Property prices in Bengaluru expected to rise by 10-15%

Property prices in Bengaluru are expected to shoot up by 10-15% immediately if the state government imposes a ban on construction of new apartment projects, multiple industry sources said.

With limited new supply entering the market, demand for ready properties will increase significantly and builders will keep inflating their property prices over the years of the ban, according to real estate experts. The ban will also impact new projects. Currently, as per the K-RERA website, as many as 328 new projects are awaiting approval from the concerned authorities.

However, there is no clarity from the government yet whether the ban will be for ongoing projects as well. As per industry data, as many as 106 new apartment projects have been launched till date in 2019, which will add 18,600 new units to the inventory.

"This is a harsh scenario to ponder, considering that the reasons that led to its need are haphazard over-construction and negligence to implement proper water management," Anuj Puri, Chairman, Anarock Property Consultants told DH.

Bangalore saw the highest jump in average property prices in the last two years at about 6%. The current average prices in the city are INR 4,950 per sq. feet.

The ban will also impact new projects. Of the 328 new projects awaiting approval, nearly 132 projects, the authorities have raised a query which means that the said applicant/ developer needs to provide for either more documents of making changes in the given plant, etc.

Additionally, builders sitting on ample land banks or even those who were waiting to launch their projects in the near future and were almost ready with all their project planning and designing would face issues with this move. The cost incurred on project designing and planning before seeking necessary approvals will all go in vain.

Meanwhile, Bengaluru has seen the second highest sales growth among the top seven cities in the country over the last two years. The city has seen sales of 15,580 units during the first quarter of 2019 compared to 8,660 units two years ago.

The ban on construction activity would also lead to severe job losses for lakhs of construction workers who have migrated from other states purely on the basis of better job opportunities in the construction sector, Puri said.

According to the Karnataka State Construction Workers Central Union (KSCWCU), there are around 1.2 million migrant workers from the states like Rajasthan, Uttar Pradesh, Bihar, Odisha, Chhattisgarh, and Jharkhand are working in the construction activities in the state. All these workers will have to move to other states for their livelihood.