Anxiety over job security owing to the economic slowdown has had a cascading effect on the real estate sector in the city, with the high-end market suffering the biggest blow. The sector is witnessing a stagnancy in new projects.
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According to the Real Estate Regulatory Authority, Karnataka (K-RERA), the number of registrations coming in from property developers and builders has come down in certain segments. K-RERA Chairman M.R. Kamble told The Hindu that while registrations for projects for plotted sites and affordable housing were “as usual”, those for high-end villas and apartments were “relatively less”.
The affordable housing segment, however, remains unaffected. “Generally, too, in the market, sites and affordable housing segment are moving relatively fast,” Mr. Kamble added.
At present, 3,466 projects have applied for registration with K-RERA across Karnataka.
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Though they concurred with K-RERA officials, property developers deemed the scenario more bleak. The sector was recovering from demonetisation and changes in business processes that included the introduction of the GST, and the current slowdown has now had a bearing on it, they said.
Kishore Jain, president, CREDAI Bengaluru, said the impact was being seen in the high-rise market, which directly translates into high-end apartments.
“More floors means more investment. On an average every year, around 900 high-rises seek approval from the Bruhat Bengaluru Mahanagara Palike (BBMP). This year, we are expecting this number to be around 50% lower,” he said.
Projects offering villas were also not moving now as they were more expensive, he said. “There is resistance to purchasing anything priced above ₹1 crore now,” added Mr. Jain.
According to CREDAI, though the scenario is the same across the country, Bengaluru is one of the more stable markets, given that the IT industry and start-up sector are not as adversely affected as others at present.
Buyers too are adopting the wait-and-watch approach, developers said. “Buying a home is a once-in-a-lifetime investment for many. Though people usually take 15 days to one month to decide on a purchase, this waiting period has increased to two to three months now as many are adopting a wait-and-watch approach,” said Mr. Jain.
In the backdrop of the stimulus announced by the Centre to boost the economy, CREDAI is hoping for a positive impact on the real estate sector as a cascading effect. “If the measures announced impact sectors such as the manufacturing industry positively, ensuring job security, it will lift the demand for housing,” said Mr. Jain.