Addition of nearly 6,800 new units marks 127% increase over previous quarter
Emerging as the front-runner in the major South Indian markets in terms of new housing supply infusion, Bengaluru saw significant growth in new housing launches as well as absorption in Q1 2018. In fact, Bengaluru saw highest launches among these markets with nearly 6,800 new units supply in comparison to Hyderabad and Chennai, which saw the launch of 2,600 and 2,100 units respectively. Bengaluru also leads on the absorption front, with a total of 11,500 units sold in Q1 2018.
“Increased commercial activity, positive buyer sentiments, infrastructure upgrades and improved job opportunities in the city have given a major fillip to Bengaluru’s housing market,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “This market is largely driven by the end-users who were in wait-and-watch mode so far. These buyers have now actively returned to the market on the back of the overall sentiment upsurge resulting from the Bengaluru’s rapidly improving market fundamentals.”
Supply & absorption trends – Bengaluru, Hyderabad & Chennai
Bengaluru realty on an upswing
“Even at a pan-India level, Bengaluru’s residential market is currently only second to the Mumbai Metropolitan Region (MMR) in terms of supply and absorption for Q1 2018,” says Puri. “This enhanced market performance is primarily led by increasing demand from the IT-ITeS sector, which has belied the fears of US President Trump’s policies putting a fatal dent into India’s InfoTech story. Other factors at play in Bengaluru are the thriving start-up ecosystem across the city, the presence of excellent education and healthcare facilities, and constantly improving physical infrastructure.”
A closer look at the city-level data of a q-o-q launch analysis clearly reveals a massive increase in Bengaluru’s housing launch supply – from 3,000 units in Q4 2017 to 6,800 units in Q1 2018, accounting to nearly 127% increase. The data further reveals that unsold housing stock in the city declined by nearly 5% – from 96,000 units in Q4 2017 to 91,000 units in Q1 2018. Also, property prices have seen a marginal increase of 1% from Q4 2017 to Q1 2018, with the current average property prices in Bengaluru being ₹4,850/sq.ft.
Besides housing many HNIs, the city is also home to several mid-level IT professionals who have added to the demand for mid-segment (₹ 40 lakh – ₹ 80 lakh) housing. Micro markets that have multiple options in this segment include Whitefield, Outer Ring Road, Sarjapur Road, and Electronic City, and also a few locations in North Bengaluru. Affordable housing options (< ₹40 lakh) are also fast catching up in the suburbs of Hosur Road, Mysore Road, etc.
Out of total 6,800 units launched in Q1 2018, nearly 84% (5,700 units) fall in the mid-segment category. Of these, the majority were launched in South Bengaluru and North Bengaluru (which accounted for 34% and 31% of the mid-segment supply respectively). The supply in the critical mid-segment category has seen a major uptick in Q1 2018 – from 1,400 units in Q4 2017 to 5,700 units in Q1 2018. Overall, the mid-segment housing category saw an increase of more than 300% in this quarter, while the ultra-luxury segment saw a decline.
Region-wise market drivers
These overall market indicators showcase strong Q1 2018 growth in the Bengaluru residential real estate market. Appreciation of capital and rental values is certainly on the cards for this city in the foreseeable future.
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