Hari Sadhanandan, who currently resides in the US, wants to relocate to India. A few weeks ago, he had come down to Bangalore to rent a house in the city. His specifications: three- or four-bedroom apartment of over 2,000 sq ft) or a villa in Whitefield, Outer Ring Road, or Sarjapur Road with proper amenities, especially play area for his children. And his budget? About Rs 40,000 a month, including maintenance.

To his relatives new to the residential scene in Bangalore, this seemed quite a lavish budget. But not big enough, as it soon emerged.

On a sunny Saturday morning, Mr Sadhanandan's real estate agent showed him half-a-dozen properties that suited his requirements. Except for a pent-house in a large apartment complex in Marathahalli, the other properties were way beyond his budget.

For instance, a villa on the Varthur Main Road, which connects Marathahalli to Whitefield, comes with a rental tag ranging anywhere between Rs 50,000 and Rs 1.2 lakh. “Instead of paying such huge rentals, I could buy my own apartment here,” Mr Sadhanandan told his agent.

Buy VS Rent index

In an effort to help property-seekers like Mr Sadhanandan , property portal Makaan.com has come out with its Buy vs Rent Index (MBRI), a tool that helps them make an informed choice between buying and renting of property in top Indian cities/sub-cities. The MBRI is a numerical value arrived at after taking into account factors including average capital value of property, average rental value, rental yield, historical capital price movement, historical rental movement and inflation, explains a release from the portal.

The report has divided the city into five sub-cities — Bangalore East, Bangalore West, Bangalore North, Bangalore South and Bangalore Central. Except for Bangalore Central, the report suggests a ‘Buy' for all other sub-cities. It suggests that the rentals in Bangalore East, Bangalore North and Bangalore South have risen more than the capital values in the past one year, making these sub-cities relatively less attractive for rentals.

Going by this advice, Mr Sadhanandan would be better off buying a property in Bangalore East, which includes Whitefield and Marathahalli, than rent one.

Sharp escalation

According to a report from 99acres.com , another property portal, rentals in Bangalore have seen an escalation in the first quarter of 2011, compared with the corresponding quarter of 2010. A look at the rentals of a three-bedroom house in the Bangalore East region shows that the residential areas of Marathahalli and Whitefield witnessed maximum appreciation, it says. While Marathahalli saw 24-per-cent increase in rentals, Whitefield saw a 9-per-cent increase over the same time period.

The report adds that rents in Bangalore South localities such as J.P. Nagar have escalated 30 per cent, Bannerghatta Road 15 per cent and HSR Layout 10 per cent.

“The Indian economy is growing at a fast pace, hiring activity is picking up and people are relocating to better homes. This, in turn, will affect the rental values of properties,” says Mr Vineet Singh, Business Head, 99acres.com . Since the availability of fresh inventory is less in Bangalore, rental values escalate on an annual basis, he says, predicting that the upward movement in rentals will continue for the rest of 2011.

Though rental values are now moving upwards, it is yet to reach the peak levels of 2007, experts point out. A comparative data provided by global real estate services firm Cushman & Wakefield shows the rental movement in Bangalore from January 2008 to March 2011.

For example, Whitefield, which commanded rentals of Rs 1 lakh - Rs 5 lakh for high-end residential units in January 2008, saw the values decreasing drastically to the Rs 45,000 - Rs 3.75 lakh range during early 2010, and again rising gradually during 2010 and the first quarter of 2011 to touch the Rs 65,000 - Rs 4 lakh range in March 2011.

Similarly, mid-range apartments, which were at the Rs 22,000-Rs 34,000 range in January 2008, saw prices nose-diving to the Rs 15,000-Rs 18,000 range in March 2009 and remaining stable at those levels till May 2010. In June 2010, the rentals touched the Rs 17,000-Rs 25,000 range.

Mr Karun Varma, Managing Director - Bangalore and Kochi, Jones Lang LaSalle India, points out, post-recession, Bangalore has seen steady growth in residential rentals across business districts. “The demand and supply are uniformly satisfactory, so there is also a degree of stability in rentals across the city.” As demand always outstrips supply in some of the preferred residential areas such as Central Bangalore, Koramangala, Indiranagar and Jayanagar, there was very little negative movement in these areas.

The high-demand areas for residential rental are Lavelle Road, Residency Road, Cunningham Road, Richmond Road, Dickenson Road, Ulsoor Road and Lake Side, Crescent Road, and Palace Road in the Central Business District; Koramangala, Indiranagar, Jayanagar, and C.V. Raman Nagar in the secondary business district; and Whitefield, Electronic City, Sarjapur Road and Outer Ring Road in the suburbs.

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