Real Estate Property Market Dips In Bangalore But Prices Stabilise

The demand for residential property market has dipped by ten percent in the 3rd quarter over the previous quarter due to a mixture of factors

. Consecutive hikes in home loan lending rates, property costs, affordability and uncertainty in economy have contributed to the scenario resulting in a dip in demand of real estate Bangalore.

The Real Estate Bangalore market saw absorption of 3743 in 3Q11 against 4301 units 2Q11, as absorption rate declined from 13 percent to eleven percent in 3Q11, in line with Jones Lang LaSalle's property intelligence service report. In 3Q11, unsold stock in Bangalore totalled 31208 residential units compared to 27334 units, reflective a percentage of 51.3% in 3Q11, up from 45.9% in 2Q11. Whereas 38 percent of the unsold units are in the Hosur road submarket, the Bellary road sub-market has nineteen percent of the unsold units.

According to Mr. N S Srinivasa Reddy, residential analyst, Bangalore, Jones Lang LaSalle, Bangalore real estate market saw the launch of twenty three residential projects across submarkets in 3Q11, giving a total of 7817 new units. Meanwhile , thirteen residential projects comprising 6171 units across different submarkets were withdrawn from active stock, as they were utterly sold out.

The Hosur road submarket contributed to over 40 percent of the new launches in 3Q11. Among the outstanding new launches throughout 3Q11 were DLF Maiden Heights at Rajapura by DLF, Brigade Meadows at Kanakapura road by Brigade Group, and Nitesh Cape Cod at Marathalli by Nitesh Estates. One other illustrious developer Prestige Group launched a luxury residential property in Bangalore on Edward road in the prime central submarket at a launch value of Rs 21000 per sqft besides Prestige Sunny Side and Prestige Park View on Hosur road and Whitefield.

The market witnessed marginal appreciation in capital values in the vary of 1-3 percent that in 3Q11 across varied submarkets. The slow growth is attributed to a dip in sales volume as a result of a sustained increment in the past eight quarters, increasing interest rates and thereby decreasing affordability, in line with Jones Lang LaSalle.Capital values in the Whitefield submarket continuing to witness healthy appreciation, that exaggerated by 4.8% on q-o-q. Brigade Exotica was launched at Rs 4200 per sq ft whereas Prestige Park view was launched at Rs 3750 per sqft. Each of these projects are on top of the average capital values of the Whitefield submarket.

Incidentally high-end market isn't that affected as villas upto Rs 3 Crore still be in demand. The priority among developers revolves around mid-segment units in the value vary of Rs 50 Lakh - Rs 1 Crore. Reasonable housing units in the value vary of Rs 15 Lakh - Rs 30 Lakh do well.The dip in demand of real estate Bangalore is due to a mixture of factors like hike in lending rate, uncertainty in job market and therefore the current uncertainty in economic situation, in line with Natarajan, home loan advisor in the city.

Outlook:

The absorption rate had peaked once the market sentiments were healthy across different housing segments throughout the beginning of last year. Later it dropped due to the stable demand against sturdy offer in the market. The Capital values across different sub markets and segments are expected to either stay stable or record marginal growth. Although several developers haven't revised the costs upwards, a number are joining hands with HFCs/banks to absorb pre-EMI interest until the completion of the real estate property in Bangalore.While the high and upper-mid segments in prime central and secondary sub markets in the city are expected to witness marginal appreciation, it's expected to remain stable across different submarkets of Bangalore. However, middle and reasonable housing segments on Whitefield, Sarjapur Road, and North Bangalore are expected to record marginal appreciation in the short term due to a low base and growth of demand for residential units from IT/ITES professionals in these locations, as stated by Jones Lang LaSalle.

by: proptiger11

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