Bangalore realty market showing positive signs

After months of lull, the real estate market in Bangalore is showing signs of revival. The real estate market is now growing by 15-20 per cent compared to last year.

Though the rental and capital values in most of the micro markets witnessed a downward trend in the last 6-8 months, for the end-users or investors the secondary market has been a lucrative option in comparison to the primary market.

But now demand for residential spaces is looking up again, and a few frontline developers have been successful in improving their sales. Though demand for commercial and retail spaces has not caught on, those in the sector feel it could just be a matter of time before things improve.

While sales has been impacted due to current economic scenario coupled with prevalent job insecurity, revival of the economy in the coming months, stable government at the Centre and positive rulings by regulatory authorities will give the much needed impetus to the realty sector, says Mr Sandeep Trivedi, Director – Development Consulting, Cushman & Wakefield India, a real estate services firm.

“Coming to terms with reality, there are positive signs in the market. New projects are being announced and residential construction is picking up; slow, but sure, signs of a change for the better,” says Mr Sridhar Kulkarni, Head – Marketing (Karnataka and Andhra Pradesh), Shriram Properties. In pockets such as Bangalore North and South, there is a sign of increase in demand now, he adds.

Sales Push

Mr Trivedi says in the last few months, developers have also been offering cash discount or providing additional room for the same cost to push sales in the primary segment.

“The State Government’s recent amendment in the registration cost is another positive factor for the residential sector.”

The residential demand is up 30-40 per cent in the mid-to-low income segments since March for residential apartments priced below Rs 30 lakh, says Mr Kulkarni.

In the commercial segment, leasing has picked up 5 per cent in volume terms in the first quarter of 2009-10.

Mr Koshy Varghese, Managing Director, Value Designbuild, feels that pricing is still soft.

“The natural path will be increase in demand due to lower prices leading to firmer prices. If the credit flow improves and builders can complete construction, a firming of prices will happen.” He adds that there is a firming of prices on ready units “where the seller is not desperate”