Bengaluru’s residential market drops after the launch of RERA: Colliers International
As per Colliers International’s research, the performance of Bengaluru’s residential market post RERA, in H1 2017, the city ranked second in total residential launches in India with about 13,400 new unit launches. The market faced a notable drop of 23% compared to H1 2016. Localities such as Yelahanka, Devanahalli, Ranchenahalli and Kogilu recorded the highest number of launches in the city. It was also noted that most of the new launches were in the mid-segment category catering to the higher demand from information technology employees of the city. Moreover, the strong office sector performance in Bengaluru indicated a healthy demand scenario for the residential sector in medium-to- long term.
“This is an unprecedented situation for all developers across India. Demonetisation has resulted in fundamental change in most of the developer’s approach towards their businesses and when RERA came into picture, they were forced to put their house in order. To make their existing projects RERA compliant, the developers were left with no band-width and had to take a pause before taking any further decisions related to new projects, thus leading to declinein number of new launches in Bengaluru” says Goutam Chakraborty, Senior Director, Colliers International India.
As per Colliers International’s research, the capital values in locations such as Central, Airport Road, Whitefield and Yelahanka recorded a 3%-6% decline in H1 2017 while off-central locations such as Jayanagar, Sadashivanagar, Bannerghatta and Koramangala witnessed a 1%-4% increase. We expect capital values to largely remain stable in short-to-medium term owing to the present skeptical situation in market post RERA.
In terms of residential sales, in spite of expected fall in the number of launches in upcoming quarters due to RERA implications, the mid-range segment will continue to drive sales as the festive season approaches in September and October. Various promotions by developers and attractive payment plans amidst a soft home loan interest rates environment will drive the residential sales in the market.
For developers, improved project planning, obtaining all necessary approvals on time and use of modern construction technologies to speed up the construction process will help developers to avoid delays, manage project funds efficiently and align themselves with all the RERA guidelines going forward.