With 5,400 projects awaiting possession, Bangalore’s realty sentiment remained tepid. While the number of project launches in Jul-Sep 2019 grew to 70 from 50 in Apr-Jun 2019, sales remained low. Unsold inventory stood at 70,000 and resultantly, the average property prices surged by a marginal one percent, QoQ.
The rental graph scored a two percent spike in average ‘asks’, YoY. Localities with good social infrastructure and connectivity in the western and southern belts remained the first choice of the tenant community. North and East Bangalore captured 80 percent of the total share of new launches priced between Rs 60 lakh and Rs 1.20 crore. Many Category A builders focused on plotted developments over apartments to improve their profit margins. Notably, several projects were re-launched after registering under the Real Estate (Regulation and Development) Act (RERA).
The inauspicious ‘aadi’ period, slow-paced progress of Namma metro, water crisis, ban on subvention scheme and low office space absorption marred the realty sentiment. In an effort to improve RERA’s effectiveness, the authority has resolved about 30 percent complaints so far. Further, the construction of two lakh budget housing units under PMAY (U) by 2022 may also help abridge the demand-supply gap in the affordable housing category. Such measures may help in restoring the homebuyers’ confidence in the underconstruction segment.
Among all zones, the housing hubs of North and East Bangalore such as Whitefield, Sarjapur Road, Hennur and Horamavu remained popular for new projects falling in the budget segment of Rs 60 lakh – Rs 1.20 crore. The city, however, recorded an unmet demand of about 30 percent for homes priced within Rs 60 lakh.
To match the ‘ask’ price in newly launched projects, builders reduced the average unit size to about 1,300 sq ft from 1,417 sq ft in the last five years. However, the disequilibrium in the market sustained, and the city struggled to record higher sale conversions in the last few quarters.
The influx of new inventory at a higher rate over resale properties led the popular housing hubs of East Bangalore such as Panathur, Cooke Town and Ramamurthy Nagar clock maximum capital appreciation of four percent, each, in Jul-Sep 2019. The southern residential hubs, including Bommanahalli, Hulimavu, Subramanyapura and Billekahalli, also recorded price appreciation of four percent, each, QoQ.
Overall, property prices remained under check and saw a marginal increment of a percent in the studied quarter. The rental landscape, on the contrary, recorded a hike in average ‘asks’ by two percent, YoY. Backed by seamless connectivity and robust infrastructure, Rajaji Nagar and Kadubeesanahalli bagged maximum rental appreciation of eight percent, each, YoY. The popularity of paying guest accommodations and co-living spaces among the tenant community led micro-markets such as Cox Town, Mathikere, Hulimavu, Billekahalli and Bellandur post a seven percent rental hike, each, YoY.
The fear of an impending economic slowdown has impacted the market sentiment and led potential homebuyers to take a cautious stance. Although faster resolution of RERA complaints is a welcome step towards re-instilling the homebuyers’ trust in the under-construction segment, the city is yet to witness any notable change in the demand curve. With the developers’ efforts to reduce the average unit size to match the affordability quotient, Bangalore’s housing segment might see some growth in the ensuing quarters.