Re-energizing Bengaluru’s Skyline: Strong Potential For Redevelopment

Re-energizing Bengaluru’s skyline: Strong potential for redevelopment

India’s Silicon Valley, Bengaluru, is one of the smallest metropolitan areas in the country. Despite having a relatively smaller geographical area, Bengaluru remains one of the most populous cities in the country. Over the past two decades, increased migration from rural areas to large cities has put pressure on the existing infrastructure.

This necessitates the creation of more structures to accommodate the growing residential, commercial, and retail needs of individuals and companies. However, the identification and development of micro-markets are not keeping pace with the rapidly growing needs of the local economy, creating a need for the redevelopment of existing structures. A redevelopment typically entails demolishing old real estate and constructing new properties for use as commercial, residential, or retail structures. This is particularly undertaken to ensure better land use, replace ageing infrastructure with one that better suits the current requirements of occupiers or homeowners, and address safety concerns while capitalising on the growing value of land parcels for developers.

The redevelopment of old properties has revitalised the real estate sector and created new opportunities for enterprises, from the 110-year-old Ismail Building at Kamla Mills to the 4.5-acre Dhan Mill compound in New Delhi, which has been transformed into a lifestyle destination. Additionally, RK Studios and Kamla Mills have been redeveloped as retail hotspots and residential complexes. The real estate sector has been revitalised, and new opportunities for enterprises have been created as a result of the redevelopment of old properties, including the 110-year-old Ismail Building, RK Studios, and the 4.5-acre Dhan Mill compound in New Delhi.

Bengaluru’s horizontally spread realty to make way for redeveloped skyscrapers

The Silicon Valley of India, which hitherto was characterised by spacious, horizontally spread buildings, is now in need of redevelopment of old structures within the central and secondary business districts. This helps ensure effective land use while creating larger spaces to address infrastructure limitations and boost economic activity, thereby improving living conditions and making the city more attractive for both businesses and residents.

This further assumes significance as the city is attracting substantial investments from companies and investors, resulting in a rapid increase in rental rates. According to a report by real estate data analytics firm CRE Matrix, in collaboration with the Confederation of Real Estate Developers' Association of India (CREDAI), the average rent for Grade A office spaces across six cities of India breached the Rs 100 mark on a per square foot per month basis for the first time, led by Bengaluru and Delhi NCR, with average rents across the cities standing at Rs 110.20 per square feet per month.  This is prompting developers to consider the redevelopment of old, dilapidated structures to unlock new opportunities, as the city’s population is expected to surpass nearly 15 million by 2030.

At the same time, the Karnataka government is also working on an urban renewal policy to redevelop old neighbourhoods, maximising space utilisation in central business districts like Chickpet and Shivajinagar. This involves encouraging landowners in congested areas to demolish unsafe structures and construct new ones.  The government is also planning to offer a higher floor space index to developers and owners to encourage them to rebuild the structure with adequate setbacks, open spaces, parking facilities, wide roads, and public amenities.

Similarly, the government has increased the cap on the Floor Area Ratio (FAR) by up to 60 percent from the prevailing regulations, creating a case for the rapid emergence of high rises.  The change in regulations will allow developers to construct extra floors by paying just 28 percent of the guidance value.

These efforts, along with challenges such as the low availability of quality land parcels and consistently increasing land prices, combined with rapid population growth, will result in a rapid rise in tall buildings in Bengaluru, similar to Mumbai, while encouraging developers to build vertically to maximise space and profit.  This further becomes important in light of India’s commitment to achieving net-zero emissions by 2070 and the government’s vision of building smart cities that can accommodate large populations while providing space and convenience for everyone.

Need For Sustainability

According to real estate consultancy Vestian Research, over 65 percent, or 805 of the 1,362 Grade A office spaces in India’s top seven cities, are green-certified. Bengaluru leads with 172 million square feet of green-certified space among the top seven cities. This assumes significance as commercial space occupiers, homebuyers, and institutional investors increasingly express their interest in sustainable buildings, which reduce their cost of leasing, renting, or ownership while offering a longer lifespan and higher value appreciation throughout their lifetime.

This year is poised to be a landmark year in Bengaluru’s real estate market, laying the groundwork for the rapid redevelopment of projects across both commercial and residential sectors.  Currently, Bengaluru has nearly 1,700 tall buildings, according to rough estimates, and this number is expected to rise significantly by 2030, enhancing the city’s attractiveness as a global metropolis on par with New York, Hong Kong, and Tokyo.  The city, already one of the largest real estate markets in the country, is expected to witness a rapid acceleration in economic activity and increased migration, resulting in higher property values and rental rates. Go ahead; high-rises will play a crucial role in creating more spaces within the prime central and secondary business districts of Bengaluru, ensuring a win-win situation for occupiers and homebuyers.