Bangalore residential market to grow by 4-6% by FY15:ICRA
Mumbai: Real estate market in Bangalore is expected to grow at 4-6 percent annually till FY15 amid demand from new migrants as well as investors and continued expansion plans of many large IT, engineering and manufacturing companies based in the city, says a report.
"The city's residential demand is mainly led by growth and performance of the IT/ITeS sector," rating agency ICRA said in a report.
Bangalore is currently contributing to 33 percent of India's IT exports and home to over 8 lakh IT/ITeS professionals, which accounts for about 55 percent of the total demand of the organised real estate market, it said.
The total residential households in Bangalore has grown at a CAGR of 6 percent over the last four years ended FY12, with an average of 94,000 new households added every year, the report said.
"With an estimated residential market size of 92 million square feet (msf) and value of Rs 27,600 crore in FY13, the sector forms around 5-6 percent of Karnataka's Gross State Domestic Product (GSDP)," it said.
ICRA said that there has been a significant increase in the residential projects under development over the last two years, which would result in increased supply in the market.
"The significant increase in supply of residential space in absence of commensurate rise in absorption rates may result in an oversupply situation in the city," ICRA said.
It has also cautioned that though the market would grow at 4-6 percent, post FY15, the demand may get impacted in case the global economic slowdown continues which may lower IT/ITeS related employment opportunities.