The residential property market in Mysuru city is showing signs of an upswing although the demand for commercial property remains muted.
The relative upswing in residential units comes after years of stagnation and builders attribute the positive sentiment to reduction of interest rates on housing loans. Besides, a general rise in wages across various sectors has contributed to the positive sentiment, according to N. Subramanya, chairman, Builders’ Association of India (BAI), Mysuru chapter.
He told media that both the builders and plot developers vouch for the positive sentiment in the market and since the property rates have been stagnating for sometime, they aver this is the best time for end-users to invest.
There are more than 80 apartment complexes under various stages of completion in the city and the majority of the buyers are salaried class with roots in Mysuru or Bengaluru, said A.R. Ravindra Bhat, former chairman, BAI, Karnataka chapter.
The spurt in demand for housing is fuelled by end-users while investors with a long-time horizon are looking at vacant sites, he added.
Stagnating commercial property market
However, Mysuru as a Tier 2 city with potential to draw FDI in real estate is bleak for now as various studies have indicated that the focus of investors will be on major metros which continue to be the economic drivers.
Lack of job opportunities, poor growth of the IT sector in Mysuru and a sluggish industrial development have put the brakes on the growth in the commercial property market in the city for now.
The rate of returns does not match the investment and hence developers in Mysuru are not opting for commercial property development.
Some of the major retailers, with a chain of malls across the country, have sold their franchise in Mysuru or have shut shop underling the prevailing downswing in the commercial property sector.
“For an investment of Rs.1 crore a rental of at least Rs.60,000 is essential to break even … but the prevailing rentals is lower than Rs.40,000,” Mr. Bhat said.
But improvement in connectivity with the completion of the double line track and expansion of the four lane road to six lane between Mysuru and Bengaluru may turn the market around in the long run.
The stakeholders are also hopeful that the ongoing development of new industrial estates around Mysuru and the benefits of reduced cost of operations may spur industrial investment in the long run to fuel commercial property development.
Credits The Hindu