After being muted for almost a decade, villa prices in the IT capital of Bengaluru have started appreciating, with a jump of 15-20 percent compared to pre-pandemic levels, developers say. A villa in eastern Bengaluru's Whitefield, which was available for Rs 2.8 crore, had gone up to Rs 3.2 crore by March 2023.
In fact, local brokers point out that in some prime locations like Whitefield and Hebbal in the north, prices have appreciated by more than 25 percent.
Kiran Kumar, Vice President of Bengaluru-based Hanu Reddy Realty said, "About 1-2 years back, villas in Bengaluru were selling for Rs 8,000-9,000 per sq ft but today they have jumped upwards of Rs 12,000 sq ft. However, very few inventories are available today for sale,"
Surprisingly, residential developments have always been independent villas or plotted developments (Bengaluru Development Authority plots) in Bengaluru, experts say. The city has been predominantly a villa and plotted development-driven market for the last 15 years, Pankaj Kapoor, Managing Director at real estate data analytics firm Liases Foras believes.
However, the segment saw a dip in mid-2000, when apartment culture surged along with a boost to the city's IT sector.
"Post-Covid we finally saw an appreciation in the prices after almost a decade. While inventory continues to remain low, the launched projects are selling out within a year," Darshan Govindaraju, Director at Bengaluru-based realtor, Vaishnavi Group, added.
Demand for villas has skyrocketed
Property listing proptech unicorn, NoBroker, said it has observed a 25 percent increase in demand for villa properties this year since August 2022.
"However, if we look at data for August 2021, as of today, there is a 120 percent increase in demand for villa properties," Saurabh Garg, Cofounder and Chief Business Officer of NoBroker said.
Additionally, Pankaj added that villa sales in Bengaluru have gone up from 720 units in March 2021 to 1,470 units in March 2023, almost doubling the sales.
Developers in Bengaluru noted that compared to pre-pandemic levels the companies are witnessing a sharp rise in sales thus shrinking the overall available portfolios --- adding to a mismatch in supply and demand.
For example, Bengaluru-based Concorde said, while they have witnessed a 30 percent spike in villa sales post Covid, their current sales from villas almost contribute to 50 percent of overall sales value across the prime locations in the city.
Why invest in a villa?
While the east Bengaluru remains one of the happening hubs for villa developments, several new micro-markets like Hennur and Devanahalli in the north, and Kanakapura Road in the south have opened up to villa launches. Whitefield, Sarjapur and Yelahanka are the top localities that have seen the highest demand for villas in the last two years, experts say.
The prices for a 1,500-1,800 sq ft villa starts at about Rs 1.5 crore. For prime locations and Grade A developments, the ticket sizes are usually between Rs two crore-three crore for more than 2,000 sq ft.
Experts say villas have appreciated more than apartments in Bengaluru over the last two years making them a unique avenue for investments.
According to Magicbricks Research, on comparing the data with last year, villas witnessed a capital appreciation of 5.36 percent YoY, while prices of multistorey apartments increased 1.86 percent YoY.
Villas give prospective buyers a sense of spacious living and the additional attraction of owning the land and being the whole and sole proprietor of the property.
"So in future, even if the real estate prices depreciate, land prices will still be on the uptick, thus providing prospective buyers a return of at least 20 percent," Kumar said.
Post-Covid, villas in prime areas have matched or crossed the rental yield of apartments. For example, according to Liases Foras Research, the average rental yield in Bengaluru is about 5 percent, while for villas it is almost 4 percent and in some places more than 6 percent.
"This makes villas an interesting route for real estate investors. We anticipate the prices will go up further, albeit gradually, over the next few quarters," he added.
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