Bangalore East: High Demand For Premium Homes

Bangalore east was known for its plush colonial-style bungalows in the established neighbourhoods of Fraser Town, Cox Town, Cooke Town and Indiranagar, all the way up to the sparsely-populated Whitefield. With the expansion of the city to include several new areas, the east belt has seen an uptake in luxury housing options, mainly owning to the spread of IT in the region. Proximity to workplaces, easy access and high disposable incomes has led to a rise in demand for villas, row houses and apartments in the premium bracket of over Rs 1.50 crores here.

Satish B N, Executive Director – South, Knight Frank India, elaborates on the emergence of luxury options in the east. “Essentially, luxury housing in the east took off in the form of mid-segment villa projects which were patronised by top executives working in IT/ITeS companies around Whitefield. The fast-paced growth of the IT/ITeS sector in the subsequent years led to increased demand for high-end luxury apartments and villas.”

Alexander Moore, Chief Executive Officer – India, LJ Hooker, says, “The first luxury options were apartments, which first appeared in the east in areas such as Whitefield, Bellandur, Harlur Road and Marathahalli. This was due to the development of the hi-tech zones here. This created high income employment in greater numbers and the effect was a demand for quality housing nearby. Villas and row house developments came up predominantly in Whitefiled as well as Sarjapur Road.”

Areas witnessing traction

Research by Knight Frank identifies localities in the east with options in the ticket size of Rs 1.50 crores and above – Indiranagar, CV Raman Nagar, Domlur Road, Old Airport Road, Brookefields, Whitefield Road, Hoodi, KR Puram, Marathahalli, Panathur Road, Varthur Road and the Outer Ring Road belt (ORR).

Satish says, “Proximity to the ORR coupled with the availability of large graded office space has transformed Bangalore east into a self-sustaining IT/ITeS hub with support infrastructure like malls, hospitals and reputed educational institutions. Growth of high-end residential markets in this zone has primarily been in Whitefield, Hoodi, Old Airport Road, KR Puram and Marathahalli.”

The buyer profile has also changed significantly in the last 10 years. “On an average, the age of the typical high-end homebuyer has come down from the 40s to the mid-30s. A large number of highend homebuyers now belong to the IT industry, rather than having their own businesses,” he adds.

Why these locations?

High-end options have emerged in these areas owing to several factors such as good connectivity to the international airport, physical infrastructure and proximity to prime locations, presence of workplaces in the vicinity, easy access to various retail and entertainment options, stable demand etc. Satish points out, “Indiranagar and Domlur are preferred high-end locations due to established neighbourhoods and proximity to the Central Business District, while locations like ITPL Main Road, Varthur Road and Brookefields are preferred due to their proximity to the Exports Promotion Industrial Park (EPIP) zone. Also, widening of parts of the Old Madras Road has enhanced connectivity, reducing the commuting time to the IT hub of Whitefield considerably, thereby increasing the demand for the location.”

Moore adds, ‘The high-income earning density is concentrated around these hitech zones -Whitefiled (ITPL) and Sarjapur Road (ORR IT cluster). Better social infrastructure and civic amenities, connectivity and access, and spacious living options are some of the advantages of these premium neighbourhoods. The appreciation potential is 12-15 percent and the rental potential can range anywhere between Rs 40,000 to Rs 1.50 lakhs per month.”

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Home loan helps save on Income Tax

BANGALORE: The reduction you can declare against the payment of interest on a home loan from your taxable income is a major saving. It is specifically so as the interest component is higher than the principle amount in the initial years of the house loan tenure. The amount of awareness paid can be availed as a reduction under Section 24 of the Income Tax Act under the head ‘Income from House Property' while assessing the total earnings for the year.

 The interest paid on a home loan is deductible from the lease income of the property too. When the house is let out, the complete interest on the home loan may be deducted from the rent received without any ceiling on the amount. However, in case of a self-occupied property, the amount of interest deductible is restricted to Rs 1.50 lakhs or the exact interest paid, whichever is decrease. This can be set-off against other incomes – salary, earnings from business etc, whereby the tax liability decreases.
When the house is self-occupied, the interest reduction can be claimed only after the home is completely constructed. Further, interest pay in the pre-construction period can be claimed as a deduction in 5 equal premiums, in succeeding assessment years after completion of construction.
Apart from reduction of interest paid from the taxable earnings, repayment of the home loan (principal amount) can also be claimed as a reduction under Section 80C of the Income Tax Act subject to some conditions.

They are:

• the building of the house should be completed in the earlier year.

• Income should be generated from a property that is taxable under the head ‘Income from House Property’ or it is deemed income from a house property as per Section 23(2) of the Income Tax Act.

• The amount of benefit is restricted to Rs 1 lakh (as the maximum deduction under Section 80C to Section 80CCE cannot exceed Rs 1 lakh). The other amounts which also qualify under this Section are payment of life insurance premium, contribution to Provident Fund, purchase of NSC etc, the overall limit for all these including repayment of home loan is Rs 1 lakh.

‘Loss from property’ can be written off
Loss from a home property arises due to claiming deduction against maintenance charges, and interest on the home loan from the rental income. If the sum of the two elements is higher than the rent received, it results in a loss. This amount may be set-off against other earnings – salary, income from business etc.
The loss from house property can be set-off against any income (salary, business income, other sources of income like interest on FD or capital gains) of the present assessment year. If the entire loss cannot be set-off in the same assessment year it can be carried forwards to the next 8 assessment years. However, the amount of loss carried forward can then be set-off only against ‘Income from House Property’ and not against any other income in the subsequent years.

Some aspects to judge for prospective borrowers

Apart from considering the tax advantage while taking a house loan, these factors also have to be borne in mind:

• Identification of the home

• Title to the house

• Earning and pay back capacity

• Initial margin money which is has to be paid

It is desirable and advantageous to think of buying a house at a younger age as the repayment capability will be better as there will not be any other biggest commitments such as children’s education, main healthcare expenses etc. Availing a home loan at a young age will also inculcate economic discipline and you can become debt-free sooner, well before retirement life.

Making a financial plan

A financial plan varies from for everyone – needs, commitments , returns on savings, insurance cover (both life and medical), the availability of funds/resources (investible money) etc. A financial plan and investments must be made keeping in view various factors. The investments should have a mix. They should be both long-term and short-term, and should also bring you the advantage of capital appreciation. Short-term investments are needed for liquidity – in case of immediate need or an emergency. The long-term investments you plan can comprise real-estate.

How it works

Rent received: Rs 2 lakhs
less: 30 percent standard reduction – maintenance charges: Rs 60,000 Interest paid: Rs 1, 50,000
total: Rs 2, 10, 000.
Loss from house property: Rs 10, 000

 
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Bangalore: You can still Buy Flats under Rs 30 lakh

Looking to purchase a home with a budget constraint of less than Rs 30 lakh? We at Discounted flats, provide you with options to choose from. As per our on-going information collection and research, there are four localities in Bangalore where you can take your pick.

See properties in Bangalore under Rs 30 lakh

Electronics City

One of the well-connected micromarkets in Bangalore, it is desired by the IT segment primarily due to it is proximity to the number of offices in Phase I and II. The locality has about 144 new projects coming up in the below Rs 30 lakh price range, the largest number of options in the city.

See locality Profile of Economics City

Most of these are 2BHK units with a few 1BHK options thrown in, with a covered area ranging from 630-1200 sq ft approximately.

Amenities-wise, most of them provide basics including ‘gated with security’, water from borewell, electricity back-up and common family entertainment areas, the society developed flats offer a multitude of facilities. These include a club-house, gym, swimming pool and a community hall. Other facilities that builders provide may include Wi-Fi and intercom.

Begur Road

Begur Road is well-connected to various leading roads in the location. This includes Hosur Road, Bennergatta Road and Jigani Road. The area witnessed an impressive 17 per cent increase in real estate values in the Jan-Mar 2014 alone.

Begur Road has about 110 new projects that are currently in various stages of building. The average rate is in the range of Rs 1500-1800 per sq ft with a covered area of approximately 600-1000 sq ft.

Amenities vary from basics such as power back-up, 24-hour borewell water, underground parking and security to high-end facilities such as pool, clubhouse, visitor parking, laundry service and DTH facilities.

Sarjapur Road

Though development in this area started later as compared to other localities, it is now hot property. Sarjapur Road surged forward on account of its proximity to the IT clusters around Madiwala, Outer Ring Road (ORR), Whitefield and the Marathahalli-Sarjapur stretch, as also commercial developments along the road.

Though the development has been haphazard, it has a lot of projects catering to a number of segments. Currently, it has about 44 new projects that are in various stages of improvement.

The location has a good mix of 1 and 2BHK units in the below Rs 30 lakh budget. While the 1BHk units come with a built-up area ranging from 500-800 sq ft, there are a few projects also that offer 2BHK units with a covered area of 800-1100 sq ft.

Whitefield

One of the fastest developing micro-markets in Bangalore, Whitefield has a plethora of new projects in the set budget.

Although the number of 2BHK units is slightly more than the 1BHK units, the floor area for both ranges largely from 600-1100 sq ft. Thus, the 1BHK apartments in this location are comparatively more spacious.

It also has several upcoming infrastructure projects and lifestyle amenities.