The Hindu Business Line : Now it's `land banking' boom in Garden City

Bangalore is witnessing a hectic activity in the area of `land banking.' In other words, all leading builders are accumulating land in a big way in the city. The reason for this is that in the last two years, there has been a tremendous demand for campus solutions by corporates.

"You see, every MNC is consolidating its real estate space and preferably in suburban locations. And most of them prefer to lease space rather than buy it," according to Mr Shrinivas Rao, Vice-President, Equis India, a consulting firm for workplace innovation. Therefore, builders who can afford to wait for orders are bagging land and keeping it.

Agrees Mr S.N. Nagendra, General Manager, Housing Development Finance Ltd, Bangalore, "Bangalore is on a high note today and builders have become active. There is a new trend called land bank which is fast catching up with all the builders."

This real estate boom has resulted in builders from Delhi and Mumbai trying to pitch their tents in the city. Leading builders such as DLF, GESCO, Rahejas, Godrej, Amco are already in the city, says Mr Rao.

In his estimate, builders have accumulated anywhere between 15 acres and 40 acres each for future growth. "This is of course primarily to service the growth of the MNCs," he clarifies.

Is this a speculative kind of investment? "It is speculative in the sense that this is for future building activity," says Mr Rao. Also land price will start rising once they start buying up land in a particular area. In his opinion, only players who have the strength to wait for future orders can indulge in this. "In addition they have to have deep pockets too," he says.

Industry experts say that thanks to land banking, land prices have started going up by 15 to 100 per cent every year in the city.

"This kind of properties are not available in any other city," says Mr Rao.

"However," says Mr Nagendra, "We have cautioned builders not to jump into the boom and bust cycle this time." In 1994, Bangalore witnessed an artificial boom in real estate prices. "We are expecting this boom to continue for another 2-3 years, but the difference this time is that the negotiating power among the consumers has become stronger and better."

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