JOIN USDevelopers keen to sell flats before general elections
Property developers in the City expect good sales of flats before the general elections later this year. Bangalore has an inventory of 45,000-50,000 flats whose purchase will be determined by the market sentiment which, in turn, will be influenced by the mood around the general elections.
In short, developers hope people will purchase as many flats as possible before the Lok Sabha elections as they believe instability is looming large.
A coalition government could affect major domains — interest rates, fiscal deficit and growth — differently. Even if interest rates are brought down, fiscal deficit may remain high in the face of lower growth.
This results in a cautious sentiment in the market and the purchase of apartments may go down. For this reason, developers would love to see their stock cleared as fast as possible before April-May. But there would be little worry if a stable government is voted in, as the market would be positive in every sense and would create fluid conditions for apartment buyers. A positive sentiment in a period of stability creates high demand and developers are keen that elections throw up a stable government.
In this inventory, the mid-price segment accounts for the most. Apartments priced Rs 30-60 lakh and Rs 40-70 lakh are the maximum in the unsold stock. And majority of the buyers are the salaried, middle-income class. The IT and ITES sector, which has about nine lakh professionals in the City, are the biggest catchment for real estate players. This population is so vital that they keep track of increments and pay hikes in the IT industry.
Given the importance of this segment, the Confederation of Real Estate Developers of India (Credai) had organised a road show in December 2013, and offered discounts.
The move was crucial because developers do not offer formal discounts during Christmas and New Year. Whatever discount had to be given was given in December and the race to clear inventory had begun in right earnest.
A lot many high-profile apartment projects have been planned for release in 2014, by Prestige, Brigade, Mantri, Puravankara and other developers. These are coming up in Hebbal (behind Manyata Tech Park), Whitefield and Koramangala.
The glint of hope among developers is that nine million sq ft of office space has been created in the City, which means thousands of students are likely to get jobs in 2014. Office space is not created without an assessment of how many people are to be hired in the IT/ITES sector.
This office space will drive the demand for homes as professionals would live close to offices and want quality apartments. Most of the office space is being created in the City’s eastern, southern and northern parts, besides the central business district. The demand for new homes is also being fuelled by NRIs who prefer to have a home in the City as well as abroad.
US-based NRIs are comfortable with the high quality ambience there and would like the same ambience replicated in Bangalore. This demand would be both the mid-segment and high end.
But the overall mood among developers now is the need for a stable government which will create healthy macroeconomic factors.