Number of unsold units not alarming for Bangalore developers


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Unsold inventory in Bangalore

Despite the number of unsold units standing at about 80,000 in Bangalore, the city developers are not alarmed by this demand-supply mismatch as they expect this inventory to be absorbed within the next two to three years. The popular belief amongst the developer community is that this oversupply was just a culmination of negative sentiments and an inventory backlog.

Bangalore has proven to be a stable market despite the slowdown that engulfed the country in recent times. It continues to be one of the favourable real estate investment destinations in India. However, a CREDAI-JLL report raised a doubt about the sound nature of Bangalore’s real estate market, highlighting that the city is second in the country in terms of unsold inventory followed by Delhi-NCR.

Experts believe that Bangalore never experienced alarming profit margins, unlike other investor-led markets. This inherent quality of the city’s realty has kept it stable and robust and hence the property appreciation has been maintaining a fairly linear curve, ranging from five to ten per cent.

Pratik K. Mehta, MD, Unishire explains that there are two separate buckets that inventory needs to be classified. The ready-to-move inventory is a mere 2.2 per cent and the other, under construction inventory which is again approximately 40 per cent  and translates to about 80,000 units which are a very healthy and stable number.

Unsold inventory not a concern

In all the under construction inventory, project development timelines could vary from two to five years and hence the sale process is to be considered throughout the lifecycle of the development. Bangalore has been recording a healthy absorption rate of 10 per cent every quarter and with this rate it would take only 10 quarters to absorb the under construction inventory, Mehta adds.

Between 2010 and 2015, 206,753 units were available in the market and total unsold inventory in completed projects is 4,492, adds the report.

Juggy Marwaha, Managing Director, JLL South India shares that developers in Bangalore have once again displayed their agility in managing demand and supply mismatch, witnessed in the middle of last year and have been successful in pushing aggressive sales in the last quarter of 2015. The quarter also witnessed reduced new launches which have ensured that the real unsold inventory numbers have reduced.

Discounts promise a solution to inventory offload

In case a home buyer is expecting exciting offers from developers, it would be probably due to one of the following reasons:

  • To enhance cash flows in their projects
  • To complete projects faster
  • To reduce their debt levels
  • To negate their future interest cost by quicker sales. 

Stability is the term for Bangalore realty market and that’s what one can expect for days to come as well. 

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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