BENGALURU: Home prices are unlikely to drop from the current levels despite tepid sales and rising inventory in the city.
The city’s residential real estate capital value remains unchanged at Rs 5,334 per sqft in the first half of 2016 compared to the second half of 2015, according to Idirees Chenakkal, head of Research & Consulting at LJ Hooker, a real estate consultancy .
According to Knight Frank, another consultancy, the overall weighted average prices have continued to climb upwards and seen a year-on-year rise of 3%. The consultancy expects a measured growth in the second half of 2016 compared to the same period last year.
“It is important that the developers relent a bit on the prices so that the sector will see a positive momentum in sales volume and old inventory will begin to ease. This will bring in the much-needed stability to the sector,” said Satish BN, executive director, south, Knight Frank India.
Bengaluru, which remains one of the best performing real estate markets in India, has been facing a slowdown for over a year now. “So far, sales have been flat as buyers continue to hold on to their decisions. We expect the market to recover by the end of this fiscal year,” said Nesara BS, executive director at Concorde Group, a real estate developer.
Weak economic conditions and concerns over a likely fall in prices due to negative sentiments are cited as reasons for buyers to defer their plans. However, builders say prices are unlikely to fall. “The Bengaluru market is facing a challenge in the closure of transactions, not enquiries. A delay in decision-making is the main problem but at some point people need to start to pick up the stock,” said Koshy Varghese, managing director at Value Designbuild, a builder.
North Bengaluru, comprising locations such as Yelahanka, Hebbal, Hennur Road and Jakkur, has had its growth potential slip as launches have seen a steep decline in the first half of 2016. South Bengaluru has emerged as the worst performing market with the highest number of inventory and slower sales.This has resulted in projects located at distant locations without sufficient infrastructure. Only east Bengaluru has drawn some traction due to affordability.
Net addition declines 40%: Bengaluru‘s residential market had a net addition of 18,129 new properties in the first half of 2016 across developments, 40% lower than the second half of 2015. Considering the net addition, the total inventory in the first half of 2016 stood at 125,738 units across developments.
Credits ET Realty