Launch of new housing projects in Bengaluru drops 48% in H1, 2020

As Covid-19 pandemic continues to wreak havoc in the country since March, the launch of housing projects witnessed a sharp 48% year-on-year decline in Bengaluru during the first six months of 2020.

The first half-year has seen the launch of 10,806 units compared to 20,894 units in the same period of 2019, the lowest in many years. With restrained launches compared to housing sales over the past year, unsold inventory level has come down by 10% to 77,043 units in H1, 2020, according to data revealed by global property consultant Knight Frank.

The decline in the launch of new units was severe during the second quarter compared to the first quarter. During the second quarter, the number of launches dropped a whopping 83% YoY compared to just a 13% drop in the first quarter.

For latest updates and live news on coronavirus, click here

In terms of sales of housing units, the first half-year witnessed a steep 57% YoY decline at 12,177 units as against 28,225 units in the first half of 2019. Again, the decline in sales was much steeper at 74% during the second quarter ended June 2020 as against 42% during the first quarter ended March 2020. The sales were adversely affected across all micro-markets in the city with the northern parts of the city witnessing a steep fall of 70% during the first half of the year, Knight Frank India said in a report.

The affordable housing segment, classified as house value up to Rs 50 lakh, witnessed its share further shrink to 32% in the first half of the year 2020 compared to 38% in the corresponding period last year.

The state government reduced the stamp duty rates from 5% to 2% for houses costing up to Rs 2 million and from 5% to 3% for houses costing between Rs 21 lakh to Rs 35 lakh. This was limited to first time registration of new apartment valued up to Rs 35 lakh. About 81% of sales in H1, 2020 occurred in the segment of Rs 25 lakh to 1 crore with 51% in Rs 50 lakh to Rs 1 crore segment.

“In this situation, we believe a broader segment for stamp duty reduction would have helped the sector,” Shantanu Mazumder, Senior Branch Director, Bangalore, Knight Frank India said.