Bengaluru: The real estate market in Bengaluru is facing an unforeseen glut. Yet, the much-awaited price correction, which could potentially bring about a parity between demand and supply is proving elusive.
According to a report released in July by L J Hooker, a real estate company, the “unsold inventory’’ in Bengaluru’s residential market has been pegged at a humongous 1.01 lakh units “amounting to about Rs 85,000 crore.’’
The primary reason for the properties not finding buyers is the mismatch between the demand and supply prices. A prominent builder who requested anonymity said, “prices have not fallen because there is a mismatch in the price of supply and the price of demand. Prices have become unaffordable to many people.’’
“The cheapest properties being offered by the top builders are in the price range of Rs 90 lakhs to Rs two crores. The average supply is the range of Rs 60-90 lakhs per apartment. There are not many apartments available below Rs 50 lakhs and this is where the demand is,” said another builder who also spoke on the condition of anonymity.
Even a fall in the home loan rates does not seem to have provided the much needed boost to the sector that has been facing a slow-down over the last year. “There is a considerable fall in the number of people approaching us for home loans. There have been instances where clients have cancelled their loans even after the bank has approved it,’’ Mr Prabhat, Sales Manager, ICICI Bank, told NSOJ News.
No official of the Confederation of Real Estate Developers’ Association of India (CREDAI), which has been holding multiple property shows in the city, was prepared to speak.
According to the L J Hooker study, this has resulted in an increase of 24 per cent in the supply of residential properties as compared to last year. The maximum addition of properties has happened in North-East and South-East Bengaluru. These two areas alone amount to 73 per cent of the city’s supply with North-East accounting for 36 per cent and South-East 37 per cent.
In terms of actual numbers it is 58,321 units. Out of this, 84 per cent are apartment units with the remaining 10 per cent being plots and 5 per cent villas. Budget homes dominate supply of properties with 158.4 million square feet (sqft) on offer and unsold inventory of 50.7 million sqft. Mid-range apartments have a supply of 123.6 million sqft with 47.1 million sqft remaining unsold, the Hooker report said.
Feroz Khan, a realtor in Indiranagar, said, “purchase of houses has become stagnant. However, leasing houses for start-ups have become a trend now.’’
Referring to an obvious effort at cutting losses, Khan said, “a few builders leave the exterior of the buildings unfinished to save up on tax and sell the apartments at lower cost to buyers.’’
Arundhati, a housewife who was going around one of the CREDAI expos, said: “We are looking for flats which are nearer my husband’s office in Whitefield and where we can find good schools for our kids. There are nice places in South Bengaluru but they are too costly.” Asked if they would prefer taking a loan from the bank, Arundhati said: “we have to take a loan, however, the sky high cost of flats is compelling us to reconsider our decision to buy a flat.’’
As of now, the builder community is hopeful that the market will revive soon. As a sales manager of one company said: “housing being a basic need, the real estate business cannot remain still for too long.’’- NAMRATA SRIVASTAVA