Residential households in Bangalore to continue to grow at 4% - 6% : ICRA

BANGALORE: ICRA expects the total residential households in Bangalore to continue to grow at the rate of 4%- 6% per cent per annum until FY2015 led by demand from new migrants as well as investors and continued growth plans of many large IT/ITES, engineering and manufacturing companies based in Bangalore.

However, post FY2015, the demand may get impacted in case the global economic slowdown continues thus lowering IT/ITES related employment opportunities.

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.

Further, the area launched by major developers in FY2012 and current financial year in Bangalore is 3 to 4 times of the area sold by them in FY2012. 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 in its report on Bangalore's real estate market.

ICRA says that City's development will get major infrastructure boost from its ongoing and planned infrastructure project such as Metro Rail (Phase I & II), Signal Free Outer Ring Road, Peripheral Ring Road, Bangalore Mysore Infrastructure Corridor, BMRDA's Satellite Townships & Ring Road Network, Expressway to Bangalore International Airport (BIA) and High Speed Rail to BIA and Mono Rail.

These projects will provide the much needed support to Bangalore's growing population base and with the enhance connectivity will also open-up newer surrounding areas for development. However, the issue related to the depletion of water table will remain a concern until a long-term solution is worked out soon by the competent authorities.