A combination of factors, including spiralling cement prices, delay in approvals for high rise residential complexes in key parts of the city and sluggish demand in the high-end market, seems to have slowed down new real estate launches in Bengaluru.
Residential market report on the first quarter of 2015 by real estate consultant Cushman & Wakefield said that only 4,100 units were launched compared to 16,800 units in Q1 of 2014. This trend has been confirmed by the Confederation of Real Estate Developers of India (CREDAI), Karnataka and other real estate consultants.
Acknowledging the slowdown, R. Nagaraj, President, CREDAI-Karnataka blamed slow approval process by HAL (mandatory height clearance required for buildings above 15 meters in a 20 kilometre radius of HAL airport) for causing delay in project launches. The area includes parts of the city that are witnessing maximum demand. The other reason is exorbitant cement price.
There is some good news, though. “The mid-level launches in parts of the city where HAL clearances are not required have given us a breather with Bengaluru contributing to 17 per cent of the country’s nearly 25,000 residential units launched.”
The ‘residential demand slowdown’ was imminent with a general slackening seen in real estate activity for the last two quarters, feels Shrinivas Rao, Vestian Global. “Although one accepts this cyclic holdback once in two-three years, this decline is a lesson to builders to re-invent themselves and cater to a lesser sq ft built-up area to suit the lighter buying power of people today,” he added.
Satish B.N., Executive Director, South, Knight Frank, says, “The unsold inventory of more than a lakh units, as of December 2014, is also a reason for builders to adopt a cautious approach with new launches.”
