Note ban effect: City's residential properties to be cheaper
Prices to come down in the range of 10-12%, says Knight Frank
“We expect prices to come down in the range of 10-12% depending upon the builder, locality and stage of construction. Demonetisation is going to impact the city’s real estate market quite substantially in Q4 of the current fiscal; new launches and sales will fall by 65% and 45% respectively during the period,” Knight Frank executive director South Satish B N told DH.
“Bengaluru, till recently, touted to be one of the most resilient real estate markets of the country, has come under considerable pressure in the last two years after reaching a peak in 2013. In H2 2016, new launches declined by 45% year-on-year while sales volume dipped by 27% year-on-year,” Satish added.
“While launches were already on a decline owing to factors like increasing unsold inventory, BBMP’s (Bruhat Bengaluru Mahanagara Palike) drive to confront encroachment of lake beds and other issues like the announcement of demonetisation in Q4 of the current fiscal, further led to curbing of new launches. South Bengaluru has seen the highest launches and sales primarily due to affordable budgets, employment hubs, social infrastructure and upcoming Metro connectivity,” Satish added.
The London-headquartered consultancy observed that north Bengaluru saw an increase in new launches by a sizeable 31% in H2 2016, from 25% in H2 2015; sales decreased to 18% in H2 2016 from 25% in H2 2015. East Bengaluru saw new launches declining to 18% in H2 2016, from 27% in H2 2015, while sales volumes see a slight increase to 27% in H2 2016, from 26% in H2 2015.
Prestige Group chairman and managing director Irfan Razack said, “There is no question of prices going down...it is a big no from us. Developers work on wafer thin margins of 8-10%. I predict that if there is a shrink in supply, the prices can go up.”
Satish claimed that big builders who have huge inventory are struggling to sell one or two apartments a month. Post note ban, people’s mindset has become “wait and watch”. “If I am a buyer, my focus would be on completed projects rather than on under-construction or pre-launch products, unless those are from organised players who have good track record,” Satish said.
With home loan interest rates coming down, builders are optimistic that a good initiative by bankers will push up residential sales.