A Review of Bengaluru Residential Real-Estate with Accurate Case Studies

Admin August 10, 2016, 15:09 PM LJH Research India’s Market Analysis and Residential Real Estate Report
analysis on bengaluru real estate

Bengaluru Residential Real Estate Market and its current trend precisely analyzed to provide a crisp data to aid builders and developers constitute the Research Report January 2017 (EOY – 2016). Some of the existing and newly added government policies and its impact on Indian Real Estate and Bengaluru in particular have been impeccably recapitulated.

Understanding the Supply and Demand scenario of the existing real estate market influenced by the Government policies is an ever-changing situation which can still be predicted when backed by accurate data by tracking trends from over 1,775 primary Bengaluru’s residential projects. This time consuming accurate statistics holds well as the year-end research report for 2016 to be released in January 2017 enabling the reader to predict the scope of residential real estate.

Demonetization of the old Rs.500 & Rs.1000 notes of the Gandhian series that took the nation by storm is highlighted where its likely impact on real estate for both buyers and sellers is well illustrated. Alongside Demonetization, GST, RERA & Benami Transaction Act, turned out to be the showstoppers having the major influence on buyer psychology according to the report.

The year 2016 can be deemed as a year of transition for Indian Real Estate due to the many policies formed to organize the sector with enhanced transparency. Demonetization for instance is believed to align the real estate sector to the international standards enabling influx of funds from banks, investors and higher unit sales.

Government policies having a direct impact on the Indian Real Estate

Following Demonetization, the Indian banks started cutting their lending rates by up to 90 bps. This in turn is likely to enhance the demand for residential projects; thus, providing ample scope for Bengaluru residential market.

The Benami Transactions (Prohibition) Amendment Act, 2016 enforces strict regulations and penalizations for dealing in Benami transactions. This Act was aimed to make India one of the most sought after investment opportunities in par with global standards.

As far as the REIT & RERA are concerned, the report suggests that the Indian real estate is likely to provide investment opportunity worth $77 billion via the former across the top seven Indian cities by 2020 while RERA to be likely implemented in all the Indian states and the union territories before April 2017.

The Bangalore primary residential market has witnessed a slowdown by 16% bi-annually since the beginning of the year 2015; this trend caused the pile up of inventories which in turn resulted in lowering trend in the new launches. Hence, developers are now safeguarding themselves by focusing on offloading the existing inventories rather than designing new launch plans.

A sneak-peak into the Research Report

KEY HIGHLIGHTS

  • During Second Half of the year 2016, Bangalore Primary Residential Apartment recorded the lowest project launches with 4.5 million which is almost 60% drop compared to the first half of 2016.
  • Appreciation in the Capital Value has been nominal as it grows at a CAGR (Compounded Annual Growth Rate) of 2.5%.
  • Bangalore Residential Market has been witnessing a slowdown since first half of 2015; the Sales Velocity has come down to 0.90% which is the lowest rate recorded since 2013.
  • Months Inventory stretched to 39.96 months which is 19% increase from the last year.
  • The average capital value of residential developments stands at INR 5,314 per Sq. ft.

SIGNIFICANT FLUCTUATIONS

  • Average ticket size of an apartment in Bangalore reduced to INR 98 lakh which is 7.5% drop from the last year.
  • The average capital value of an apartment stands at INR 5,153/- per Sq. ft. where it observed a slight drop by 0.4% compared to last year’s value of INR 5,175/- per Sq. ft.
  • Sales Velocity of Apartment Developments recorded an all-time low rate with 0.9% which is almost 18% decline from the previous year from a Sales Velocity of 1.1%.
  • Villa Developments observed the lowest Sales Velocity followed by Row House Developments by 0.7% and 0.8% respectively.
  • Months Inventory of Villa and Apartment has increased by 52.7% and 17.4% respectively, while Row Houses and Plots have dropped by 21.6% and 3.2% correspondingly.
  • Villa Developments observed the highest Months Inventory of 43.6 months followed by Apartment of 36.7 months.
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