These days the unprecedented boom of 1992-1995, when real estate values increased by over 300 per cent during one 36-month period, is ancient history. There is some sanity now, the herd effect of NRI investment over, and generally, a price correction of 25 to 30 per cent. This is a positive character in a growing city, especially for genuine investors and rentals. Despite its massive infrastructure problems and the recent allure of Chennai and Hyderabad, Bangalore is still a popular destination for professionals.

The spiralling cost of real estate in prime commercial and business districts (M.G. Road, Brigade Road and bylanes around these roads) has meant that office development has shifted towards less congested southern and eastern nodes such as Airport Road and Banerghatta Road. The move is becoming so popular that more than 3,00,000 sq ft of space has been leased in the suburban and peripheral areas in 1998, about double the space in the main commercial business districts.

New Housing
A similar move for decongestion is on for the residential segment. Almost 20 new housing projects plan a shift away from the core. Majority of these developments are located to the north of the city and offer built-up apartments. A handful offer integrated working and living environment designed to international standards. Within the city, Palace Orchards, Indiranagar, Koramangala, Richmond Road, Cooke Town and other Cantonment areas are popular choices for housing projects. The apartment prices are usually in the range of Rs 2,500-3,750 per sq ft in and around the business districts; the lower range accounts for relatively poor location and average construction quality. The rates in the popular areas located at a distance of 5 km from this area are in the range of Rs 1,500-2,800 per sq ft. The suburban areas have prices in the range of Rs 1,000 to Rs 1,950 per sq ft.

It's best to keep a watch on two key things. One: values in the upper segment housing are expected to decline further to more realistic levels because of the oversupply situation. And two: be careful of half-finished projects floated by little known developers, many of them have little chance of being completed.

An exclusive series from CB Richard Ellis