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Are Bengaluru‘s infrastructure issues making it the next Gurgaon?

A traveller coming out of Bengaluru‘s airport, is unlikely to miss the numerous hoardings that advertise luxury apartments, ranging from Rs six crores to Rs 10 crores. One may thus wonder, ‘Isn‘t Bengaluru supposed …

A traveller coming out of Bengaluru’s airport, is unlikely to miss the numerous hoardings that advertise luxury apartments, ranging from Rs six crores to Rs 10 crores. One may thus wonder, ‘Isn’t Bengaluru supposed to be an end-user-driven market, unlike Mumbai or Gurgaon?’

Prima facie, the similarities between Gurgaon and Bengaluru are undeniable – economies driven by the IT sector, their expat population, scaling up from the affordable to luxury housing segments and poor infrastructure. However, none of the developers in Bengaluru would like to admit that the city may be headed the Gurgaon way. Nevertheless, infrastructure challenges are only mounting in Bengaluru, as well as Gurgaon.

Moreover, as the number of upscale and luxury projects has steadily increased, the market has gradually become unaffordable for the average buyers. Bengaluru’s realty market witnessed surplus inventory of more than one lakh units, for the first time, in 2015. The stress in the market is clearly becoming visible.

An unfair comparison?

JC Sharma, vice-chairman and managing director of Sobha Ltd, however, feels that it is unfair to define Bengaluru’s market on the basis of high-value projects that cost Rs four crore or Rs six crore, as these projects constitute only 5% of the market. Rather, he maintains that any comparison between Bengaluru and Gurgaon, should be on the average size of an apartment and its average price.

“In Gurgaon, an average apartment costs Rs 3-4 crores, whereas, in Bengaluru, you can get a premium apartment close to the CBD, with that kind of money. Moreover, Gurgaon was developed as a city because of its proximity to Delhi and its infrastructure had to be created. Bengaluru did not have that problem. It was a cantonment city for around 200 years,” Sharma elaborates.

Besides, developments now, are such that it can absorb many people, without creating much of a problem, he adds.

Growth pangs

Trivita Roy, associate director-research and REIS, JLL India, believes that the infrastructure problems in Bengaluru, can be attributed to the fact that the city grew much faster than it was expected to. The population doubled in 10 years and this is akin to compressing 60 years of growth in just 10 years, Roy explains.

“This sort of growth was beyond the capacity of any city planner. Now, we have to bring all the stakeholders – town planners, bureaucrats and developers together, to devise a cohesive plan of action. This does not mean that Bengaluru could turn out to be like Gurgaon. Moreover, while Bengaluru is a city, Gurgaon is at best a satellite town,” points out Roy.

Joe Verghese, managing director of Colliers International, points out that of the 100 business leaders in Bengaluru, most of them are IITians. These individuals, who are typically conservative, are not just after money; many of them are spending considerable time, for the betterment of the city, he says. “They belong to various government bodies and advise the government. I don’t see this happening in other cities. If infrastructure is improved, Bengaluru can become a global city,” concludes Verghese.

(The writer is CEO, Track2Realty)

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First Published on Jun 15, 2016 12:07 pm
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