Unsold inventory dries up YoY; Bangalore realty in a revival mode: 99acres Insite Report

Bangalore, July 21, 2016: 99acres Insite is a quarterly report which captures the capital and rental price trends in the residential realty market across seven major cities of India. According to the report, property prices per sq ft in Bangalore did not post any change in Apr-Jun 2016, as compared to Jan-Mar 2016. The rental market witnessed ‘ask’ rates going north by 3 percent in the last one years (Apr-Jun 2016 vs. Apr-Jun 2015). Affordable land rates, proposed industrial growth and impending metro connectivity have paved way to a propelling housing market in areas such as Kolae and Devanahalli.

Commenting on the report, Mr Narasimha Jayakumar, Chief Business Officer, 99acres.com, said, “Across all zones, Bangalore’s realty landscape reiterated that buyer interest transitioned from developed and saturated markets to peripheral locations. Price competitiveness, promising infrastructure plans and availability of land parcels have tilted demand towards affordable localities along the ORR stretch.”

Price Trend Analysis of Bangalore (Apr-Jun 2016 vs. Jan-Mar 2016):

East, South and Central Bangalore

Apartments

· The Apr-Jun quarter marked the revival of the residential market in East and South Bangalore backed by an increased demand for affordable housing. Major beneficiaries of this upward capital movement were localities beyond Outer Ring Road (ORR).

· One of the key frontrunners in East Bangalore, Sarjapur Road, posted a hike of seven percent in average capital values on account of consistent demand from mid-segment buyers working in IT hubs. Proposed infrastructure plans such as the Peripheral Ring Road and metro were other influencers.

· Gunjur emerged as an alternate residential hub, getting spill-off demand from its upscale counterparts – Marathahalli and Whitefield. Availability of ready-to-move-in apartments within Rs 50 lakh and easy accessibility to IT hubs are helping Gunjur climb up the popularity charts.

*All prices are per sq ft rates

Residential Land

· In line with the general lack of activity in the housing market for residential plots, average prices of plots in the city posted an artificial hike in ‘ask’ rates to the tune of two percent in the last one quarter.

· Though improved connectivity and proximity to IT hubs helped residential land market in East and South Bangalore gain traction, enquiries hardly converted into transactions. Seasoned investors are avoiding parking money in land because of its limited buyer base.

North and West Bangalore

Apartments

· The While rental demand for premium homes took a backseat in the first half of 2016, budget inventory witnessed an upswing. Average rental values in East and South Bangalore advanced by three percent YoY. Increased demand from IT catchments, fresh inventory supply in mid-budget segment and new commercial establishments pushed up the rental rates.

· Indira Nagar and Old Airport Road in the East recorded maximum rental appreciation to the tune of 11 percent backed by the expansion of commercial centers.

· Proximity to IT/ITeS hubs along the ORR coupled with the proposed metro connectivity led to the rise of four percent in rental values in localities across Sarjapur Road.

*All prices are per sq ft rates

Land

· Residential land values witnessed an increase of a marginal one percent in Apr-Jun 2016, with northern part of the city garnering maximum traction.

· Devanahalli and Anekal were the top performers in the quarter, witnessing capital appreciation to the tune of eight percent, each.

· Anekal land market topped the popularity charts on the back of rising demand from working professionals in Electronic City on the lookout for second investment opportunity within Rs 25-30 lakh.

Rental Analysis (Jan-Mar 2016 vs. Jan-Mar 2015):

East, South and Central Bangalore

Apartments

· While rental demand for premium homes took a backseat in the first half of 2016, budget inventory witnessed an upswing. Average rental values in East and South Bangalore advanced by three percent YoY. Increased demand from IT catchments, fresh inventory supply in mid-budget segment and new commercial establishments pushed up the rental rates.

· Indira Nagar and Old Airport Road in the East recorded maximum rental appreciation to the tune of 11 percent backed by the expansion of commercial centers.

· Proximity to IT/ITeS hubs along the ORR coupled with the proposed metro connectivity led to the rise of four percent in rental values in localities across Sarjapur Road.

Builder Floors

· The rental yield in the builder floor segment was at par with residential apartments, rising to the tune of three percent YoY. Tenant community equally preferred this residential format owing to its price competitiveness over apartments.

· Hulimavu emerged as the top grosser with an eight percent hike in average rental values. Housing demand from IT workforce and easy accessibility to premium markets such as Electronic City, BTM Layout and Nice Road led to the rental buoyancy.

· While the established localities such as Kalyani Nagar and TC Palaya faced restricted land availability, rental values soared on the back of high demand from working professionals and international student fraternity.

North and West Bangalore

Apartments

· North, West and Central Bangalore demonstrated a three percent hike in the average rental values YoY. These zones posted a marked rise in demand thanks to proximity to IT hubs, new launches and infrastructure developments.

· Malleshwaram scored the highest average rental yield, standing at nine percent YoY. The locality emerged as an alternate rental hub, getting spill-off demand from its developed neighbourhood such as Vidhana Soudha, a political center.

· Thanisandra and Hebbal largely benefited from the new launches that took place in the luxury segment by reputed developers such as Siroya, Brigade, Godrej and Century. Proximity to Manyata Tech Park was another growth driver.

Builder Floors

· The rental market for builder floor community in North and West Bangalore saw a marginal appreciation of one percent YoY. Certain sections of student and working population prefer the layout and independence offered in this type of housing format.

· Hegde Nagar in North clocked the maximum rental yield, at nine percent owing to increased demand from working professionals of Manyata Tech Park.

· New launches in the premium housing segment in Hebbal and higher rental prices across the neighbouring localities attracted tenant community to Shahakara Nagar, resulting in an eight percent hike.

Supply Analysis (Apr-Jun 2016 vs. Apr-Jun 2015)

· Bangalore’s realty illustrated a grim scenario on account of an enormous demand-supply mismatch. Despite a huge inventory overhang of around 80,000 units, the number of new launches increased by 13 percent in H1 2016, as compared to the first half of 2015. This has further put already stunted capital growth under pressure.

· Despite rising demand for affordable housing, there was a shortfall of eight percent in supply, indicating that the developers are not yet focusing on launching budgeted projects.

· The 2BHK configuration captured almost half the demand in Bangalore, indicating homebuyers’ preference towards affordable and compact houses. The supply, too, at 50 percent, was in line with the demand.

Corporate Comm India(CCI Newswire)