Investing in Bangalore real estate - optimistic view ...

As I mentioned in my previous post, let me cover the optimistic view of investing in Bangalore real estate. Unfortunately, like any thing else, risk and rewards go hand-in-hand here as well. If somebody says 'investing in real estate in Bangalore/India is the sure bet to get handsome returns', don't trust that! The old truth of 'risk versus rewards' always wins. However, in the current environment, Bangalore real estate does look in the upward trend and what future holds is a 'time will tell' story...

Many factors contribute to this:

• Tech sector is definitely driving the housing market. Banks are still generously giving home loans and it is very easy to get funds to invest in an apartment unit. Crossing loan amounts of above 60-70 lakhs becomes a challenge even for the tech folks but even at this level, it is still possible to settle on something.
• Availability of high-tech workers: It would be hard to find anywhere else in India the amount of tech savvy people like in Bangalore. This naturally attracts more tech companies to have Bangalore as the location, which in-turn drives the real estate market.
• There is still a good influx of people from all parts of the country to Bangalore(not only in tech sector but other peripheral sectors like hotels, construction etc) and that will keep the demand at higher level. The fact that it is difficult to get a good apartment unit in a decent location shows that there is still demand for apartment units. This is typical in larger communities where there are good facilities like swimming pool, club house, good walking area, gym etc.
• Bangalore tops in getting access to malls, entertainment, good Indian/international food etc. This does attract lots of folks to stay in Bangalore.
• Whether is a major factor - it is comfortable throughout the year, which is hard to beat even when compared to any part of US.
• There is still lots of international investment that is happening into Bangalore - not only in the tech sector but in other sectors like hotels, malls, hospitals etc. As far as new tech companies starting offshore setups, that is a TBD. However, I have seen many, many startups, which are setting up offices in Bangalore, which is a good sign for real estate as well.

I have seen places like Sarjapur, which are really outside of Bangalore and not at a commuting distance for work to high tech areas getting sold out when it comes to Villa/apartment projects. Unfortunately, nobody knows whether these are getting bought for investment and with a view of appreciation or they are folks really who are going to stay here when homes are ready. If you are from California, you might remember the story of city Stockton!

Overall, if you count the factors above, it seems like good times are there to stay for some time. If you buy the right property at the right location, you can still get good returns. However, to note, buying a finished apartment and keeping it for few years with a view to sell down the line won't get you much - they may go up a bit but start loosing value as the apartments start getting older. Will cover such scenarios in my next post ...