Karnataka RERA mandates permanent approval of projects
Starting April 2018, Karnataka RERA mandated developers to seek permanent approvals before advertising projects. So far, RERA issued provisional certificates to all applicants. The move has tightened the string on several developers. Bangalore has a huge share of projects awaiting sanction in the State.
Bangalore realty goes digital
Post relaunching the Bangalore Development Authority (BDA) website, the government has opened an online portal for payment of property tax. In tandem with the E-governance department, BDA is set to launch five more online services pertaining to the issuance of Occupancy Certificate, approval of plans, transfer of Khata and amalgamation and extension of BDA plots in the forthcoming quarter.
Lake encroachment becomes ceaseless
The unremitting talks on clearing lake encroachments across Bangalore proved futile as most water bodies faced serious environmental concerns. While the National Green Tribunal (NGT) was commissioned to probe into the infringement of the Varthur Lake, people continued to occupy the temporary sheds around the Bellandur Lake. In another incident, residents moved to the High Court against the encroachment on the Pattandur Agrahara Lake.
Protests against project delays mar sentiment
Inordinate delays in completing infrastructure and residential projects got Bangalore residents livid. While in one of the instances, a group of homebuyers protested against BDA for missing the 2015 deadline of the Gunjur Housing project, in another, residents dissented over the two-year delay in completing the underpass at the Hosakerehalli Cross.
The quarter which marked the first anniversary of the most crucial reform in the real estate sector – Real Estate (Regulation and Development) Act, 2016 (RERA), saw Bangalore’s residential market reporting an increment in sales volume which surpassed the previous year levels by huge margins. With an outstanding unsold inventory of 70,000 units at the beginning of the quarter, the average property prices maintained status quo in Apr-Jun 2018.
A few project launches were a testimony to the actively regaining market. Locations such as Kanakapura Road in the South and Varthur and Belathur in the East witnessed large-scale project launches from Category A developers. Majority new launches were restricted to the Rs 30-60 lakh price bucket as high-end, and luxury landscapes continued to suffer on account of piling stock.
The fast-paced commercial office space absorption and low vacancy levels remained Bangalore realty’s growth drivers. The rental market, too, benefitted as Q1 2018 witnessed absorption of more than 1.62 lakh sq ft of office space. Increased transparency and accountability instilled by RERA and GST seemed to smother the volatility in Bangalore real estate. The market is anticipated to hit a lull in the next quarter due to the ‘inauspicious’ period of Aadi (monsoon) between July and August, before picking up the pace in the festive months of October and November.
Recording a healthy uptick in demand, sales volume and supply in the form of new launches, Bangalore’s real estate market displayed all the signs of a revival. The city recorded a significantly high traction for affordable inventory located in proximity to the job-generating IT and other office hubs in East and South Bangalore. Registrations under RERA remained the prime focus of developers resulting in more than a 1,000 apartments getting approved this quarter.
The quarter witnessed buyers flocking towards under-construction units, a segment snubbed by them since the implementation of GST last year. The come-back of ‘pre-launch’ surged enquiries for the segment. With developers pocketing all approvals and buying a completion timeline of 3-4 years under RERA, it became possible to allow sale of homes at competitive prices, offering a resurgence opportunity to investors.
The East and South zones remained the market-bearers as maximum enquiries, sales and launches concentrated here. Stretches such as Kanakapura Road and Bannerghatta Road in the South and
Sarjapur Road in the East garnered maximum traction with new project launches in the price bracket of Rs 5,700-6,000 per sq ft. Varthur and Belathur in the East, too, witnessed the launch of a few projects in the budget range of Rs 4,200-4,700 per sq ft. Proximity to the IT hubs of Whitefield in the East and Electronic City in the South, coupled with the expanding metro connectivity, remained the prime growth benefactor for locales in these regions, which clocked a modest capital appreciation in Apr-Jun 2018 over Jan-Mar 2018.
Developers restricted new launches to a ticket price of Rs 60 lakh and below owing to an oversupply of nearly 20 percent in premium housing category, across zones.
In the North, developers were primarily seen focusing on offloading existing inventory. While sales volume remained subdued, the rental landscape flourished, especially along the Thanisandra Main Road. The belt, which swarmed with ready inventory lying vacant for the last few quarters, attracted the tenant community on the back of the recent social infrastructure boost as several schools opened in the vicinity. Thanisandra and Jakkur, along the Thanisandra Main Road, clocked an 8-10 percent hike in rental prices, YoY. The capital market in the North remained undeterred by the lack of sales and maintained status-quohis quarter.
Towards the western quadrant, connectivity woes continued to play a spoiler. Housing pockets connected by metro such as Vijaynagar, Nagarbhavi, Basaveshwara Nagar and Raja Rajeshwari Nagar posted a capital growth between one and four percent, each, QoQ.
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