Published on 1/10/2017 3:33:58 PM
Bangalore sees 60% sales transactions of pre note ban levels for ready homes with OC
Home enquiries from end consumers have reached the pre-demonetisation levels. Om Ahuja, CEO Residential, Brigade Enterprises Ltd, Brigade Group in Bangalore says the group has even clocked transaction levels of 60-65% of pre-November levels. So, what changed in the past month that brought buyers back to the buying arena?
Firstly a drop in home loan interest rates. It definitely contributed to enhancing consumer sentiment. “But beyond that it improves the buying capacity of the consumer,” says Ahuja. What is heartening is that the current market is catering to latent demand.
“At least 70% buyers are first-time home buyers looking for homes in the Rs 50 lakh onward category. Many are those who are upgrading from rental accommodation to purchasing their own home. Since they have shown serious intent, we have sat across a negotiating table and given out small discounts of 2-3%,” says Ahuja. He expects this trend to pick up after January 14 when the buying season restarts in India.
End users come with their own set of dos and don’ts. For instance, there is a definite bump up in demand for completed projects with Occupation Certificate. Location preference has moved toward the place of work.
However, one new trend in Bangalore is the shift of demand towards the airport. “Since there has been a large amount of commercial space that has been absorbed in North Bangalore last year, which is slowly translating into demand for housing units between Rs 50 lakh to Rs 1 crore per unit,” says Ahuja.
The changing economy has also resulted in a shift in the type of buyers the demand comes from. For instance the space take-up in Bangalore has also been for payment banks and engineering companies who are invested in the demonetised world where infrastructure projects are expected to be a significant driver of the economy in the next decade.
“The large number of contracts that have been awarded for projects like ports, airports, and infrastructure is bringing drilling experts and contracting companies from overseas. The cosmopolitan culture of Bangalore and Pune are making them attractive,” says Ahuja.
Impact on residential market
All this translates into take up of residential space. The big brands that have delivery track records and completed projects with occupancy certificates are clear winners. To the extent that even luxury property in the influence zone of commercial hubs are also seeing take-up of units.
“We have started sweeting the luxury deals with 3-4% discounts and payment flexibility,” says Ahuja. Some are paying 60% upfront and asking for payment holidays till possession. Many are upgrading from 2 to 3 BHK units or from older to newer, more loaded apartment complexes. Proximity to workplace is a major consideration.
Bangalore’s residential real estate fortunes are linked to the increasing commercial demand. To the extent that Ahuja expects 2018 to be the year when housing shortages are going to start. Premium commercial space is already in short supply. Residential has another year’s run before the lack of launches since 2016 are going to start pinching the market.