News & Views on Indian Real Estate

Monday, May 12, 2008

Bangalore real estate cooling off

After seven years of hectic activity, the Bangalore real-estate market is hesitant, perhaps more on the part of bulk investors than serious home buyers. Blame it on the rising inflation or the economic crisis in the US. Like other locations, Bangalore real-estate, termed ‘hot’ by leading realty consultants, seems to have cooled off in the last few months. Though property prices have not seen a dip, home sales has come down “at least by 50 per cent”, say consultants. Certain Grade ‘A’ developers have experienced a sustained drop of around 50 per cent on the monthly level of bookings compared to what they enjoyed prior to December 2007. First-home buyers, it seems, are still interested in the market, though it is the second- or third-home buyers who are shying away. However, reputed developers offering homes in booming locations in the city are still selling. In fact, some of them have upped their pricing by 3-7 per cent, with South and South-West homes costing 3-5 per cent more. In the North of the city, prices have gone up by 8-12 per cent. Many indicate that this is a correction phase and not a crash as witnessed in 1996. The market currently is more need-based and mature; there’s no need to panic. There’s a 10 per cent more supply than demand in the market now but this should get absorbed by the last quarter of 2008-09.Its expected that the prices will head north again in the third and fourth quarters, and recommended that the buyers should make their deals then. According to the Cushman and Wakefield report, capital values appreciated marginally by 1-2 per cent across micro markets in January-March 2008 on account of increasing demand, primarily from a migratory and working population. It is expected that both capital and rental values in the city will continue to stabilise during the next few months across select micro markets (Whitefield, Kanakapura Road, Outer Ring Road) with a large number of investment-based properties expected to see softening of rates over the next six months.

Anonymous said...

I am not satisfying that comment because the real estate at all indian level is very good growth path because the real estae is not be ended at any level.And main Banglore is a very good IT grow sector which have not down the rates at all the time

Anonymous said...

I am also not satisfying that point because all the places everywhere there is a good growth in the Real estate sector and All the BPO and IT sectors are also setteled over there.

Anonymous said...

I think that the real estate boom is going to cool off. One of the main reasons is that Foreign currency is being taxed in India now. So not too many people would convert dollars or pounds into rupee. You can see that yourself, the dollar was 40Rs but now its 43Rs. I guess the real estate would not fall drastically but would saturate and even out. Only companies who want to invest in office spaces would be shelling out the money.

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