A CITY OF QUIET RESILIENCE
A favourable climate and apt socio-economic conditions have ensured that Bengaluru remains a veritable property hub, says a report by Knight Frank
Bengaluru has l ong been one of the most preferred residential destinations in India, thanks to factors like a favourable climate and apt socioeconomic conditions. The advent of the IT sector in the region in recent years has brought about great change in the residential landscape of the city, turning it into a veritable property hub.
Bengaluru’s residential market proved its resilience effectively by maintaining a healthy demand for homes and new project launches in 2013 in a situation wherein most of the prominent residential markets across the country witnessed a negative churn. However, the momentum has somewhat slackened in 2014, and while the demand for homes had increased by 13% in 2013 over the demand in 2012, it is expected to increase by just 3% in 2014. The total number of units to be absorbed is expected to increase from 57,366 in 2013 to 59,300 in 2014, says the Knight Frank report.
This lack of substantial growth in absorption is expected to be accompanied by a drop in the number of new launches during the year. New launches are estimated to decrease by 8% from 78,300 units in 2013 to 72,113 units in 2014.
The election results, revival of manufacturing activity, higher salary growth of IT/ITeS employees and various sops announced in the Union Budget of 2014 seem to have induced a positive change in the homebuyer sentiment. The conversion time between a sales inquiry and an actual sale has shortened considerably, indicating a revival in demand. While the sales volume has improved somewhat in the first half of 2014, it is expected to strengthen further in the second half of 2014. Absorption is forecast to increase by 18% to 32,044 units in the second half of 2014, compared to the first half of 2014.
This translates into an increase of 26% over the sales volume in the second half of 2013. Meanwhile, the variation in demand and supply of residential property notwithstanding, price levels in the city continue to move upwards, albeit at a slower, controlled pace. The weighted average residential price in the city has increased by 11% from ₹ 4,020 per sq ft in the first half of 2013 to ₹ 4,473 per sq ft in the first half of 2014.
This can be attributed to the rising cost of input materials and the relative decline in new launches. Going forward, the prices are expected to increase nominally, by 1.5% in the second half of 2014 to ₹ 4,540 per sq ft, compared to the first half of 2014, on the back of a moderate recovery in sales volume.