Bangalore, home to about 60% of US-based MNCs, has been driving
residential property demand in all price ranges. As of March this year,
nearly 119,000 residential units are under various stages of
construction. About 35% of the upcoming supply will be ready for
possession by the end of the year with the spill over effects of some of
the projects launched as early as in 2007 and 2008.
According to a survey by Knight Frank India, most of the residential
projects are focused towards northern and southern part of the city. On
the northern front, the Hebbal-Devanahalli stretch is considered to be
one of the fastest emerging commercial and residential hubs. In the
eastern part, Whitefield is one of the most preferred residential
locations, primarily for IT employees. The western part of the city has
not been able to compete with the newer locations.
Demand for residential units has been more evident in the mid-end
category, where most of the affordable housing projects are located.
During the FY2012 the city has witnessed the launch of approximately
9700 units which are scheduled to be completed in the next 2-3 years.
On the pricing front, nearly 39% of the total number of residential
units launched in FY 2012 fall under the Rs 25 lakh - Rs 50 lakh ticket
size category, implying that the mid-end segment is the prime demand
drivers of residential market. Residential units in the price range of
Rs 25 lakh - Rs 75 lakh were altogether responsible for around 70% of
the total number of units launched during FY2012.
Although the threat of global economic turmoil looms large over
residential property segment, Bangalore residential market has been
relatively resilient and has a somewhat healthy sales level. South
Bangalore has the highest number of residential units up for sale, has a
vacancy level of approximately 32% as of March 2012, while East and
West Bangalore has vacancy levels of 34% and 35% respectively. The
northern part has a lower vacancy level of 29%, which reflects the
saleability of the residential projects in the region.
It has been observed that nearly 34% of the absorption in FY 2012 has
been in the ticket size range of Rs 25 lakh - Rs 50 lakh, followed by
Rs 50 lakh - Rs 75 lakh at 31%.
This illustrates that mid-end segment has been responsible for the
absorption of around 65% of the residential units booked or sold, while
only 5% of the absorption has taken place in the Rs 2 crore - Rs 4 crore
ticket size.
Over a period of time property developers have realised that demand
exists for those properties which offer quality, value for money and
transparency in deals. A majority of the upcoming supply will be
concentrated in the suburban and peripheral locations towards north and
south Bangalore, with gated communities offering various amenities. On
the price front, capital values of properties are not expected to
increase considerably due to slowing down of the economy, though
marginal appreciation is projected in a few micro markets like Hebbal
and Sarjapur road.
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