Dynamics of Urban Residential Land Markets: A Case of Bangalore City

Centre of Excellence in Urban Governance, 2012

126 Pages Posted: 16 Mar 2014

See all articles by A. Ravindra

A. Ravindra

Independent

Madalasa Venkataraman

Indian Institute of Management (IIMB), Bangalore - Century Real Estate Research Initiative

Narayan Edadan

Independent

Dinesh Masta

Government of Chhattisgarh; Indian Institute of Management (IIMB), Bangalore - Department of Economics and Social Sciences

Date Written: July 7, 2012

Abstract

This paper deals with the Residential Land Market Assessment of Bangalore in India.Home to about eight and a half million people (2011 Census) and spread over 800 sq. km., the city of Bangalore is larger than the city-state of Singapore!

The city has to provide land for the various activities within its ambit, be it industrial, commercial, or residential. Land being a scarce and necessary resource, its optimal allocation among the different competing uses leads to the increasing competitiveness of the city. The land market assessment (LMA) is a useful tool that identifies the market that exists for land — the factors that lead to demand for land, where land is supplied from, whether the supply of serviced land will be sufficient for the residential, commercial, and industrial sector, what determines the price dynamics. In effect, it deals with whether land is being put to the most optimal use (Dowall, 1995).

The generation of data in a land market assessment framework will enable governments to state and prioritise their goals with reference to the growth of the city, to provide for folk, work, and play, to create infrastructure proactively to address the needs of the residents, and more importantly, to serve the marginalised sections of society with shelter and basic infrastructure services.

The current LMA for Bangalore was undertaken in June 2011, using data obtained between January 2003 and December 2010. The underlying methodology for the LMA is adopted from Dowall (1995).

This study broadly attempts to answer the question “What drives the land markets in Bangalore?” by analysing the demand, supply, and price of land. On the demand side, we take on the following questions. What is the urban form and structure of Bangalore? What determines the structure of the city? Is the city of Bangalore sprawled? Is there a demand pressure or a supply pressure on the city? Where is new supply created from, and how does this influence the structure of the city? How are residential prices changing spatio-temporally? Where do the poor live? We also deal with the governance and policy implications that the study throws up.

The study uses real estate price data from broker surveys, bank surveys, auctions by the land development authority, and from the Inspector General for Registration and Stamps, the governmental arm involved in property transactions. The real estate price data is triangulated to achieve a consistent range, and the spatio-temporal analysis of prices is then conducted. Various measures are employed together with international and national comparisons to understand the nature of sprawl in Bangalore.

The data on land use information from previous and current master plans has been collated to identify changes in land use over time. IKONOS Satellite imagery as of 2008 is used to analyse the pattern of sprawl. The housing database, housing stock, population data, dwelling units, and other ancillary data is obtained from various censuses such as the 1991 census, the 2001 census, and the 2011 census. The price data of Bangalore city is calculated from multiple sources carefully, keeping in mind the sample biases in each data set.

We find, as a result of this analysis, that the city of Bangalore is poly-centric in nature. Bangalore could be considered sprawled, but the poly-centric nature of Bangalore and the dispersion of the city’s employment centers have reduced the dis-economies associated with sprawl to a great extent. There is rampant speculation in property prices and excess supply of converted land is created, primarily through unapproved conversion of the green belt area, creating pockets of scattered development. The results indicate that the green belt is converted more for speculation and investment rather than for need-based housing. The impact of various development factors on residential prices is studied — the movement of prices indicates the stability of demand and supply forces in the market, while the price contours of land indicate whether the land is put to the best possible use.

This study is an analysis of the extant position of land that can be developed in the city, the price contours of land, the determinants of the price of raw land, and the extent of conversion of agricultural land for non-agricultural uses. The study also looks at the existing policy framework and suggests some key land policy and governance recommendations, specifically to address the shelter needs of the poor and the marginalized.

Keywords: Land Market Assessment, urban planning

JEL Classification: R5, R52,R1

Suggested Citation

Ravindra, A. and Venkataraman, Madalasa and Edadan, Narayan and Masta, Dinesh, Dynamics of Urban Residential Land Markets: A Case of Bangalore City (July 7, 2012). Centre of Excellence in Urban Governance, 2012. Available at SSRN: https://ssrn.com/abstract=2409192

A. Ravindra

Independent ( email )

Madalasa Venkataraman (Contact Author)

Indian Institute of Management (IIMB), Bangalore - Century Real Estate Research Initiative ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Narayan Edadan

Independent ( email )

Dinesh Masta

Government of Chhattisgarh ( email )

Raipur
India

Indian Institute of Management (IIMB), Bangalore - Department of Economics and Social Sciences ( email )

Bannerghatta Road
Bangalore, Karnataka 560 076
India

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