2015 has been a challenging year for the residential real estate market in India. High expectations that prevailed at the beginning of the year morphed into fears of a slowdown in the real estate market. Buyers seemed to balk at the idea of making a purchase commitment while developers continued to churn out project after project. The resulting numbers of unsold inventory became too significant for developers to ignore. The latter half of the year has seen builders in many cities put the brakes on new projects in order to bring down the lag between demand and supply.
However, according to Jones Lang Lasalle, sales have begun to pick up gradually in cities such as Bangalore, Hyderabad and Mumbai. Luring unsure prospects with attractive schemes and deals as well as lowering of interest rates by RBI seems to be working for the time being.
In this post, we take a look at how residential real estate has been faring in Chennai, Bangalore and Hyderabad.
Chennai:
While the residential real estate market didn’t show impressive growth, it wasn’t all bad news. The city saw a rise in property sale prices in areas such as Ambattur, Anna Nagar West, Mogappair West, Medavakkam, Navalur, Poonamallee, Siruseri, Sithalapakkam andUrapakkam in the 3rd quarter of the year. In contrast, sale prices in RA Puram, Saligramam, T Nagar, Valsaravakkam, Nungambakkam, Kodambakkam, Kotturpuram, Mandaveli, Mylapore, Adyar, Alwarpet and Besant Nagar saw a marked decline.
In general, unsold inventory at the beginning of the year had begun to decline due to appealing offers and discounts from developers.
In November, disaster struck in the form of unprecedented floods. Real estate was considered to be one of the worst hit industries with massive wastage of building materials, project delivery delays and a slowdown in the sales momentum that the city had previously seen. The flooding exposed issues such as poor urban planning and has got buyers reconsidering their interest in areas that were inundated. Chances are that buyers will be especially wary as the city recovers from the disaster until they are assured about the property they are considering.
Bengaluru
In comparison with the rest of the country, Bangalore continued to be one of the better performing residential real estate markets. While there remains considerable numbers of unsold units signifying a lag between supply and demand, the fact that the market is driven by end users makes it a relatively stable one. Overall, the city seemed to be performing better than the National Capital Region and seemed to be catching up with Mumbai in terms of sales according to Knight Frank India.
Areas such as Yelahanka New Town, Malleshwaram, Madivala, Kudlu, Jakkur Road, Kalyan Nagar, Hosa Road Junction, Indira Nagar, Devarabeesanahalli saw a decline in sale prices of multi-storey apartments. But most areas experienced an increase in prices. The reason for this could likely be the revision in realty guidance value that took place in September.
Hyderabad
As far as Hyderabad is concerned, real estate was expected to see a noted improvement post the State separation. However, that has not materialized as expected. The real estate sector is gradually recovering. Price appreciation has not been high and the number of new projects launched have also been modest.
The high-end areas in Hyderabad are Jubilee Hills – Banjara Hills section and the Hitech city-Gachibowli region. While the former has always been considered a premium option of home seekers, the latter has seen robust demand due to the proliferation of IT companies. For those who can’t afford homes in the Hitech city – Gachibowli belt, the Miyapur – Chandanaga region is proving to be a reasonably good alternative. As for upcoming localities, the completion of the Hyderabad metro is expected to bring attention and considerable growth to the Uppal – Pocharam area.
Everything considered, it has been a mixed year for residential real estate in the abovementioned cities. The coming year will hopefully see a reduction in unsold units and the realization of home ownership dreams for many.
Due to the reason of state separation(negative thing for real estate), I don’t think there will be significant improvement in Hyderabad Realty. This is because after the State separation, almost 80% of the investments from Andhra-Pradesh is happening only within the state and not in Hyderabad(Telangana). So it would be difficult to sustain the existing prices with the investments coming only from Telangana State and non-Telugu speaking people.