BENGALURU: Till some time ago, properties priced at over Rs 1 crore sold like hot cakes in Bengaluru. But a weak economy and subdued real estate sentiment have reduced the demand for such properties. People are trading down, making do with smaller apartments at lower costs.
Consequently, developers are seeing action in the mid-segment – apartments priced between Rs 40 lakh and Rs 80 lakh, with areas ranging between 850 sqft and 1,600 sqft.
Khushru Jijina, MD of Piramal Fund Management, which invests in residential developers in Bengaluru, says demand for houses still exists provided the developers price the products appropriately based on the location. “A builder can still sell 15 apartments priced at Rs 75 lakh each every month in Whitefield, Sarjapur or Hebbal; but if it is a Rs 2-crore apartment in the same areas, he will probably sell four units as sales have slowed in that category,” he notes.
Rajni Mishra, chief general manager of the State Bank of India says, said the demand for home loans is being primarily driven by houses in the Rs 50 lakh-Rs 80 lakh range. “The segment is growing by about 23% (a year).”
Property developer Salarpuria Sattva Group’s MD Bijay Agarwal says apartments in this segment now constitute about 40% of the group’s revenues, up from 25% two years ago. Demand for the premium segment (above Rs 1 crore) is down 15-20%.
Premium housing company Sobha Developers forayed into the Rs 35 lakh-Rs 65 lakh segment earlier this year with a massive project near Varthur. The project consists of 650 sqft, 1 BHK units and 1,000 sqft-1,200 sqft, 2 BHK units. The company says it has already sold more than 1,000 units, or 50% of the apartments in phase I. “We hope to do better volumes through this project as this year has been tougher than the last,” Sobha MD J C Sharma says.
Realty firm Unishire, whose apartments are priced from Rs 45 lakh to Rs 4 crore, reveals that 70% of its demand comes from the mid-segment. MD Pratik Mehta says the company sells about 30 units a month now, up from 20-22 that it sold six months ago.
Farook Mahmood of property consultancy Silverline Realty says the demand for the mid-segment is up about 20% now, compared to earlier this year.
Real estate industry body Credai Bengaluru’s secretary Suresh Hari expects this segment to be the main driving force over the next two years. “IT people in the city are first-time buyers, and their salary increase has not been consistent with the rise in inflation.”
Ashish Puravankara, MD of Puravankara Projects, says customers are still waiting for interest rates to come down.
Sharma of Sobha, however, believes it’s a matter of time before the premium segment gains strength. “Indians in general prefer bigger, 3 BHK apartments. Affordability is there, but the sentiment is low now. Once the property sector rebounds, demand for the premium category is sure to go up.”