As per the latest edition of 99acres.com Insite (Apr-Jun 2015), the ultra-luxury housing segment- properties in the budget category of Rs 1-5 crore, has the maximum supply of ready to move properties in Bangalore. However, are buyers looking for the same? Unlikely, say experts.
The Bangalore real estate market has stayed resilient in turbulent times registering an average capital growth of three per cent in the Apr-Jun 2015 quarter. Thus, while other cities are struggling to keep their real estate markets intact with both buyer sentiments and sale volumes spiraling down, Bangalore has been a sole case. However, does the positivity in the market translate into any benefits for the buyers? Let’s see.
As per the latest 99acres.com Insite report, more than half of the total supply in budget categories of Rs 1-2 crore and Rs 2-5 crore were ready for use. Both categories recorded a supply of more than 60 per cent for ready units while under-constructions properties formed only about 40 per cent of the market share. On the other hand, the more demanded affordable and mid-income housing categories saw lower supply of ready units.
This reflects a realty paradox in the Bangalore market. While buyers look for properties priced at Rs 40 lakh to maximum Rs 1 crore, these budget ranges do not have enough ready properties. Satish B N, Executive Director, South India, Knight Frank, explains, “The luxury segment in the city has the maximum ready units while the affordable category lacks the same. This is exact opposite of the existing demand in the market. In the last two years or so, most of the projects that have been completed were in the above Rs 1 crore segment due to the perceived demand for luxury, particularly from NRIs and HNIs. However, off-late, it’s the end-users who have been driving the market, which has shifted the demand focus towards properties priced upto Rs 80 lakh.”
This is also the reason why, in the last six months, hardly any movement has been observed in the ready and under-construction segments. As per 99acres.com Insite, the total inventory of ready units stood unchanged at 48 per cent and that of under-construction units stood at 52 per cent since the last two quarters.
“As developers have realized that demand is for properties within Rs 80 lakh, they have shifted their focus towards building smaller units. Instead of 1200 sq ft, they are now building 900 sq ft 2BHK units. This trend has started in the last two quarters or so and hence most affordable and mid-segment properties are still under-construction,” adds Satish.
Thus, there is an increased pile of ready inventory in the luxury segment which has no or very few takers in the current market scenario. And, this is the paradox that exists in the market today. While, the Bangalore market is being driven by end-users, many of whom are first time buyers, who look for ready units or projects nearing completion in order to negate the added burden of paying rents, the only ready supply in the market are the luxury properties!
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.