Bengaluru has seen a 35% year-on-year (Y on Y) decrease in residential units in the calendar year 2016 with nearly 24,800 units launched, says a report. “While this reflects a 35% Y on Y decrease over 2015, the pipeline of new units in the pre-launch stage in the primary market should increase setting an optimistic outlook for 2017,” the report, titled ‘India Residential Property Market Overview - Realistic Pricing Key to Revival in 2017’ by Colliers International, said.
The report listed multiple factors for the decline. Impending finalisation of the Real Estate Act and delays in obtaining approvals due to the local municipal body’s citywide drive to tackle encroachment of storm water drains kept developers cautious. The momentary unrest over the Cauvery water issue between Karnataka and Tamil Nadu also hampered new launches in the second half of 2016, according to the report.
The report also added that there was lower impact of demonetisation on the residential market of the city, as compared with Delhi and Mumbai. “In comparison to Mumbai and the NCR, Bengaluru was less impacted by recent demonetisation as the city’s residential market is primarily driven by the end-user demand comprising a white-collar population employed in the IT-ITeS sector,” report said. The report anticipates ‘ready for occupancy’ projects to increase in popularity in 2017. “In 2017, buyers’ interest is likely to remain focused on quality mid-segment projects located in the vicinity of commercial hubs,” it said.
“Going forward, we anticipate that properties in central residential locations near commercial hubs may see rents increase by 7-10%,” the report added. The primary market is likely to remain stable. “We cannot rule out the possibility of a 2-5% correction in capital values in the secondary market as the slowdown in transaction volume may force some distressed sales at slightly lower prices,” it said.
The report listed multiple factors for the decline. Impending finalisation of the Real Estate Act and delays in obtaining approvals due to the local municipal body’s citywide drive to tackle encroachment of storm water drains kept developers cautious. The momentary unrest over the Cauvery water issue between Karnataka and Tamil Nadu also hampered new launches in the second half of 2016, according to the report.
The report also added that there was lower impact of demonetisation on the residential market of the city, as compared with Delhi and Mumbai. “In comparison to Mumbai and the NCR, Bengaluru was less impacted by recent demonetisation as the city’s residential market is primarily driven by the end-user demand comprising a white-collar population employed in the IT-ITeS sector,” report said. The report anticipates ‘ready for occupancy’ projects to increase in popularity in 2017. “In 2017, buyers’ interest is likely to remain focused on quality mid-segment projects located in the vicinity of commercial hubs,” it said.
“Going forward, we anticipate that properties in central residential locations near commercial hubs may see rents increase by 7-10%,” the report added. The primary market is likely to remain stable. “We cannot rule out the possibility of a 2-5% correction in capital values in the secondary market as the slowdown in transaction volume may force some distressed sales at slightly lower prices,” it said.
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