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

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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.

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