Real estate market slowing down in Bengaluru: ICRA
Mumbai: Faced with slow sales and weak consumer sentiments, real estate developers in Bengaluru are slowing down on new project launches, particularly in the premium segment, and reconfiguring specifications by lowering unit sizes to improve affordability.
As per a study by rating agency ICRA, Bengaluru real estate market has witnessed a slowdown in demand and sales volumes. “The focus on affordable / mid-category of projects vis-à-vis the premium segment is supported by the marked divergence in pace of inventory absorption in both the seg- ments,” it said.
“The Bengaluru residential market has remained subdued in the last two years on account of moderate demand, weak consumer sentiments and demandsupply mismatches in certain product segments,” said K Ravichandran, group head, ICRA.
However, growth in commercial office space off-take and recent regulatory developments should support improvement in long-term demand profile in the residential segment in Bangalore though the near term outlook is challenging, he said.
On the commercial side, the city has seen the highest level of absorption of office space across the country for the fourth year running Vacancy levels have fallen to around 10% by end of 2016 as supply fails to catch with the demand. On the supply side, around 30 million sq ft of stock is under construction in the city and is expected to be completed over 2017-2019, the study said.
The rating agency said its outlook on the Indian residential real estate sector remains negative due to subdued demand on account of weak consumer sentiment and low affordability levels. In addition to these factors, the demonetisation exercise in third quarter of last financial year of FY2017 has further suppressed demand for residential real estate as prospective customers preferred to wait and observe the impact of the demonet is at io non real estate prices