Riding on the continued wave of growth in the IT/ITeS sector, India’s Silicon Valley, Bengaluru has displayed great resilience in the residential realty market space in 2019, emerging as one of the strongest markets in the country currently. With a 14% decline in unsold inventory in the residential space and now accounting for just 9.6% of the total unsold inventory across the top seven cities (Bengaluru, Chennai, Hyderabad, Pune, MMR, NCR, and Kolkata), Bengaluru’s inventory overhang stood at 15 months, well below the 18 months threshold needed for consideration as a healthy realty market. Inventory overhang is the total unsold homes divided by the average monthly sales rate.
Continuing the trends from the last two years, East Bengaluru outshined other regions within Bengaluru, with the maximum homes sold in 2019. Out of 50,450 units sold in 2019, about 35% were in the eastern part of the city. Presence of IT-ITeS companies, robust social infrastructure, and upcoming infrastructure upgrades have helped the region to evolve into a self-sustaining hub. The increase in sales in East Bengaluru was also visible in the unsold inventory, which recorded a drop of 18% in Q4 2019 as against the same period in 2018.
Speaking at the launch of the TRESPECT Marketwatch Bengaluru Report, Mr. Sunil Mishra, CEO of Trespect India Pvt ltd said, “Bengaluru has witnessed a healthy 14% growth in new launches, with those in the mid-segment (INR 40 Lakh-INR 80 Lakh) accounting for 42% share while affordable segment units(<INR 40 Lakh) contributed to a 30% share of the total new homes added in 2019. Additionally, homes in the luxury (INR 80 Lakh - INR 1.5 Crore) and ultra-luxury (INR 1.5 Crore- INR 2.5 Crore) segments have also gained some sales momentum in 2019.”
He added, “Sarjapur Road and Whitefield in East Bengaluru were among the top five micro-markets that recorded maximum new launched homes in 2019. Increased commercial developments, presence of the IT-ITeS establishments along the Outer Ring Road (ORR) and Whitefield, and good social infrastructure have been instrumental in driving residential growth in this region.”
With experts predicting that residential markets across the country will come out of a seven-year downturn in 2020, Bengaluru has emerged as the one of the strongest markets on account of the dynamic youth population embracing the start-up culture and a robust social infrastructure which has pushed the development of plush malls, numerous healthcare facilities, and some of the best educational institutions in India.
Key insights of the report:
- Interestingly, supply in the affordable segment nearly doubled as compared to 2018. Additionally, properties in luxury (INR 80 Lakh - INR 1.5 Crore) and ultra-luxury (INR 1.5 Crore- INR 2.5 Crore) segments gained some momentum in 2019 with a small rise in the supply in 2019.
- In terms of budget segmentation, the mid-segment (INR 40 Lakh - INR 80 Lakh) accounted for 42% share of new launches in Bengaluru, followed by affordable segment (<INR 40 Lakh) with 30% share.
- After a slowdown of two years, supply picked up at a good pace in 2019. With improving sales volume, we expect the supply to increase further in the coming year as well. Amidst sales and continued new supply addition, there has been a definite reduction in the unsold inventory, which has reduced by 44% since 2015 and was 62,816 as of Q4 2019. In Q4 2019, Bengaluru’s unsold inventory stood at 15 months, the lowest amongst metro cities.
- Out of the total under-construction supply in the city, 50% is expected to be completed by the end of 2020. Thus, an uptick in sales is expected over the next three to four quarters, which will further reduce the inventory overhang.
