Bangalore’s residential market is likely to remain highly active in future with 243,000 units expected to be supplied in the next five years (until 2018). The city, being a prominent IT-ITeS hub of South India, attracts workforce from India as well as abroad, leading to massive housing needs.
In a study by global real estate consultancy Cushman & Wakefield (C&W), the supply projections indicate that nearly 56% of new units may cater to the MIG, 29% to the LIG and remaining 15% to the HIG. The cumulative demand for residential housing (until 2018) is projected to be 438,600 units with 44% in the MIG and 31% in the LIG. Considering the high requirements, demand is likely to remain unmet in all segments with a total demand-supply gap of around 196,000 units with a high paucity (38% of total shortfall) in the HIG.
Bangalore has remained focused on the MIG, primarily due to the large-scale mid-level IT workforce in the city. However, as the city attracts larger global corporations with headquarters of many companies being located here, the need for the HIG housing is likely to rise significantly. Exclusive residential housing options targeted at the CEOs will also be in high demand in future.
As per the study, total new demand for urban housing in India is expected to be nearly 13 million units by the end of 2018 on account of the burgeoning population in urban centres. This is in addition to the already existing unmet demand. Of the total additional demand, the top 8 cities are likely to constitute 23% or 2.95 mn units.
Of the total additional demand across the top eight cities, MIG is expected to generate the highest volume of demand of 1.08 mn units until 2018, followed by the Lower Income Group (LIG) which is expected to generate demand of nearly 1.05 mn units, and the HIG with a demand for 0.52 mn units. Thus, both LIG and MIG will account for nearly 80% of the total demand in these eight cities.
The expected supply of residential units including existing, under construction and planned is estimated to be 1.31 mn, which is expected to be delivered across the top eight cities by the end of 2018. The bulk of the under-construction units have already been sold. Delhi-NCR is likely to have the highest supply of around 516,000 units delivered in the next five years, followed by Bengaluru with around 243,000 units and Mumbai with 203,000 units.
Until 2018, the expected supply in the LIG will be approximately 21% of the total supply across top eight cities, whilst demand constitutes 58% share of the cumulative demand-supply gap.
The MIG accounts for 59% of the total supply across top eight cities whilst it has a 23% share in cumulative demand-supply gap. Cities such as Ahmedabad, Bengaluru and Mumbai are expected to lead the ranks of those with the shortfall of housing units catering to MIG.
According to Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield, “The private sector housing, which is largely responsible for creating housing in India, has been grappling with many issues such as rising input costs, expensive land valuations, outdated building norms, restricted access to funding, serious delays in regulatory processes and uncertain economic conditions resulting in poor and/or slow sales volumes, all of which have resulted in holding back the growth of this sector since the last 2-3 years. Consequently, the demand-supply imbalances across cities have been becoming more pronounced.”
