur Road - Bannerghatta Road Junction to PRR along Bannerghatta Road (15.0 km). Seven Flyovers to be constructed at HSR Layout 14th Main- HSR Layout Bellandur Devarabeesanahalli junction Kalyannagar Junction Hennur Veerannapalya Junction An Underpass at Hennur 31 km
Signal Free Outer Bangalore Development Ring Road Authority
The proposed length is 31 km stretch from Hebbal Flyover to Central Silk Board There is proposal for seven underpass and one underpass The entire project is proposed to be completed by 2011 The total cost for the entire project is INR 2400 million Status: Project under implementation
Final Report - 36 -
The map below presents some of the key existing and proposed road network of the Bangalore City, which have been the factors fueling the physical growth of the city. Also existing and proposed infrastructure projects have been highlighted. Map 2.4: Major Infrastructure Initiative Projects in Bangalore
2.8
GROWTH TRENDS
Economy of Bangalore being driven by IT & ITES sector, telecommunication firms and other industries as well as in educational institutes, research colleges, etc, resulted in large immigrant white collar population and also opened avenues for many real estate developers to build large scale developments across the city-commercial, residential, retail, hospitality etc. Residential developments have been targeting primarily the middle and upper middle segments. In-terms of physical growth, most of the existing development have been witnessed along the corridors having significant presences of IT-ITES activities. Accordingly, Hosur Road, Bannerghatta Road, Sarjapur Road, Marathalli Sarjapur Outer Ring Road and Whitefield have witnessed significant growth in terms real estate development. All these locations lie on the South, Southeast and Eastern quadrant of the Bangalore city in the close proximity of IT&ITES and industrial development. The following map presents the strategic locations of Bangalore and also the growth corridors of the city.
Final Report - 37 -
Map 2.5: Growth Trends and Growth Corridors of the Bangalore City
Broadly Bangalore can be divided or classified into strategic locations like Central Business District (CBD), Secondary BD (SBD), Northern Suburb, Southern Suburb, Eastern Suburb and Western Suburb. The CBD has limited land availability and it is densely populated with increasing traffic congestion. Physical growth potential is very limited as compared to other strategic location in Bangalore. SBD is primarily triggered by the improved connectivity of ORR, proximity to city center and the suburban areas. In the case of Northern Suburb, urban infrastructure projects like International airport, Eight lane NH 7 highways, proposed Metro rail, Airport Expressway and the availability of large land parcels for real estate development has driven the growth of this region. Suburban areas in Bangalore witnessed very high growth of real estate activites primarily because of lower land rates and other government initiatives such as Electronic City and EPIP Zone in Whitefield. The commercial development gave rise to the residential needs. Southern and Eastern Suburb continue to be on radar of real estate developers, investors and buyers due to improved connectivity via Outer Ring Road and the elevated express way (along Hosur Road) to other parts of city is driving factor for the real estate development. The Western Suburb has not witnessed sufficient real estate growth due to the distance from the IT/ITES hubs and existing Industrial profile of the region. But presently many of
Final Report - 38 -
these industries are either shutting down their operations and/or relocating to alternate locations to facilitate the land for the real estate development under commercial format. However, there are many infrastructure projects such as Proposed Elevated express way and Metro project in the micro market which will lead to improved connectivity and increase the real estate value in the coming future.
Final Report - 39 -
3
3.1
REAL ESTATE MACRO-MARKET REVIEW

GENERAL SECTOR TRENDS
In the last decade, Bangalore has gained a special significance in the real estate market. The boom in Information Technology was largely responsible in triggering the real estate activities in city. Other than IT and ITES, other sectors like automobile, garments, finance and real estate also have shown phenomenal growth in the past 5 years. The increasing demand for commercial sector reflected in generation of more employment, increasing people with higher disposable incomes, need for better residential enclaves and different formats of retail, leisure and entertainment. The spur of activities led to increase in spread of city catchment. The map below presents the overview of the real estate sector trends in Bangalore. Map 3.1: Overview of the Real Estate Macro-Market Trends in Bangalore City
Bangalore has grown in radial direction along the main corridors. The centre is the CBD (Central Business District) followed by ring of SBD (Secondary Business District) developments and further is the PD (peripheral districts) comprising of developments in suburban areas. Following are the prime areas witnessing different real estate activities High-end corporate offices & retail developments: CBD Area (MG Road, Brigade Road, Commercial Street, Residency Road, Langford Town, Cunningham road, Richmond road etc). IT/ ITES Offices & SEZs: towards Eastern and Southern suburban areas: Electronic City, Whitefield, ORR, Sarjapur Road, Hebbal etc. Corporate / Office: CBD and SBD areas: Koramangala, Indiranagar, Jayanagar, Bannerghatta Road etc.
Final Report - 40 -
Residential: Hebbal, Sahakarnagar, Yelahanka, Jalahalli, Kengeri, Rajajinagar, JP Nagar, Banashankari, Jayanagar, Koramangala, Indiranagar, HSR Layout, Brookefield, Whitefield, Sarjapur road, Hosur road, Bannerghatta road, Kanakpura road etc. Industrial: Peenya, Yeshwantpur, Rajajinagar Industrial Suburb, Jigini, Bommasandra
3.2
RESIDENTIAL SECTOR TRENDS

Development Zones in City The Bangalore residential market is one of the fastest growing residential markets in India with a greater stress on quality developments and a higher%age of demand for apartment developments. The market is seeing tremendous growth with the support from the ITboom and has presently positioned to be the most developed residential market, compared to all the cities in South India. Bangalore is the only city in South India to see upcoming residential developments with apartments priced as high as INR 13,000 per sq. ft. The table below presents profile of important residential development zones and prime typologies in the city. Map 3.2: Residential Zones in Bangalore City
Final Report - 41 -
Table 3.1: Major Residential Development Zones in Bangalore SI. 1. Zone Important Locations Profile These areas are well developed with very nominal new supply. The new supply is mostly from redevelopment of old residential buildings into modern apartments. Majority of the proposed and lunched projects targets only the super luxury segment with very minimum average units of 10-15 units. In terms of social index, these areas primarily constitute a business class and upper middleincome group and higher income group households. The developments in CBD targeted high priced buyers. Most upper-middle class buyers who wish to stay closer to both city and work place preferred the SBD area which is areas between CBD and ORR areas. The project size varied across the micro market is in the range of 80-150 units. SBD has access to well developed social and physical infrastructure facilities and the land rates are intermediate of high priced CBD and the suburban locations. Social index: majority of household are in upper middle and middle income and business. The growth of the micro market is driven by the existing international airport. In the case of real estate residential development, most of the developments are into plots with few villa developments. Prominent developers like Sobha, Purvavankara, Godrej etc have their presences over this areas and the projects are under various stages of construction. Social index : Middle and Lower Middle Income. Central Business MG Road, Brigade Road, Cox Town, District - CBD Residency Road, Frazer Town, Richmond Town, Lavelle Road, Benson Town, Sadashivnagar, Jayamahal, Palace Cross Road, Brunton Road and Seshadripuram Secondary Indiranagar, Airport Road, Koramangala, JP Business District Nagar, Jayanagar Malleshwaram, (SBD) Vijaynagar, Rajajinagar, RT Nagar, New BEL extension, RMV II Stage, Banasvadi, Basavangudi and Banashankari Stage II etc. Northern Suburb Yelahanka, Jakkur, Bellary Road, HRBR Layout, and Doddaballpur road etc.
2.
3.
4.
Southern Suburb Mysore Road, Kanakapura Road, The proximity to the IT corridor and improved infrastructure facilities has hastened the development in Bannerghatta Road, Hosur Road (Electronic this region. In the case of residential development, most of them here are plotted development city). followed by Residential Apartments and Villa developments. Social index: most of the residents are IT workforce with disposable incomes and propensity to spend on family shopping and entertainment. Eastern Suburb Marathalli-Sarjapur ORR, Sarjapur Road, Whitefield and Brookfield These areas gained importance because of the IT&ITES development followed by improved connectivity. Mix of apartment and independent homes/villa developments are found in these areas. Social index: Whitefield has middle and upper middle-income group settlement, who are mainly into IT and ITES sector with higher disposal income. Western suburb has witnessed slow off take in real estate development. Apart from the real estate development this micro market is also prominent for industries, warehouse and PSUs etc, which is presently acting like barrier for real estate developments. Social index: mix of middle and lower income group households.
5.
6.
West Suburb
Magadi Road and Tumkur Road
Final Report - 42 -
Market Status on Supply and Absorption Residential sector boom is predominantly towards the south, east and north of the city, with the eastern part of the city witnessing an increased residential activity as a spin off from the IT related corporate / office developments. Local as well as national developers are developing large-scale residential townships. The residential market in the city is presently a market of apartments, villas and independent plots. At present, high-end residential developments are mainly concentrated in the CBD and in the East and Southern parts of the city. Bangalore has the highest share as Apartments (50%) followed by Plotted developments (40%). Villa market is mostly confined to the suburban areas like Whitefield and Devanahalli, with Sarjapur road witnessing few new projects in recent times. Following are the major findings from the residential sector analysis for the city:
Share of Housing Typology Villa Supply 10%
Apartment Supply 50%
Plots Supply 40%
Bangalore residential market is estimated to be about 13,000-15,000 units per year. Year 2010 is expected to touch 15,000 units sale, which is comparable to peak sale volume during the year 2007. Residential activity is high in suburban and peripheral areas due to proximity to ITITES commercial areas and also availability of land parcel for development. Migrants constitute 30-40% of the employee population who also constitute major share of buyer profile in market. The average absorption in the city for all the projects is around 65-70%. Grade A projects had the highest absorption in the range of 70-75% depending upon the location. Affordable housing developments are presently the most sought after segment after recessionary pressures have shifted the focus away from high-end luxury apartment projects. Good demand for luxury villa projects. Pricing ranges from INR 15 million to 35 million and above per villa. Amenities offered by the high end projects include clubhouse, swimming pool, landscaped parks, childrens play area, CCTVs, security etc. Emphasis is high on specifications and materials used, integrated amenities and support facilities. Concepts such as integrated residential townships are still nascent as compared to other cities. Concept of walk to work, green buildings, buildings with carbon credits etc. emerging as the new marketing mantra among developers for marketing. Market Trends - Apartment Typology Supply: 95% of total apartment supply is in the suburbs with Eastern and Southern Suburbs taking the largest share of 34% and 33% respectively. CBD accounts for about 1% of the total apartment supply. Secondary Business District accounts for approx 4% of the total supply. The share of Western and Northern suburbs is only 14% each. The northern suburbs are in the early stages of development while the western areas comprise of densely developed localities with little space available for new development. Grade A & B developments constitute 78% of the overall supply. Absorption: The average absorption in the city for all the projects is around 65-70%. Grade A projects had the highest absorption in the range of 70-75% depending upon the location.
Final Report - 43 -
There has been only a minor increase in the absorption figures from 2009 to 2010. During the period of 2008-09 the residential market witnessed a price reduction to the tune of 2025% across all markets in the city. The market has picked up gradually since first quarter 2010 with an average increase in price by 15-20%. The absorption in suburbs is lower as compared to the absorption in SBD areas like Jayanagar, JP Nagar, Banashankari, Indiranagar, Koramangala, Hebbal, etc. These areas have an average absorption rate of nearly 80% and above. This is also because of large supply in the suburbs as compared to the limited supply in the off-CBD areas.
Apartment Absorption Across Different Micro Markets

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ORR Sarjapur Road Hosur Road Kanakapura Bannerghatta Tumkur Road Bellary Road Mysore Road Hennur Main Road Road Road Old Madras Road Whitefield
Pricing: The average price range in the CBD was from INR 12,000 - 18,000 per sq. ft in early 2008. However the prices have dropped to INR 12,500-15,000 per sq. ft after the downturn in the market. Secondary Business District (Jayanagar/ Indiranagar etc.) have prices ranging between INR 5,000- 7,500 per sq. ft. Prices in Suburban areas range between INR 2,500- 3,500 per sq. ft. Among the suburbs, Bellary road and Sarjapur ORR command the highest pricing with an average of INR 3100 per sq. ft. while the eastern areas have the lowest prices with average of INR 2700 per sq. ft. The prices were on a decrease since 4Q 2008 till 4Q 2009 have now started to witness a increase by almost 15% in most areas since the beginning of 2010. There was an increased market activity during year 2009 under the affordable category/ budget apartment moving away from the luxury apartment and villa segment that had prevailed till early 2008. The market is witnessing again revival of luxury segment with launch of Prestige White Meadows in 1Q2010. The table below provides trends in residential pricing over the past six years across different micro markets in the city. Table 3.2 Year-Wise Residential Rates across various Micro Markets location (Grade-A, B&C Category) Micro-Markets Residential Apartments - Average Price (INR per sq. ft.) Year-Wise 2004 CBD Indiranagar JP Nagar Jayanagar 3500 2500 1800 2300 2005 4000 3000 2000 2800 2006 6000 4000 3000 4000 2007 10500 6000 4500 5000 2008 10000 6500 4500 5300 2009 8500 6000 4000 5000 2010 10500 6000 5500 6500
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Micro-Markets
Residential Apartments - Average Price (INR per sq. ft.) Year-Wise 2004 2005 3000 2350 1800 2000 1800 2500 2500 2500 2100 2006 3500 2500 3000 2300 2250 2800 2800 2900 2700 2007 5500 2950 3300 2800 2800 3350 3000 3200 3000 2008 6000 3000 3200 2850 2750 3500 3000 3100 2900 2009 5500 2800 3000 2400 2500 3100 2300 2600 2400 2010 6500 4000 3200 2650 2550 4000 2650 2800 3500
Koramangala Bannerghatta Bellary Road (between Hebbal & Yelahanka) Hosur Road Whitefield ORR (b/w Silk Board and KR Puram) Tumkur Road Kanakapura Rd Sarjapur Road
2500 2200 1500 1800 1500 2100 2200 2200 1800
Table 3.3 Year-Wise Residential Rates across various Micro Markets location (Grade-A Category) Micro-Markets Residential Apartments - Year-Wise Average Price (INR per sq. ft.) 2008 CBD Lavelle Road Richmond Town Convent Road SBD Indiranagar JP Nagar Jayanagar Koramangala SUBURBS Bannerghatta Road Bellary Road (between Hebbal & Yelahanka) Hosur Road Whitefield ORR (b/w Silk Board and KR Puram) Tumkur Road Kanakapura Rd Sarjapur Road 3,000-3,400 3,325-3,750 2,100-3,390 2,640-3,100 2,700-4,400 2,400-3,200 2,950-3,450 3,550-3,700 2900-3,200 2,800-4,500 2,000-2,900 2,600-2,900 2,700-4,400 2,500-3,500 3,200-3,400 3,200-3,600 3,600-4,600 2,900-4,000 2,700-3,600 2,600-3,500 3,900-6,400 2,600-4,500 3,400-5,000 3,500-4,200 5,500-6,500 3,500-5,800 3,600-5,600 3,500-6,000 5,000-6,500 3,400-5,400 3,500-5,500 3,800-5,500 7,000-9,000 4,000-6,050 6,500-7,800 6,500-9,000 6,100-14,000 8,000-14,000 7,700-10,000 6,800-9,000 2009 7,000-10,000 7,500-13,000 7000-11,000 6,200-9,000 2010 9,500-15,000 8,000-15,000 7800-13,500 7,000-12,500
Final Report - 45 -
Sales Velocity: Market conditions will eventually be determined by fundamentals such as unsold inventories, new pipeline inventory, price point of new launches, availability and cost of credit and macro-market conditions of the state & the country. Similarly, if inventory risks force developers to cut losses, there are cases of developers y may resort to lower prices or use the mechanism of sales promos to offload stocks. Bangalore residential market is estimated to be about 13,000-15,000 units per year. Year 2010 is expected to touch 15,000 units sale, which is comparable to peak sale volume during the year 2007. Sale performance during the year 2010 is estimated to be about 34% increase over the pervious year (year 2009), which witnessed absorption of about 11,600 units. This increase in sale volume was primarily assisted by the affordable housing segment that provided a remarkable increase in sale volume. Few prominent player in the market who contribution for 2010 supply were DLF Westend Heights, Provident Welworth City, Brigade Metropolis, Prestige Shantiniketan, VBHC, etc. Observations on Apartments Typology: Following are some of the key observations on apartment typology in Bangalore: Typology 2-BHK and 3-BHK are the most common units 4-BHK and 5-BHK types are available in CBD, secondary CBD, suburban ORR area Studio and 1BHK units are also available - more towards the work centers like Whitefield and Hosur Road Land is proportioned through undivided share Loading of common areas: 15% - 25% depending on the extra amenities provided (Super built-up area SBA). Loading factor: Grade C developers is 15%-18%, Grade A & B developers is 20%- 25% Above observations are micro-market specific and also depend upon the Grade of the developer. Other than the loading, there few other charges like car parking, charges payable to civic authorities, clubhouse membership, floor-rise, VAT, etc. which are usually charged over the base cost of residential unit. Other Charges - These miscellaneous charges which include statutory charges vary greatly depending on the developer, project specification, amenities and location. The typical range of charges are listed below: Club Membership : INR 50,000 - 200,000 per unit Maintenance fees - Either lump sum (INR 150,000-250,000) or corpus of one year maintenance fees. Further, a monthly fee is charged between INR 2-8 per sq. ft. for common area maintenance after a specified maintenance free period. Car Parking Charges : INR 100,000-300,000 per car for covered/ stilt parking, INR 50,000-250,000 for open/ peripheral parking Floor rise/ Premium pricing: Floor rise - INR 25-45 per floor. Alternatively, price increases in the order of approx. INR 50 for slabs of every 4-5 floors. Further a similar premium is sometimes attached based on the apartment facing. Private garden/ terrace areas are charged at typically 1/3 the quoted rate per sq. ft. of the project. VAT: 8.75% (Calculated at 12.5% on 70% of Construction Value). Service Tax: 3.09% on construction Value, other Additional Services will be at 10.3%. However, the legal validity of payment of Service tax is been debated amongst the builder community. BESCOM: INR 70-100 per sq. ft. Further some developers have an additional fee for solar lighting, heating and DG back-up charges BWSSB & STP Charges: 75-125 per sq. ft. Legal fees : INR 20,000 - 35,000 Other charges payable at actual on handover - MOEF fees, Registration % Stamp duty (based on Government guideline values)
Final Report - 46 -
3.3
AFFORDABLE HOUSING
Concept and Definition Affordable housing is a term used to describe dwelling units whose total housing costs are deemed "affordable" to those that have a median income or less than median income. Although the term is often applied to rental housing that is within the financial means of those in the lower income ranges of a geographical area, the concept is applicable to both renters and purchasers in all income ranges. The commonly accepted guideline across the world for housing affordability is a housing cost that does not exceed 30% of a household's gross income. Housing costs considered in this guideline generally include taxes and insurance for owners, and usually include utility costs. When the monthly carrying costs of a home exceed 30-35% of household income, then the housing is considered unaffordable for that household. Affordable Housing - National Scenario The National Urban Housing & Habitat Policy (NUHHP) 2007 envisages a strategy of scheme of affordable housing in partnership to promote various types of public private partnerships for realizing the goal of affordable housing. This scheme is part of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), wherein the affordable housing is typically defined by three significant parameters namely the income level, size of the dwelling unit and affordability. Affordable housing refers to any housing that meets some form of affordability criterion.8 The affordable housing targets primarily the LIG and MIG segments of the society. It indicates that the dwelling units should be a mix of Economically Weaker Section (EWS), Lower Income Group (LIG) and Middle Income Group (MIG) categories with the maximum size of a dwelling unit size ranges from about 300 sq. ft. (super built up area) for EWS, 500 sq. ft. for LIG and 600 sq. ft. to 1200 sq. ft. for MIG, at costs that permit repayment of home loans in monthly installments not exceeding 30% to 40% of the monthly income of the buyer. The sale price of these dwelling units should have an upper ceiling in terms of Rupees per square metre of carpet area. The price ceiling would be settled in consultation with the States/ UTs for different classes of cities. A recent analysis by research groups/consultancies defines affordable housing in India as indicated in the following table. Table 3.4 Income and Dwelling Size for Affordable Housing Project Category Economically Weaker Section Lower Income Group Higher Income Group Income Level (INR per Annum) < 150,000 150,000 - 300,000 300,000 - 1,000,000 Size of Dwelling Unit Up to 300 sq. ft. 300 to 600 sq. ft. 600 to 1200 sq. ft. Affordability EMI to Monthly Income - 30 to 40% House Price to Annual Income Ratio Less than 5.1 (Deepak Parekh Task Force)
At present, affordable housing in India has become the new concept for several developers in the country. From buyers to the sellers to the realtors and investors, everyone is pitching for affordable quality homes in India. The story begins from the realization of the huge unmet demand for affordable housing in India since the premium section is witnessing an oversupply.
New options for Affordable Housing? Shelter WA Occasional Paper 2003-1, by Karel Eringa (April 2003)
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The real estate property market experienced downtrend in late 2008 with a downfall of up to 15-50% in property prices across selective micro market of major metropolis cities like Delhi, Mumbai, Hyderabad, Bangalore, Kolkata, Chennai, Pune, Gurgaon, Noida, Greater Noida, etc. In the case of the completed projects the prices have hit a low of more than 2540% in major property markets across these cities. It was during those periods that various developers have started looking for alternatives to revive the housing demand. This resulted in change in target segment from upper class to mid segment population primarily comprising of PSU and BPO employees. Attractive interest rates offered by bank for loan size less than INR 3 million and interest subsidy of 100 basis points offered by the Government of India for loans up to INR 1 million for residential unit priced up to INR 2 million also contributed to both end-users and developers looking at the affordable housing segment. Government is also promoting affordable housing and now have recently announced subsidy of 1% for sub INR 2 million homes for a loan of INR 1 million for the first year. These properties are also good for PSU and other government employees. Since the economic slowdown had resulted in bringing down the commodities prices as well, the cost of construction also come down. The fall in cement and steel prices which constitute major chunk of construction costs during end of 2008 compelled the developers to pass on the benefit to the end users. Thus, there emerged an increase in the supply of affordable quality homes across metro cities within the price range of INR 0.55 million INR 3 million. However with the increased costs in year 2010 the discounts that were envisaged during early 2009 have not been possible to provide. The key success factors however for affordable housing as an asset class would be Infrastructure support, use of alternate materials and low cost techniques and mechanisms, subsidized land costs, faster approvals from the government and lesser construction period. Affordable Housing Scenario - Bangalore The affordable housing concept has gained ground in Bangalore City mainly due to few graded developers like Purvankara, Brigade Group, Shriram Properties, Golden Gate Properties, Ozone Group and Nitesh Estate, etc. focusing their projects targeting this customer segment. In most of the cases, the housing units are made affordable by reducing the unit size, compromising on the civic amenities and other USPs, which were typically provided as differentiators to the competing projects in the micro-market/city. Most of the housing units under affordable housing segment have sizes ranging between 400 sq. ft. to 1,900 sq. ft. with pricing ranging between INR 1.0 million per unit to INR 3.0 million per unit. This doesnt include the project developed by VBHC. There are few projects developed by prominent developers like DLF of Westend heights located off Bannerghatta Road and Platinum City located off Tumkur Road in Bangalore, wherein the projects were launched as affordable projects during launch period. However with the increased demand and interest of consumers the projects have witnessed increase in the capital prices and now are priced higher than the normal affordable housing projects. The focus was so aggressive that some of the projects launched during year 2007 - 2008, in locations such as Sarjapur Road or Outer Ring Road (ORR) were largely focused on mid-market residential category, which typically has budget ranging between INR 4.0 to 6.0 million per unit. The developers resorted to re-designing the projects to address the demand of the wider target segment looking at affordable homes. At present in Bangalore, there are more than 15 projects which are marketed as affordable housing. However, it is pertinent to note that few of such projects are not in the affordable segment category according to the JNNURM scheme definition. Most of the units
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delivered have areas larger than the prescribed norms and the pricing are also on a higher scale. Few such Grade-A& B projects are Platinum City by Indian Builders Corp, Hyde Park by Nitesh Estates, Evergreens by Ozone Group, etc. Some of the prominent developments under the affordable housing segment launched in the recent past include the following: Provident Welworth City by Puravankara and Provident Housing in Doddaballapur Road which was launched on 2009 has 2 and 3-BHK formats with unit sizes from ranging from 845 to 1920 sq. ft. The project envisages a supply of approximately 3,360 units by 2013. The base price range is from 1.6 million to 2.8 million per unit, with a unit cost of INR 1850 per sq. ft. Janapriya Green Wood is a project launched by Janapriya developers along Hesaraghatta Road in 2009. This has 2 and 3-BHK formats with area ranging from 895 to 1,365 sq. ft. The project is under construction and comprises of 356 units. The base price of the units varies from 1.7 million to 2.3 million per unit, with a unit cost of INR 1,745 per sq. ft. Shriram Smrithi is another project worth mentioning in the affordable segment. This is developed by Shriram Properties and the Project was launched in 2009 along Attibele - Sarjapur Road. The project comprises of 1-BHK, 1-BHK plus Study, 2-BHK and 3BHK formats with area ranging from 630 to 1090 sq. ft. The project is envisaged to supply a total of 890 units. The unit pricing for the project ranges from 1.3 million to 2.2 million, with a unit cost of INR 2,050 per sq. ft. As on date, these branded developers have launched more than 15 projects with a committed supply of about 14,334 units in different micro-markets of the city. In addition major national level players and local developers have plans to enter the affordable housing segment of Bangalore. This includes Tata Housing, Usha Breco Realty, Godrej Properties, Ashoka Group, Jannaadhar Construction, CSC Builders, Brigade Group, etc. The following table indicates details pertaining to major projects in Bangalore that are under the affordable category.
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Table 3.5 Inventory and Details of Affordable Housing Projects in Bangalore

Project Name Developer Location Launch Year Launch Price (INR per sq. ft.) 1750 2,100 1700 1,500 1,600 1,400 1,800 2100 1950 2300 2360 2750 1950 2100 1890 2450 1300 Expected Completi on Year 2013 2012 2012 2010 Na 2011 2008 2011 2011 2011 2011 2013 2012 2011 Unit Size (sq. ft.) 1-BHK 2-BHK 3-BHK 4BHK ---Units (Nos.) Status Absorption Rate Price (INR per sq. ft.) 1,850 2,100 1,850 3,200 2,000 1,745 2100 3,000 3,200 3,200 2,500 2,850 2,150 2,350 2050 2,650 1,327
Welworth City South Scape Pride Horozon

9Platinum
Provident Housing Concorde Group Pride Group Indian Builders Corp. IVR Prime Urban Jana Priya Mahaveer Golden Gate Nitesh Estates Ozone Group HM Constructions HM Constructions Shriram Properties
Doddaballapur Road Electronic City Phase II Bannerghatta -Jigini Rd. HMT Main Road Jigani Hesaraghatta Road Kengeri Kanakapura Road Bannerghatta Road Off Sarjapur Road Off Doddaballapur Rd. Marathalli Jalahalli Off Kanakapura Road Attibele - Sarjapur Rd. Rajarajeshwari Nagar Attibele - Anekal Rd.
2009 2010 2010 2006 2007 2009 2007 2009 2009 2009 2010 2010 2010 2009 2009 2010 2010
---800 ------700 758 ---
845 -896 840-940 550
1075 - 1920 1080 -1231 880
3,360 Under Const. 156 176 Under Const. Under Const.
35% 15% 10% 80% 100% 35% 100% 40% 70% 6% 25% 5% 20% 30% 20% 20% 50%
City
1112 - 1214 2541 - 2635 3462 2,500 Completed Na 895-1105 795-1010 900-1120 1100 902-927 910 968 650 843 - 900 855 878 - 950 615 Na 1240-1365 1260 1370 Nil 1350 1206 1255 1238-1387 1140 Nil 1090 1200 - 1700 --------------450 356 280 2500 250 912 630 900 832 552 890 490 1140 Completed Under Const. Completed Under Const. Under Const. Under Const. Under Const. Planned Under Const. Under Const. Under Const. Under Const. Under Const.
Thyme Park Green Wood Willow The Commune Hyde Park Evergreens North City Capital Shriram Shruthi
Shriram Surabhi Shriram Properties Shriram Smrithi Century Indus Janaadhar Shubha Shriram Properties Century Group Janaadhar Const.
2011 630 -720 2012 2012 -400
Note: There are few projects developed by prominent developers in Bangalore, where the projects are highlights as affordable housing during launch period. Still these projects are priced at high cost than the normal affordable housing projects in the micro-market.
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A major foray into the Cumulative Supply and Growth Rate of Supply in Affordable affordable housing Houses, Bangalore segment in Bangalore 20000 300.0% was witnessed during 15000 200.0% 2009 which saw the 10000 100.0% supply of approximately 5000 0 0.0% 9,960 dwelling units in 2006 2007 2008 2009 2010 that category. Till 2010, a Year total launch of 16,374 Cumulative Supply Growth Rate (cumulative supply) dwellings units is expected in Bangalore City.
No.of Units
The average launch price per year is indicated in the graph. The launch price has shown an annual increase to the tune of 20% from 2009 to 2010. The average launch rates for affordable category housing in 2010 are INR 2,218 per sq. ft. which is 15% higher than the launch rate of INR 1,850 per sq. ft. in 2009. The average absorption rate of affordable housing is approximately 36%. The present pricing per sq. ft. for projects under affordable category housing varies from INR 1,327 per sq. ft. to INR 3200 per sq. ft.
Area in Sq.ft
Average Launch Rates of Affordable Projects across Bangalore
2000 1800 1600 1400 1200 1000 800 600 400 200 0
INR per sq.ft
1500
1700
1,927
2,087
2006
2007
2008
Year
2009
2010
Average Unit Size and Average Pricing 1500 1000 668 500 0 1 BHK 2 BHK
Format
1408 905
4000000 Pricing in INR 3000000 2000000 1000000 0
The size of a 1-BHK format in the affordable segment varies from 630 sq. ft. to 800 sq. ft. while a 2-BHK format has area ranging from 550 sq. ft. to 1,214 sq. ft. 3-BHK formats have area ranging from 880 sq. ft. to 2635 sq. ft.
3 BHK
Average Unit Size (sq.ft)
Average Pricing per Unit (INR)
Apart from the existing affordable housing project there are few prominent developers, who are planning large scale affordable housing projects in Bangalore ranging from 500 to 5,000 units at unit cost of INR 2.0 to 3.0 million. Prominent among them are Usha Breco Realty, Godrej Properties, Tata Housing Development, CSC Realty, Ozone Group, Ashoka Group and Brigade Group. The Ashoka Group is planning for LIG housing with 5,000 units in Bangalore in collaboration with HUDCO, DHIFC and Mahindra Housing. It is expected that the above said projects might get launched in the forth coming year (2011). Cost Rationalization The affordable projects have various ways in which cost rationalization is carried out to offer the benefit to the buyers. This varies from providing the common amenities, lower built up area per unit, varying the technical specification as compared to the general residential projects across the city.
Growth Rate (Percentage)
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Common Amenities Most affordable projects in general have common amenities like landscaped spaces, primary school; play area for children, healthcare centre with trained medical professionals, convenience shopping centre and round-the-clock security. Welworth city an affordable project by Provident Group which is under construction on YelahankaDoddaballapura road boasts of additional facilities such as Jacuzzi, billiards and cards room, swimming pool, table tennis, basketball post, jogging park etc. Size Rationalization Typically the maximum supply in city is of 2-BHK followed by 3-BHK and very few of 4BHK. Supply of 1-BHK or studio units in city have been minimal. Following table provides size variation of different typology of apartment units in conventional and affordable housing projects in the city. Table 3.6: Size Variation in Conventional and Affordable Housing Projects in Bangalore Unit Type Studio 1-BHK 2-BHK 3-BHK 4-BHK Conventional Project 450 sq. ft. (Rarely provided) 600 sq. ft.-850sq. ft. (Rarely provided) 1100 sq. ft. to 1300 sq. ft. 1500 sq. ft. to 2000 sq. ft. 1850 sq. ft. to 2400 sq. ft. 250 sq. ft. 400 sq. ft. to 450 sq. ft. 600 sq. ft. to 850 sq. ft. 1000 sq. ft. to 1150 sq. ft. (Rarely provided) Not provided Affordable Project
Price Variation For many developers, positioning their project under affordable housing was a necessity to face the challenges of downturn in the overall real estate market. There are quite a few organizations that are catering to the affordable housing segment in Bangalore. Most of the supply till year 2007 were targeting workforce under IT-ITES segment, which were priced above INR 5 million. Recent downturn, which also affected the IT-ITES sector, has forced many developers to look at affordable housing segment in an effort to revive the housing demand. Employees under ITES (BPO) and PSUs received this concept well and made purchases under these projects. With the improved IT-ITES sector performance, many IT-ITES professionals are evaluating affordable housing as an investment proposition due to low entry investment requirement and potential appreciation due to increasing demand as the target segment band-width is significantly high. Most of these projects offer unit price ranging between INR 1.5-2.5 million where unit sizes are as low as 400 sq. ft. and average of sub-1,000 sq. ft. The size of format, technology of construction and location are key parameters, which are primarily focused under affordable housing project. In general, the affordable housing projects are built in large volumes with the best technology to minimize the cost factor. The primary cost-cutting for the developer or builder is through land as the plots are bought at very low costs in outskirts. In terms of facilities, even though the flats are small, the facilities like clubhouse, swimming pool, etc are the same as premium houses. This also brings down the cost as the project size is large and the same facilities are shared by more number of people. Within the affordable housing project, there are few existing and proposed project in Bangalore which are marketed at INR 0.64 million, targeting the auto rickshaw drivers, construction workers etc who have total household income of INR 12,000-25,000 per month, but live in slums or poor houses. The following table provides list of affordable housing projects along with unit size and cost per unit in Bangalore.
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Table 3.7: List of Affordable Housing Projects in Bangalore Project Name Developer Location Unit Size (sq. ft.) 845-1920 840-1231 550-880 800-3462 895-1365 795-1370 900-1120 Total Unit Cost (INR Million) 2.28 - 2.36 2.10 - 2.70 1.21 - 2.15 3.49 - 4.13 2.25 - 2.73 2.11 - 3.30 On hold- Going to re-launch on March 2011 3.50 - 4.50 2.80 - 3.80 2.64 - 3.24 2.20 - 3.70 2.30 - 3.30 2.75 2.70 - 3.80 3.06 - 5.80 0.64
Welworth City South Scape Pride Horozon Platinum City Green Wood Willow The Commune
Provident Housing Concorde Group Pride Group Indian Builders Corp. Jana Priya Mahaveer Golden Gate
Doddaballapur Road Electronic City Phase II Bannerghatta -Jigini Rd. HMT Main Road Hesaraghatta Road Kengeri Kanakapura Road
Hyde Park Evergreens North City Capital Shriram Shruthi Shriram Surabhi Shriram Smrithi Century Indus Janaadhar Shubha
1st
Nitesh Estates Ozone Group HM Constructions HM Constructions Shriram Properties Shriram Properties Shriram Properties Century Group Janaadhar Const.
Bannerghatta Road Off Sarjapur Road Off Doddaballapur Rd. Marathalli Jalahalli Off Kanakapura Road Attibele - Sarjapur Rd. Rajarajeshwari Nagar Attibele - Anekal Rd.
1100-1350 902-1206 700-1255 758-1387 650-1140 843-900 630-1090 878-1700 400-615
Note: By Q, 2011 Janaadhar Shubha is planning for revise the total unit cost to INR 705,000. It is to be noted that, presently phase-I of the project is under construction with 1-BHK format. It is expected that Phase-II of the project will have 1 & 2 BHK format. Unit cost mentioned above is based on basic price alone. There are other charges like car parking, statutory taxes, registration, stamp duty, deposits to civic authorities, etc., which are payable over & above the basic price. Source: Real Estate Market Research and Analysis; Jones Lang LaSalle; October 2010
VBHC is offering Studio unit at INR 0.68 million, 1-BHK unit at INR 0.88 million and 2-BHK unit at INR 1.28 million, inclusive of base price, car parking, and all other charges like statutory taxes, registration, stamp duty, deposits to civic authorities, etc. at present on the Project Site. It is noteworthy that the present pricing of VBHC is not only competitive but also the least among other competing projects offering products under affordable/budget apartment segment. The table below indicates the variation in the cost for an average size of unit type between the general type project and an affordable project in Bangalore city. Following table provides cost/price variation of different typology of apartment units in conventional and affordable housing projects in the city. Table 3.8: Cost/Price Variation in Conventional and Affordable Housing Projects in Bangalore Unit Type Studio 1-BHK Conventional Project (Unit Cost in INR Million) 0.85 - 1.35 1.25 - 1.95 Affordable Project (Unit Cost in INR Million) 0.35 - 0.50 0.60 - 0.80
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Unit Type 2-BHK 3-BHK 4-BHK
Conventional Project (Unit Cost in INR Million) 2.30 - 3.60 3.05 - 4.80 4.20 - 6.60
Affordable Project (Unit Cost in INR Million) 0.90 -1.20 1.50 - 2.00 NA
Technical Specifications The quality of construction is of utmost importance while marketing it as affordable since the home seekers in India are conscious of the investment in housing that they make. This kind of investment is typically considered for life-time and they would not compromise on the quality and specifications of the materials used. Table 3.9: Typical Specifications in Affordable Housing Projects in Bangalore Particulars Flooring Description Living/dining, bedrooms/ attached balconies, kitchen/utility tiles/granite/Italian marble Toilets- Designer antiskid tiles for flooring and dado up to 7 feet height. Kitchen: Chamfered Black Granite top. Corridors: Sadarahalli granite flooring Staircase: Sadarahalli stone- 20 mm for tread and 10mm for risers. Balcony/ Utility: Ceramic antiskid tiles. Vitrified
Walls Fixtures Fittings Plumbing Sanitary Fittings and
All Interior wall faces - Plastered, smoothly finished and painted with Oil Bound Distemper Exterior- Two Coats of exterior emulsion paint. Doors - Hard wood frame with polished HDF/DF door shutter with good quality hinges bolts / locks and handles, Internal surface of toilet doors painted. Windows - Powder coated aluminum 2 track sliding windows. Attached Toilets to the Bed Room - white EWS, Wash Basin of medium size.
Electricity and Electrical Fittings
Generator: Generator Backup for common areas and 500 watts for each flat. Quality cables / wiring through PVC conduits concealed in walls and ceilings. Light points, fan / exhaust points, power points, call bell point, telephone points, TV points and AC point in master bed room. And provision of dummy A/C points for other Bed rooms. The electrical room will have panel boards, meters, etc. One outlet for TV& Telephone in the Living area and in all the Bedrooms. Provision for cable TV connection. Gated campus with Security cabin Water Supply: Water Supply from Water Treatment Plant. Sanitation: Underground drainage with Sewerage Treatment Plant (STP) Groceries, Laundry and children play areas
TV/Telephone Points Security Water supply, Sewerage and Sanitation Other
The following map presents broad geographical locations of upcoming affordable housing projects in Bangalore
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Map 3.3: Locations of Affordable Housing Projects in Bangalore City
3.4
CONCLUSION
Yield Rates Typically yield rate of residential projects in Bangalore range from 3-4%. Established micro-markets offer about 4% yield rate, which may go up to 5% in select SBD micromarkets. Most of the suburban and developing micro-markets typically offer 3-4%. Future Outlook Residential activity is high in suburban and peripheral areas due to proximity to IT-ITES commercial areas and also availability of land parcel for development. After almost a year of lull due to the economic downturn, the real estate sector in the Bangalore is slowly
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picking up and is all set to focus on the middle and upper middle segments, where it envisages huge potential. Customizing their offerings, builders are keen to capture these segments, which are witnessing increasing demand. Affordable housing developments came into foray during the recession period wherein the buyers of mid and higher mid segment dried out during the phase. Many innovative methods were arrived at to make projects affordable. The cost effectiveness were brought about in many ways like locations far away from city where land costs are much lower, alternate specifications, technologies which brought down the construction time period which saved on costs, reduced built up areas for the typologies, introduction of studio and one-BHK units etc. Year 2010 has also witnessed return of premium projects wherein the emphasis and differentiators are showcased as green buildings, buildings with carbon credits etc which are emerging as the new marketing mantra for developers. Amenities offered by the high end projects include clubhouse, swimming pool, landscaped parks, childrens play area, CCTVs, security etc. Emphasis is high on specifications and materials used.
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4
4.1
PROJECT SITE ANALYSIS AND APPLICABLE DCR

LOCATION OF THE PROJECT SITE
The Project Site admeasures an area of about 19.90 acres, is located towards the southern quadrant of city and is located at a distance of about 5 km off Hosur Main Road (NH-7), Bangalore. The Project Site is located under the jurisdiction of Bangalore Metropolitan Regional Development (BMRDA), under Anekal Planning Authority (APA), revenue administration of Byagadadenahalli village, Kasaba (Anekal), which forms a part of the Anekal Taluk. Map 4.1: Location of Project Site with respect to the City
Following table provides distances of the important locations / landmarks from the Project Site: Table 4.1: Distance of the Project Site from Important Landmarks in the Bangalore Location / Landmark MG Road (CBD) International Airport at Devanahalli (BIAL) Distance from Project Site (km) 28.0 61.0
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Location / Landmark Bangalore City Railway Station (Majestic) Hosur Road Jigani Bannerghatta Main road Electronic City Peripheral Ring Road (Proposed) NICE Road Outer Ring Road (Silk Board Junction)
Distance from Project Site (km) 30.0 5.0 8.0 11.0 10.0 13.0 20.0
4.2
PROJECT SITE DESCRIPTION AND ITS SURROUNDINGS

The Project Site is strategically located along Chandapura Anekal Main Road, covering an area of about 19.90 acres (i.e. 866,837 sq. ft.) and is categorized under residential landuse as per the Landuse Plan of BMRDA. The Project Site is located under the jurisdiction of BMRDA, under the APA, revenue administration of Byagadadenahalli village, Kasaba (Anekal), which forms a part of the Anekal Taluk. Presently real estate development along Chandapura Anekal Main Road is at slower pace when compared to other growth corridors of the southern suburbs of Bangalore. However, it is expected that, the existing, proposed urban infrastructure facilities and civic amenities will improve the entire scenario of the region. The Project Site has two access roads, wherein the primary access is through Chandapura Anekal Main Road, which is about 30 m wide (Right of Way). This road connects the Hosur Road (NH-7) at a distance of 5 km from the Project Site. While the secondary access road is a kutcha village road with the width of 7 m, connects Byagadadenahalli Village in the south of the Project Site. Site Attributes The Project Site is fairly regular in shape and has a frontage of approximately 150 m on the eastern side, towards the Chandapura Anekal Main Road and 410 m on the western side. In the case of physical infrastructure, the Project Site has power lines, water supply and drainage & sewerage facilities. Some of the salient features of the Project Site are summarized in the table below: Table 4.2: Salient Features of Project Site Area Access 19.90 acres (i.e. 866,837 sq. ft. approximately) Chandapura Anekal Main Road
Existing Access Road Access is through two approach roads namely the Chandapura Anekal Main Road and Byagadadenahalli Village road which is on eastern and western side of the Project Site with the width of 30.0 m and 7.0 m. Shape Visibility Contiguity Topography Frontage Fairly regular in shape Visible from the approach road (Chandapura Anekal Main Road) and secondary access road Contiguous in nature Flat terrain The property has frontage of Approx. 150 m on the eastern side, towards Chandapura Anekal Main Road and 410 m on western side.
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Land use
Residential Use (As informed by VBHC)
Following table presents the boundary/edge conditions of the Project Site. Table 4.3: Immediate Surroundings of Project Site North South West East MGB Subha Enclave, R.K Farms and Sai Prashanth Enclave Private Properties, Byagadadenahalli Village and Aryan Grand Residency 7 m wide approach road, private properties and Divya Jyothi Layout 30 m wide approach road, Alliance Business Academy and Eden Gardens
Following table presents the infrastructure status of the Project Site. Power Telecommunication Water Supply Sewerage & Power facility available within the premises Telecommunication facility available within the premises Water supply is available within the premises
Photographs below present some of the features of the Project Site and its surroundings:
Approach Road - Towards Anekal Town
Approach Road- Towards Chandapura Circle
Construction at Project Site
View of Model Flat at Project Site
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Vacant Land Parcel in the North of Project Site
Granite Factory- Diagonally
Main Entrance of the Project Site
SUBH Enclave Project in
Entrance for Brindhavan, Kemp City Project along Chandapura Anekal Main Road
JR Green Park Maedows along Chandapura Anekal Main Road
View of Sai Prashanth Enclave Project along Chandapura Anekal Main Road
View of Surya City Project along Chandapura Anekal Main Road
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Google map below shows the location of the Project Site and its surroundings. Map 4.2: Location of the Project Site and its Surroundings
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4.3
CATCHMENT ASSESSMENT
In order to carryout an in-depth assessment, it is important to identify and delineate different catchments for the Project site. The catchment area has been delineated after conducting a reconnaissance survey of the Project site neighborhood to assess the extent of movement of people using the existing major markets. The catchment is defined by the travel time taken or the travel distance to reach the project site. Catchment Delineation Primary catchment spreads to an extent of 6 km distance towards north, northeast and south, covering areas Hosur Road, part of Jigani Bommasandra Industrial area and Anekal, while the secondary catchment area spreads to an extent of 6 to 12 km distance from the Project Site towards north till NICE Corridor. A good catchment with good proportion of SEC-A & B population provides a good platform for any real estate development in general and retail & healthcare in particular. The project site lies is in Southern suburbs of Bangalore along Chandapura Anekal Main Road. The main driving factor for Hosur Road and its surrounding areas is Electronic City, which is one of the IT hubs of Bangalore City. Apart from Electronic City Bommasandra and Veerasandra Industrial Estate is also acting like a catalyst for residential development along this region. The micro-market scan is detailed below for both primary catchment and secondary catchment for residential development. The below table present the details of primary and secondary catchment of Project Site. Table 4.4: Catchment Details of the Project Site Primary Catchment Secondary Catchment Chandrapura, Anakal, Iggaluru, Marasur, Haragadde, Neraluru, Yadavanahalli, Kambalipura, Kunimadivala, Sidihosakote and Attibele Electronic City Phase I & II, Dodda Thoguru, Chika Nagamangala, Hebbagodi, Begur, Singasandra, Bommasandra & Veerasandra Industrial Area, Jigani, Kylasana Halli, Bande Nallasandra Village and part of Bannerghatta and Begur
The real estate development along Chandapura Anekal Main Road has grown at a slower pace when compared to other growth corridors of the southern suburbs of Bangalore. This micro-market has more serviced plots sold within gated communities. These projects developed are more from investing perspective since most projects launched during 2007 are yet to witness any construction on those site that have been sold long back. The expressway on Hosur Road which got operational during 1st quarter 2010 resulted in improved interest of office seekers in Electronic city and also an improvement in residential in the surrounding areas. There has been an upward swing of activities in the area with launch of
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Map 4.3: Catchment Delineation Map for Project Site
Neighborhood Analysis - Catchment Profiling Hosur Main Road is one of the important commercial spines of Bangalore. The presence of Electronics City has induced development of many commercial complexes and IT parks in the form of campus and stand alone developments. This has exaggerated the real estate development in the primary and secondary catchment of the micro market. The primary catchment of the project site, Especially the Chandapura Anekal micro market is mainly into residential development and most of the developments are into residential plotted development. Initially, this micro market was into a residential layout but in recent past, apartment developments are emerging in this region, which were consider as secondary home or weekend destination for the end user. But as of now, there are very few habitation in the primary catchment. In terms of social index, the primary catchment has a mix of upper middle, middle and lower income group households. Majority of the plotted development were been developed by the local player. Whereas in the secondary catchment has witnessed a mix of residential development by Grade-A & B and C developers in the form of apartments, villas and plots. The existing residing population in secondary catchment is a mix of white collared, blue collared employees and agrarian community since the area is in the suburbs and close to Electronic City. With the increased urban activities and work profiles the area is fast developing in terms of residential development. The existing developments in the secondary catchment have brought in larger percentage of middle income and upper income group population. The rental values in the area surroundings are about INR 6,000- 15,000 for a 2 and 2.5-BHK house indicating the earning capacity of the residing population. Though the Project Site is located at a distance of about 5 km off Hosur Road, Immediate surrounding of the Project Site does not have large-scale real estate development and adequate social infrastructure like health facilities, entertainment & leisure activities, etc. It is expected that the completion of proposed SEZ projects such as Biocon, HCL Technologies Ltd and Karnataka Biotechnology and Information Technology (KBITS) covering an area of about 220.39 acres will induce real estate development in the primary
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and secondary catchment of the Project Site. In addition the completion of Peripheral Ring Road (PRR) will also act as catalyst and also improve the overall connectivity of the region, resulting in price appreciation in residential market and land price. The following table summarizes the key characteristics and features of the population residing in the primary and secondary catchment on the basis of their income and demographic profile. Table 4.5: Key Demographic and Socio-Economic Features of the Primary and Secondary Catchment Location Chandapura Anekal Main Road Electronic City Phase I & II Begur Bommasandra and Veerasandra Industrial Area Bannerghatta Road Neighborhood Characteristics Very few habitations has witnessed in this region. This is presently acting as secondary home for the end-users. Residential area comprising a mix of upper middle, middle and low income group with low purchasing power. Area predominantly catering to the commercial (office / corporate) sector under IT-ITES segment, comprises working population residing in the secondary catchment Residential area comprising a mix of upper middle, middle and low income group with low purchasing power. Area predominantly catering to the Industrial sector under comprises working population residing in the primary and secondary catchment. Upper income and middle income group population working in the IT industry with higher level of disposable income and lifestyle aspirations. Consumerist community.
4.4
SWOT ANALYSIS FOR THE PROJECT SITE

SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis has been done for the Project Site based on location, infrastructure, linkages, frontage and potential usage and is presented below: Table 4.6: SWOT Analysis for the Project Site Strengths Location is on Chandapura Anekal Main Road easy access of public transport Site is contiguous with excellent frontage and visibility Two main approach roads towards east and west Good Access road - 30 m wide road Opportunities Proximity to Electronic City, proposed SEZ projects, Jigni Industrial areas offers captive demand for the proposed development on the Project Site. The size of Project Site explores possible options for large-scale integrated real estate development. Surya city and many plotted developments have already created visibility of the area for homeseekers Weaknesses Large distance from city CBD and also the site is located 5.0 km off Hosur Road The immediate surrounding lacks social infrastructure which can be addressed through project amenities Social index of the region is poor presently Threats Competition from other newly launched projects like Janaadhar Shubha, Shriram Smrithi, Pride Horizon and Concorde South Scape which are focusing on affordable category of apartments.
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4.5
APPLICABLE DEVELOPMENT CONTROLS AND REGULATIONS

Following are the applicable development controls and regulations (DCR) for the Project Site. The Project Site forms part of the BMRDA jurisdiction, under APA, revenue administration of Byagadadenahalli Village, Kasaba (Anekal), which forms a part of the Anekal Taluk. In the absence of a Master Plan for Anekal Local Planning Authority (LPA) the Zoning Regulation prepared by BMRDA is applicable. As per BMRDA regulations, the Project Site is classified as residential use and lies in Zone C - sparsely developed zone of the planning area. Map 4.4: Landuse Map showing Project Site
The Project Site is under Residential Zone admeasuring an area of about 19.90 acres. Following are the applicable DCR for the Project Site as per the BMRDA regulation. Table 4.7: Applicable DCR for Project Site Sl. 1 2 3 4 5 6 7 Landuse Total Plot Area Total Plot Area Permissible Floor Area Ratio (FAR) Area to be earmarked for Parks & Open Spaces (Mandatory) Plot Area to be considered for calculation of FAR Total Permissible Built-up Area Particulars Description Residential Zone 19.90 Acres 866,837 sq. ft. 2.5 value 25 % 75 % 1,625,320 sq. ft. Unit
Note: For group housing 25% of the total area be reserved for civic amenities, parks and open spaces, subject to a minimum of 15% for parks and open space.
Final Report - 65 -
5
5.1
REAL ESTATE MICRO-MARKET REVIEW

GENERAL
The Project Site located is located on Chandapura Anekal Main Road. The main driving factor for the real estate development in the region is the Electronic City followed by Bommasandra Industrial area. Major driver for the development has been IT and ITES related developments and demand for commercial/office space. The area has witnessed one of the highest supplies of real estate space in the commercial / office sub-sector and residential sub-sector. Large malls and hypermarkets have been opened in the recent past and several large malls like Ascendas Mall are under construction. Electronic City is part of the Bangalore Southern Peripheral micro-market, which comprises of areas between Silk Board along Hosur Road up to Electronic City, which is one of the developing zones across Bangalore. Following table provides a brief overview of the characteristics of the micro-market of the Project Site. Table 5.1: Characteristics of the Micro-Market of the Project Site Micro Market Characteristics Primarily covers areas around Hosur Road and Electronic City. Surrounded by numerous Grade A commercial developments which form a key catchment for potential home buyers The new elevated expressway has improved the connectivity of this micromarket to Bangalore City Schools Hospitals Ebenezer International School, Treamis World School, St Francis De-Sales School Narayana Hrudayalaya, Bangalore Childrens Hospital and Agarwal Eye Hospital are the reputed hospitals near the micro-market
Social Infrastructure
At present, the micro-market has predominantly commercial spaces (IT&ITES) and warehouses followed by recent development of residential supply that have emerged in and around Electronic City. Following table provides an overview of the prevailing market situation in the micro-market of the Project Site across core real estate sectors. Table 5.2: Overview of the Micro-Market Situation under Residential Sub-Sector Location Hosur Road, Electronic City Select Projects Concorde Manhattan, Ajmera Infinity, Ittina Mahaveer and Salarpuria Symphony Supply Apartment: Total: 11,702 units Completed: 3,094 units Under Construction: 7,292 units Planned: 1,316 units Average Indicative Pricing Apartment: INR 2,500-3,200 per sq. ft. (Grade-A)
Based on the instructions received from VBHC, the Project Site is proposed to be used to develop a residential development with villa and apartment typology. Accordingly, this chapter presents the real estate micro-market trends focusing residential sub-sector in general and villa & apartment typology in particular. Till a few years ago, residential real estate market along Hosur Road was mainly characterized by plotted developments by local players. The stretch along Hosur Road, within Bangalore City limits, stretches from Silk Board Junction at one end to Hosur Toll
Final Report - 66 -
Gate (Tamil Nadu Border) at the other end. Area surrounding the Silk Board Junction, constituting the secondary catchment of the Project Site, comprises of high-end residential developments mainly characterized by independent bungalows and apartment developments. Plotted layouts by local players dominated the residential typology along Hosur Road. There are also a few apartment projects located along Hosur Road and in the immediate surroundings of Electronics City Phase-I & II. Some select examples of large apartment complexes and villa developments by private developers are Concorde Manhattan, Ajmera Infinity, Ittina Mahaveer, Sobha Saffron, etc.
5.2
RESIDENTIAL SUB-SECTOR - APARTMENTS

Inventory, Supply and Stock There are total of about 57 apartment projects constituting all grades (Grade-A, B & C) in the primary and secondary catchment of the project site. Out of which 19 projects are completed (100% absorption) and rest of the projects are under various stages of construction. Apart from the ongoing constructions there are 6 projects which are under planning stage with a proposed supply of 1,316 units. It is expected that the proposed supply will be launched by the end of 2010 and it will be in pace with the market by 2012. The tables below provide the breakup of stock with respect to the available vacancy. The fully absorbed projects are accounted to understand the penetration of grade of developers in the market. The projects with vacancy are the right indicators for immediate absorption potential and the price range in the market. These projects are also the immediate competing ones for any new proposed development based on the vacancy levels. Table 5.3: Grade-wise Supply of Residential Apartment Units in Micro-Market with 100% Absorption Typology Grade A Grade B Grade C Total No of Projects 3 6 10 19 No of Units 228 507 677 1,412 Average Price (INR per sq. ft.) 2,567 2,176 2,245 2,272
There are 38 projects which have vacancy and these projects are under-construction stage. The details are as follows: Table 5.4: Grade-wise Supply of Residential Apartment Units Micro-Market with Vacancy Typology Grade A Grade B Grade C Total No. of Projects 6 14 18 38 Units (Nos.) 3,074 4,966 2,250 10,290 Average Absorption Rate 62% 66% 57% 63% Average Pricing (INR pet sq. ft.) 2,976 2,525 2,150 2,600
Year 2006-08 witnessed launch of largest number of apartment units in the micro-market. The subsequent years witnessed good amount of supply while year 2010 witnessed launch of very few projects. Key advantages of this micro-market are its proximity to the
Final Report - 67 -
work areas within Electronic City, excellent connectivity and competitive pricing compared to the Outer Ring Road and other stretches in Bangalore City. The overall absorption is 63% in the micro-market. The table below presents historic market trends for residential apartments in the micro-market in terms of supply, absorption and vacancy. Table 5.5: Historic Market Trends for Residential Apartment Developments in the MicroMarket of the Project Site Particulars Supply No of Projects Absorption Vacancy Sold Units 2005 72 1 100% 0% 72 2006 1,973 11 90% 10% 1775 2007 2,661 15 89% 11% 2368 2008 1,594 11 73% 27% 1163 2009 2,495 10 41% 59% 1022 2010 1,873 9 39% 61% 730 Total 10,668 57 68% 28% 7,133
Capital Values Average capital value for apartment in the micro market is about INR 2,600 per sq. ft. depending on location, project and specifications. The price range of Grade-A developments in the micro-market is witnessed to be between INR 2,600-3,200 per sq. ft. Grade- B & C projects have price band of INR 1,850- 3,350 per sq.ft and INR 1,372- 2,800 per sq. ft. respectively.
Residential Apartment- Average Price (INR per sq.ft)
3500
Average Capital Price (INR per sq.ft)
3000 2500 2400 2000 2000 1500 1000 500 0 2004 2005 2006 2007 2008 2009 2010 1800 2800 2850 2900 2700
Year
The micro market has witnessed a CAGR of 8% since 2004 when many projects were launched in comparison to the present launch prices. The early years witnessed an increase of almost 15-16% increase in the launch price annually since the base number was low. The subsequent year 2008 had an increase of only 12% owning to the fact that not many Grade-A projects were launched unlike in other micro-markets. Also years 2008 and 2009 were affected due to the economic recession which had a direct impact on real estate in the city. There was a downturn in the pricing and the area witnessed lowering of price by about 4-5% in comparison to its immediate predecessor year. This correction is very low compared to many other micro-markets which did witness almost 10-15% price correction. Year 2010 has started on positive note with an increase of almost 7% in the pricing when compared to the previous year.
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Absorption The overall absorption of all projects is about 68 percent. There has been a huge supply in the market launched in the present year which is yet to witness more bookings going forward. The absorption is rated fairly satisfactory in the present market situation. The chart below presents supply and absorption trends of apartments in the micro-market.
Supply Vs Absorption
Number of Residential Units
Absorption (%) 3000 2500 2000 1500 1000 500 0 2005 2006 2007 Year 2008 2009 2010
72 1973 2661
120% 100% 90% 89% 73%

1594 2495 1873
100% 80% 60% 40% 20% 0% 41% 39%
Inventory and details of prominent residential apartment developments in the micro-market of the Project Site is given in Annexure - 1.
5.3
RESIDENTIAL SUB-SECTOR - AFFORDABLE HOUSING

Supply and Absorption Trends The affordable housing segment has been discussed earlier in the report. The suburban areas of Hosur Road stretch which had easy accessibility especially to Electronic city and Bommasandra Industrial area, competitive land prices (near Anekal and Chandapura circle) made the location suitable for launch of this segment of housing apart from the plotted developments which commenced in early 2006, The primary and secondary catchment of the Project Site, have about 5 projects with a total supply of 2,812 units (excluding VBHC Project on the Project Site) that were marketed as affordable in the micro-market at the time of launch. However with the time period the rates escalated and since the unit sizes were also as in other normal projects the unit cost has become out of the affordable bracket. The unit size of affordable housing projects is observed to range from 400 sq. ft. to 1350 sq. ft. The launch price of these projects was in the range of INR 1,300 to 2,100 per sq. ft. With the rise of popularity of these projects and good absorption, the capital values have also witnessed increase and it is to a tune of about 10% on an average. The pricing indicated is the quoted base pricing of apartments. Other charges like car parking, deposits, statutory levies and taxes are collected additionally. These other charges vary 15-25% of the apartment pricing depending on the size of development, developer profile and amenities provided in the development.
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Annexure - 2 presents the projects that were launched as affordable housing segment in the micro-market of the Project Site. Maps containing geographic distribution of prominent residential projects in the micro-market of the Project Site are presented in Annexure - 3.
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6
6.1
CONCLUSIONS AND RECOMMENDATIONS

FUTURE OUTLOOK FOR THE MICRO-MARKET
As stated earlier, the micro-market of the Project Site comprises areas in and around the Electronic City and Bommasandra Industrial area. Hosur Road is the main growth corridor for the micro-market of the Project Site. Hosur Road is the part of NH-7, which connects the Bangalore City and Hosur in Tamil Nadu. Hosur Road has been witnessing developments due to high commercial activity ever since KEONICS Electronic City Phase 1 (spread over 332 acres) planned during 1976- 1980. The first Software Technology Parks of India (STPI) was set up in Electronics City in 1981-85 and now prominent companies like Infosys, Wipro, Siemens, Motorola have their operations in the campus developments within the Electronic City. KIADB acquired additional 320 acres as part of the Electronics City - Phase 2 & Phase 3 development. The land was allocated to various IT/ITES, Biotech and other related industries. Development of Electronics City has induced development of many commercial complexes and IT parks along Hosur Main Road, translating the micro-market of the Project Site into one of the economic hubs of the city. These commercial developments gradually generated substantial demand for the residential sub-sector in the micro-market, which eventually led to construction of various apartment projects. In-terms of physical growth potentials, the micro-market of the Project Site enjoys growth drivers similar to that of Bannerghatta Road, Sarjapur Road, Marathalli Sarjapur Outer Ring Road, Kanakapura Main Road and Whitefield, which have been witnessing significant growth in terms real estate development primarily driven by IT-ITES related development. All these locations lie on the South, Southeast and Eastern quadrant of the Bangalore City in the close proximity of IT&ITES and industrial development.
Looking at the historic growth evolution of locations like Bannerghatta Road, Sarjapur Road, Marathalli Sarjapur Outer Ring Road, Kanakapura Main Road, over last 4-5 years, Hosur Road and the areas within the micro-market of the Project Site is expected to undergo similar evolution and transformation over next 2-3 years. With the operation of the Elevated Expressway connecting Silk Board Junction and the Electronics City, the travel time from the city (Silk Board Junction) has reduced from 45-50 minutes to just 10 minutes. With this improved connectivity and other infrastructure initiatives of the Government and development agencies in the city like Peripheral Ring Road, the micro-market is expected to have excellent connectivity from different parts of the city over next 2-3 years.
Further, the micro-market has good social infrastructure such as healthcare, schools, recreation (resorts) and general retail when compared to other development corridors in the city. This is also expected to offer competitive advantage for the micro-market over other developing micro-markets in the city for residential development. Considering the growth of commercial activities in the region and also the proposed 4 SEZs projects namely; Biocon, WIPRO, HCL Technologies and Karnataka Biotechnology and Information Technology (KBITS), covering about 89.19 hectares (220.39 acres) will further augment economic drivers of this micro-market, which is expected to have positive impact in terms of demand growth and price appreciation for the real estate products over next 2-3 years.
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6.2
ACHIEVABLE CAPITAL VALUE DEVELOPMENT
FOR
THE
PROPOSED APARTMENT
Proposed residential apartment units on the Project Site have been evaluated with respect to the detailed market assessment carried out within the micro-market pertaining to similar developments. Prevalent price range for conventional as well as affordable housing segment has been considered for determining the average benchmark price for the proposed residential apartment development on the Project Site. The average benchmark price determined above is considered for potential price adjustments for various attributes like location, accessibility, developers profile, size of the development, product offering, present project status, site attributes, etc. among others, to determine achievable pricing for the proposed residential apartment development on the Project Site. The price adjustments have been carried out in terms of premium and/or discount on attributes of the Project Site with respect to the competing projects in the micro-market. The table below presents various premium and discount factors considered in the assessment and rationale for the same. Table 6.1: Attributes and Rationale for Premium and Discount Factors used for Price Adjustment Attributes / Parameters Location Rationale Location in terms of how the Project Site is positioned in the macro & micro level with respect to its neighboring developments, its socio-economic profile of the catchments, its connectivity, economic drivers and proximity to the major landmark developments, etc. Accessibility in terms of how the Project Site is accessible from major commuting corridors of the city, travel time, ease of traffic etc. Any large development has the potential to have more amenities, better community size, and better quality of environment. Such sizeable development, can command a premium on the villa price for various facilities provided within the gated community. Availability of the units on primary sales from the developer The support facilities and amenities of each project have been studied and compared with the proposed project to understand where the proposed development stands vis--vis the other projects in the market. The track record of the developer/ promoter, quality of construction and delivery capability Similar developments in the micro market helps in establishing the occupier perception for that particular type of development in the micro market. Good physical and social infrastructure is a necessary requirement for a comfortable living. The degree of variance depends on typology of facilities.
Accessibility Size of Development
Availability of Unit Options Support Facilities /Amenities Developer Profile Like Developments in the Micro Market Proximity to Physical / Social Infrastructure
As detailed in the previous chapter, there are 5 projects under affordable housing segment in the micro-market, bringing total supply of 2,812 units. Average present price of these projects range between INR 1700-1800 per sq. ft. Building specifications and amenities play a vital role in marketing residential products in Bangalore. The decision making of the end-users largely depend on superior building specifications, comparable to the buildings of Grade A developers in the city and level of civic amenities provided within the residential development. Considering both building
Final Report - 72 -
specifications and level of amenities provided/envisaged, Janaadhar Shubha may not be a comparable to the building specifications and level of amenities provided/envisaged in VBHC Project. Excluding Janaadhar Shubha, the micro-market has 4 projects under affordable housing segment, bringing total supply of 1,672 units. Average present price (on weighted average basis) of these projects range between INR 2,000-2,100 per sq. ft. Accordingly, INR 2,000 per sq. ft. is considered as the average benchmark price for the micro-market of the Project Site. Based on the assumptions as mentioned above and price adjustments, Jones Lang LaSalle is of the opinion that the achievable pricing for the residential apartment on the Project Site will be INR 2,000 per sq. ft (applied over the saleable/super built-up area). This achievable pricing is for a residential apartment product for affordable housing project for apartment development. It may be noted that the above achievable pricing is as on the date of assessment (October 2010) and the indicated price is only the base price for the unit saleable area of the apartment. Other charges like parking, club membership, deposits payable to civic authorities, etc. are chargeable over and above the base price. Details of such charges are covered in Page 45 of this report. In the case of year wise price increase, Hosur Road micro market has an average CAGR of 7% per annum in residential apartment projects whereas, Bangalore City has CAGR of 13%. Considering the factors like city average appreciation, Hosur Road micro market average price appreciation, proposed IT&ITES commercial development, improved / proposed urban infrastructure projects towards the micro-market and future outlook, a CAGR of 10% is considered for future projection. The details pertaining to the same are mentioned in the table below: Table 6.2: Projected Base Price for the Proposed Apartments on the Project Site Year 2010 2011 2012 2013 Projected Capital Value (INR per sq. ft.) 2,000 2,200 2,420 2,662 10% 10% 10% 200 220 242 Suggested Annual Increase Price Increase over Previous Year (INR per sq. ft.)
Note: Please note that the above projected pricing is for a residential apartment product under affordable housing segment. It may be noted that the above achievable pricing is only the base price for the unit saleable area of the apartment. Other charges like parking, club membership, deposits payable to civic authorities, etc. are chargeable over and above the base price. Details of such charges are covered in Page 45 of this report.
6.3
ACHIEVABLE RENTALS FOR THE PROPOSED APARTMENT DEVELOPMENT

The achievable rentals for the proposed development on the Project Site is determined by carrying out appropriate price adjustments on the average rentals of similar residential projects in the micro-market of the Project Site. The table below summarizes prevailing rentals in some of the sub-markets within the micro-market of the Project Site for a typical 2-BHK unit. Table 6.3: Prevailing Rentals in Primary and Secondary Catchment of Project Site SI. 1. 2. 3. Location Chanadapur Anekal Surrounding (Surya City) Jigini Road Electronic City Rental Range (INR per month) 2,500 to 3,000 3,000 to 4,500 6,000 to 11,000 Unit Size (sq. ft) 600 to 700 800 to 1,000 1,000 to 1,400
Final Report - 73 -
SI. 4. 5.
Location Begur Road BTM Layout
Rental Range (INR per month) 5,500 to 7,000 10,000 to 15,000
Unit Size (sq. ft) 1,000 to 1,200 1,000 to 1,200
Based on the assumptions as mentioned above and price adjustments, the Consultants are of the opinion that the achievable rental value for a 2-BHK apartment unit will be INR 3,300 per month. In addition, the tenant is expected to pay for Maintenance Charges as determined by the Resident Welfare Association of the Project Site. There is no rental trend available for the apartments in the micro-market. Considering the fact that the market typically maintains the capital value & rental value gap, average annual increase of 10% (same as capital values) is considered for projecting the rentals for future. The table below presents project rental values for the proposed apartment development (2-BHK unit) on the Project Site. Table 6.4: Projected Rentals for the Proposed Apartment on the Project Site for 2-BHK Apartment Unit Year 2010 2011 2012 2013 Projected Rental Value (INR per Unit) 3,300 3,630 3,993 4,392 10% 10% 10% 330 363 399 Suggested Annual Increase Price Increase over Previous Year (INR per Unit)
Since there are no instances of renting of 1-BHK apartment units in the micro-market, the rentals for 1-BHK apartment units is calculated based on the yield rate (ratio of annual rental value to capital value expressed in percentage). As stated earlier, typically yield rate of residential projects in Bangalore range from 3-4%. Established micro-markets offer about 4% yield rate, which may go up to 5% in select SBD micro-markets. Most of the suburban and developing micro-markets typically offer 3-4%. Considering the saleable area of different type of apartment units proposed in the Project Site and the recommended achievable capital value & rental value for the Project Site, yield rate for the apartment units proposed in the Project Site is calculated. 2-BHK apartment units proposed in the Project Site have carpet area ranging between 481-500 sq. ft. and super built-up area ranging between 620-640 sq. ft. Considering achievable capital value of INR 2,000 per sq. ft. as recommended above, the total average capital value of a 2-BHK apartment unit in the Project Site works out to INR 1,260,000 per apartment unit. Considering achievable rental value of INR 3,300 per month, the annual rental value works out INR 39,600 per 2-BHK apartment unit. Accordingly, the yield rate for a 2-BHK apartment unit works out to 3.14%, which is well within the typical yield rate range for residential apartments in the city (i.e. 3-4%). 1-BHK apartment units proposed in the Project Site have carpet area ranging between 340-360 sq. ft. and super built-up area ranging between 456-476 sq. ft. Considering achievable capital value of INR 2,000 per sq. ft. as recommended above, the total average capital value of a 1-BHK apartment unit in the Project Site works out to INR 932,000 per apartment unit. Considering the yield rate of 3.14% as worked out for 2-BHK apartment unit in the Project Site, the achievable rental value for a 1-BHK apartment unit works out to INR 2,441 per month, rounded off to INR 2,450 per month. Considering annual
Final Report - 74 -
appreciation of 10%, the table below presents project rental values for the proposed apartment development (1-BHK unit) on the Project Site. Table 6.5: Projected Rentals for the Proposed Apartment on the Project Site for 1-BHK Apartment Unit Year 2010 2011 2012 2013 Projected Rental Value (INR per Unit) 2,450 2,695 2,965 3,261 10% 10% 10% 245 270 296 Suggested Annual Increase Price Increase over Previous Year (INR per Unit)
Considering the achievable capital value of INR 2,000 per sq. ft. as recommended above, rental value at average yield of 3-4% per annum and capital appreciation of about 10-12% year-on-year, the gross yield over 5 years will be in the range of 12-15%. Any increase in price appreciation over years than estimated, due to various growth potentials of the micro-market highlighted above, will have significant upside in the returns to a purchaser.
DISCLAIMER This Report has been authored by Jones Lang LaSalle acting on the instructions of VBHC. Jones Lang LaSalle was instructed by VBHC to provide an independent, expert assessment of the marketability of the Project being developed by VBHC as Vaibhava situated near Electronics City, Bangalore. This Report has been formulated by Jones Lang LaSalle independent of any inputs (other than information specifically sought for) from VBHC and VBHC has not in any manner influenced the findings of this Report. The prospective purchaser may however note that VBHC has paid JLL professional fees for the formulation of this Report. Notwithstanding the foregoing, this Report should be treated as additional information and not be taken as a substitute for comprehensive due diligence to be exercised by a prospective purchaser including visiting the project site and evaluating the suitability of the Project to their specific needs, their ability to meet the financial commitment either through purchase or through loan servicing and the availability of third party financing. It is specifically noted that while the Report contains certain views regarding the possible marketability of the Project in the future, prospective purchasers are encouraged to evaluate the Project based on their personal requirements rather than from the perspective of future real estate price appreciation. This Report does not constitute any commitment whatsoever from VBHC and shall not give rise to any claims whatsoever from any prospective purchaser regarding the veracity or otherwise of this Report. This Report is provided for information only. This Report shall not constitute formal advice rendered directly to the prospective purchaser.
Final Report - 75 -
7
7.1
Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. 9.
ANNEXURE
ANNEXURE - 1: INVENTORY PROJECT SITE
Projects Name Developer Name
AND
DETAILS
Location
OF
SELECT RESIDENTIAL PROJECTS

Project Status Expected Completion Year 2009 2007 2010 2010 2010 2011 2011 2011 2011 2009 2008 2010 2010 2010 2010 2011 2010 2010 Units
IN THE
MICRO-MARKET
Absorption Rate 100% 100% 100% 95% 70% 85% 90% 70% 6% 100% 100% 80% 100% 80% 100% 80% 80% 100%
OF THE
Project Launch Year 2006 2006 2008 2006 2008 2007 2007 2009 2009 2006 2005 2008 2007 2007 2006 2007 2006 2007
Price (INR per sq. ft.) 2,500 2,700 2,600 3,100 2,600 3,000 2,800 3,200 3,200 2,300 2,400 3,150 2,100 2,400 2,400 2,600 2,100 2,050
Dwelling Size (sq. ft.) Min. 1,200 957 1,260 1,270 1,210 1,248 1,057 --1,065 1,246 1,275 1,230 1,054 1,095 950 589 1100 Max. 1,521 1,690 1,760 2,595 1,700 2,043 2,607 --1,760 1,818 1,863 1,735 1,722 1,630 1,750 1,350 1,550
Greenwoods Green Sleeves Gardenia Symphony Equinox Midway City Ajmera Infinity Hydel Park Evergreens
Elite Group Total Environment Gopalan Salarpuria Group SJR Concorde Group Ajmera Nitesh Estates Ozone Group Hoysala RS Developers Royal Retreat Homes Jain Farms ND Developers Vascon Construction Goel Ganga Group Ittina Group Sumadhura
Basapura Road Singasandra Electronic City Phase-I Hosur Road Electronic City Phase-I Basapura Road Electronic City Bannerghatta Road Off Sarjapur Road Begur Rd Hosur Road Off Hosur Road Hosur Road Hosur Road Hosur Road Electronic City Electronic City, Phase I Manipal County Road
Completed Completed Completed Completed Completed Completed Under Construction Under Construction Under Construction Completed Completed Completed Completed Completed Completed Under Construction Under Construction Under Construction
120 44 64 298 310 244 1060 250 912 48 72 296 70 48 77 298 900 160
10. Sowpernika 11. Gardenia Phase-2 12. Royal Legend 13. Shebang 14. ND Ascent 15. Vascon Venus 16. Vertica 17. Mahavir 18. Serene
Final Report - 76 -
Sl. No.
Projects Name
Developer Name
Location
Project Launch Year 2008 2010 2008 2008 2009 2008 2010 2009 2010 2010 2010 2008 2007 2006 2006 2007 2006 2008 2007 2008 2008 2007 2007
Project Status
Expected Completion Year 2010 2012 2011 2010 2012 2011 2011 2012 -2012 -2009 2009 2007 2008 2009 2007 2009 2009 2010 2010 2009 2009
Units
Price (INR per sq. ft.) 3,350 2,200 2,100 2,000 1,850 2,250 2,650 2,950 ---2,200 2,100 2,200 2,100 2,300 2,250 2,400 2,500 -2,400 2,100 2,250
Absorption Rate 80% 60% 65% 100% 25% 60% 75% 60% ---100% 100% 100% 100% 100% 100% 90% 100% -60% 100% 90%
Dwelling Size (sq. ft.) Min. 1035 1244 905 1026 1070 1140 639 360 --925 1555 944 1300 1275 1175 1221 929 2335 1000 750 550 1,094 Max. 1,486 1,539 1,850 1,359 1,575 2,075 1,821 1,350 --1,530 NA 1,484 2,300 2,560 1,615 1,950 2,556 2,650 1,350 1,800 1,350 1,483
19. Kristal Axinite 20. Royal Citadel 21. Pride Pristine 22. Rosebay 23. Prince City 24. Aakruti Amity 25. Royal Manor 26. Smondoville 27. Duo Symphony 28. Shine 29. Reshan 30. Pearls 31. Paras Mallige 32. Phoenix Orchid 33. Sa Maliabu Enclave 34. Sneha Residency 35. Vensa Residency 36. Daaliya 37. Shanthi Nivas 38. Samrudhi 39. Nisarga Keerthana 40. Moon Mist 41. Daadys Olive
Kristal Arattukulam Dev. Pride Group V Maks Builders Times Estates Aakruti Nirmiti Limited Arattukulam Dev. Patel Realty Duo Associates Radiant Group Radiant Group Definer Paras Builders Phoenix SA Group Sneha Developers Venkata Sai Daadys Builders GR Construction Sapthagiri Dev. Nisarga Builders Axis Concept Const. Daadys Builders
Hosur Road Singasandra Off Hosur Road Off Hosur Road Off Hosur Road Off Hosur Road Off Hosur Road Electronic City Hosur Road Begur Road Begur Road Electronic City Electronic City Manipal County Road Manipal County Road Basapura Road Manipal County Road Off Hosur Road Manipal County Road Off Hosur Road Off Hosur Road Electronic City Hosur Road
Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction Planned Planned Planned Completed Completed Completed Completed Completed Completed Completed Completed Completed Completed Completed Completed
64 108 340 80 330 176 64 1339 438 500 65 16 75 20 162 44 32 40 40 32 176 56 88
Final Report - 77 -
Sl. No.
Projects Name
Developer Name
Location
Project Launch Year 2007 2007 2007 2006 2007 2009 2006 2009 2010 2009 2009 2010 2010 2009 2009 2010
Project Status
Expected Completion Year 2009 2010 2010 2009 2010 2011 2010 2011 2012 2012 2010 2012 2012 2011 2011 2012
Units
Price (INR per sq. ft.) 2,300 2,375 2,300 2,430 2,300 2,,200 2,800 1,372 1,900 1,500 2,300 2,000 2,600 ----
Absorption Rate 100% 85% 90% 100% 80% 75% 95% 50% 20% 25% 65% 25% 40% ----
Dwelling Size (sq. ft.) Min. 1,275 1,275 1,375 1,257 1,294 880 1,280 792 922 750 1,150 1,089 1,250 890 890 635 Max. 2,560 1,524 2,053 1,780 2,550 1,390 1,791 1,132 1,400 1,950 1,561 1,719 2,590 2,200 2,200 1,520
42. GR Shree Nivas 43. Nandanam 44. Greenwoods 45. Ziggurat 46. Eco Sphere 47. Daddys Elixir 48. SRK Silicana 49. Aryan Orchid 50. Paras Maitri 51. Nisarga Sarovar 52. Sai Palace 53. Sri Tirumala Vintage 54. Altavisha 55. Pine Tree 56. Cherry Tree 57. Redwood
GR Construction Krishna Projects RS Developers Vijetha Developer Genesis Realtors Daadys Builders SRK Aryan Hometec Paras Group Nisarga Builders BSR Constructions Tirumala Const. Shanders Const. BlueValley Properties BlueValley Properties Radiant Group
Manipal County Road Electronic City Hosur Road Basapura Road Electronic City, Phase I Huskur Gate Electronic City Off Hosur Road after Thali Restaurant Anekal Road Off Begur Road Basapura Main road Electronic City Electronic City Hosur Road Begur Road
Completed Completed Completed Completed Completed Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction Under Construction Planned Planned Planned
88 160 70 144 160 167 128 96 180 290 64 90 196 84 125 104
Note: The pricing indicated is the quoted base pricing of apartments. Other charges like car parking, deposits, statutory levies and taxes are collected additionally. These other charges vary better 15-25% of the apartment pricing depending on the size of development, developer and amenities provided Source: Real Estate Market Research and Analysis; Jones Lang LaSalle; October 2010
Final Report - 78 -
7.2
ANNEXURE - 2: INVENTORY AND DETAILS OF SELECT RESIDENTIAL PROJECTS SEGMENT IN THE MICRO-MARKET OF THE PROJECT SITE
Project Name Developer Location Launch Launch Price Year (INR per sq. ft.) 2010 2010 2007 2009 2009 2,100 1700 1,600 1890 1300 Expected Completio n Year 2012 2012 Na 2011 2012 Unit Size (sq. ft.) 1-BHK ---630 720 400 2-BHK 840-940 550 Na 855 615 3-BHK 1080 1231 880 Na 1090 -4-BHK ------
UNDER
AFFORDABLE HOUSING
Sl. No. 1. 2. 3. 4. 5.
Units (Nos.) 156 176 450 890 1140
Status
Absorption Present Price Rate (INR per sq. ft.) 15% 10% 100% 20% 50% 2,100 1,850 2,000 2,050 1,327
South Scape Pride Horizon Thyme Park Shriram Smrithi
Concorde Group Pride Group IVR Prime Urban
Electronic City Phase II Bannerghatta -Jigini Rd. Jigani
Under Const. Under Const. Completed Under Const. Under Const.
Shriram Properties Attibele - Sarjapur Rd. Attibele - Anekal Rd.
Janaadhar Shubha Janaadhar Const.
Final Report - 79 -
7.3
ANNEXURE - 3: GEOGRAPHIC DISTRIBUTION OF SELECT RESIDENTIAL PROJECTS IN THE MICRO-MARKET OF THE PROJECT SITE
Prominent Residential Developments in the Micro-Market of the Project Site
Final Report - 80 -
Prominent Residential Developments in the Chandapur Anekal Micro-Market of the Project Site
Final Report - 81 -
ABOUT THE AUTHORS OF THIS REPORT

Jones Lang LaSalle, the Indian operations of Jones Lang LaSalle (NYSE: JLL), is the only real estate money management and services firm named to FORTUNE magazine's "100 Best Companies to Work For" and Forbes magazine's "400 Best Big Companies". It is the premiere and largest real estate Services Company in India, with an extensive geographic footprint across ten cities (Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and staff strength of over 3,000. The company provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property management, capital markets, residential, hotels and retail advisory. For further information, please visit www.joneslanglassale.co.in. The report is authored by the Strategic Consulting Unit of Bangalore comprising following key professionals
Girish K. S. MRICS
Girish is a Local Director at Jones Lang LaSalle and heads the Strategic Consulting in Karnataka, Andhra Pradesh and Kerala (South India) and based out of Bangalore. He has over 12 years of professional experience related to planning and architecture. He has been involved in various assignments related to real estate management, valuation, feasibility studies, urban planning, urban development and management, urban infrastructure, poverty alleviation, urban reforms, urban (municipal) finance, environmental infrastructure and private sector participation, in various disciplines from team member to project manager. He was awarded Gold Medal as the Best Student in Master of Planning. Girish has been working on several real estate development assignments involving feasibility studies, valuation and best use option studies for various clients. His key Client accounts include leading developers, financial institutions / real estate funds, corporates and others. He is involved in several development advisory services, feasibility studies, strategic advisory services and valuation advisory services. In addition, he is been advising various Government Departments / PSUs on the real estate development related activities.
Deepa Hurali
Deepa is an Associate Director at Jones Lang LaSalle and in-charge Strategic Consulting Operations at Bangalore and based out of Bangalore. She has over 11 years of professional experience related to planning and architecture. She was one of the core members of the working group of prestigious Bangalore Agenda Task Force - a public private participative initiative of Government of Karnataka in 2000 and was involved in the capacity of full-time consultant implementing various projects under BATF umbrella. During this tenure she worked on urban sanitation projects, public-private initiatives, transportation related projects, city beautification related projects such as redevelopment initiatives etc. Deepa has been involved in various assignments related to real estate management and delivered many prestigious projects for variety of end users like investors, developers, government stakeholders, etc. She has ventured into analysis of various other sectors like MICE industry, Leisure & Entertainment, Hospitality, Luxury markets apart from the core sectors of residential, commercial and retail markets. She has been part of various valuations and market assessment mandates and coordinated various pan-India assignments.
Y. Umakanth
Umakanth is a Manager at Jones Lang LaSalle heads the Strategic Consulting and based out of Bangalore. He has over 9 years of relevant professional experience related to planning and architecture. He has been involved in various assignments related to real estate management, and other development sector projects. Umakanth has been working on several real estate development assignments involving feasibility studies, valuation and best use option studies for various clients. He has worked for many prestigious projects with private and Government sectors funded by international funding agencies like ADB, World Bank, USAID, etc.

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Final Report

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Market Research and Assessment of Capital Values and Rental Values for Proposed Development near Electronic City,

Bangalore, Karnataka, India

Final Report -1-

VALUE AND BUDGET HOUSING CORPORATION LIMITED (VBHC)

Jones Lang LaSalle Property Consultants India Private Limited

Final Report -2-

Value and Budget Housing Corporation Limited (VBHC)

Final Report -3-

PROFILE OF BANGALORE CITY ................................................................................ 21

REAL ESTATE MACRO-MARKET REVIEW ................................................................. 39

PROJECT SITE ANALYSIS AND APPLICABLE DCR..................................................... 56

REAL ESTATE MICRO-MARKET REVIEW ................................................................... 65

CONCLUSIONS AND RECOMMENDATIONS ................................................................. 70

Final Report -4-

Final Report -5-

Final Report -6-

Final Report -7-

BANGALORE - MOST HAPPENING CITY IN SOUTH INDIA

Final Report -8-

DEMOGRAPHIC & SOCIO-ECONOMIC CHARACTERISTICS

Final Report -9-

GENERAL REAL ESTATE MARKET TRENDS

Topography Frontage Land use

FUTURE OUTLOOK FOR THE MICRO-MARKET

ACHIEVABLE PRICING FOR THE PROPOSED APARTMENT DEVELOPMENT

ACHIEVABLE RENTALS FOR THE PROPOSED APARTMENT DEVELOPMENT

OBJECTIVE AND SCOPE OF WORK

PROFILE OF BANGALORE CITY

Geographic Location Connectivity and Linkages

As per Revised Master Plan-2015, Bangalore

Key Advantages of Bangalore

Map 2.2: Bangalore Region Map

Hyderabad Hubli Goa

FUNCTIONAL BASE OF CITY

As per Revised Master Plan (Projected Population) 9.96

Population (Million) 0.80 1.21 1.68 2.94 4.13 5.68 8.01

Decadal Growth (%age) -51.25 38.84 75.00 40.48 37.53 41.02

SEC Share across Cities

Cities Delhi Hyderabad Mumbai

Annual Per capita income of Urban Household 78,660 69,493 123,032

Annual capita savings of Urban Household 17,962 20,386 16,510

%age of Savings 23% 29% 13%

Source: Skyline India 2008-09

Source: Skyline India 2008-09

Map 2.3: Major Industrial Estates and IT&ITES Hubs in Bangalore

KEY INFRASTRUCTURE INITIATIVES

Bangalore International Airport Limited

Elevated Expressway to BIA

22.12 km long elevated sixlane expressway

Peripheral Ring Road

Bangalore Development Authority

Name of the Infrastructure Initiative

Metro-Rail Corridor (PhaseII)

Bangalore Metro-Rail Corporation Limited

Name of the Infrastructure Initiative BangaloreElectronic City Elevated Toll Expressway

BangaloreMysore Infrastructure Corridor

Kalyani Group of companies, VHB International Limited, SAB International Ltd

Department of IT, BT and S&T, GoK

Bangalore Airport Rail Link

Name of the Infrastructure Initiative Link

Intermediate Ring National Highways Road (IRR) Authority of India

Satellite Town Ring Road

Bangalore Metropolitan Region Development Authority

Name of the Infrastructure Initiative