Bengaluru

Second wave dealt blow to real estate sector’s slow revival

New launch activity was significantly higher during Q2 2021 compared to the same period last year with east and north Bengaluru accounting for majority of the new launches.   | Photo Credit: Bhagya Prakash K.

Buoyed by signs of revival that were seen after the first wave, the real estate sector saw quite a few new launches. But no one expected the second wave of COVID-19 infections to be as vicious as it was and that dealt a severe blow, to the extent that the sector’s performance remained a tad poorer than last year for the same period.

According to property consultants, new launch activity was significantly higher during Q2 of this year compared to the same period last year as businesses were better prepared.

“The majority of the launches were concentrated in east and north Bengaluru, accounting for 46% and 34%, respectively. The mid-end segment accounted for nearly 49% of the launches during Q2 2021, improving marginally from the last quarter. On the other hand, the share of the affordable segment decreased again to 16% in Q2 2021 from 21% a quarter earlier as the preferences of the buyers change for larger spaces,” said an analysis from ANAROCK Property Consultants.

But as for the sales trend, nearly 3,560 units were sold during Q2 2021 — higher than the same period last year. The sales decreased by 59% on quarter due to the adverse impact of the COVID second wave. East Bengaluru accounted for 38% of the overall sales across the city followed by north Bengaluru at 29%. Nearly 27% of Q2 2021 sales came in from the south.

Anuj Puri, Chairman, ANAROCK Property Consultants, told The Hindu that Bengaluru has always been a unique real estate market: heavily driven by IT/ITeS industries, it is a city where most of the housing demand comes from end-users. “Amidst ample new supply being launched, Bengaluru’s unsold inventory increased by 2% in a year – from approximately 60,390 units in Q2 2020 to approximately 61,480 units by Q2 2021-end. Interestingly, despite the pandemic, the city saw average property prices rise by 2% - from ₹4,975 per sq. ft. in Q2 2020 to ₹5,060 per sq. ft. in Q2 2021,” he explained.

Suresh Hari, chairman, CREDAI Bengaluru, explained that during the first wave, no one knew what it was.

“But the second wave was a very big shocker. Every sector was jolted. New launches were one part, but even existing properties received a big jolt. People didn’t know what was in store the next second, so property not in the mind of anybody,” he said, acknowledging that Q1 performance was markedly better than Q2.

Now, the sector hopes for stabilisation. “ There are a lot of changes in perception of investment. Now, we expect some stabilisation because it’s established that the pandemic is going to be a cycle. Work from home may not be permanent but many are looking at a hybrid model. So there will be redesigning - altered new design elements, new ideas, etc. There will be interest in self sustained centres. But the commercial sector may need some time, though it will all evolve,” he added.

Mr. Puri added that the reduction in stamp duty in Karnataka announced recently was only for homes valued between ₹35 lakh and ₹45 lakh, which is why it is not likely to give a significant boost to housing sales in Bengaluru on the lines seen in Mumbai and Pune. However, smaller towns and cities, like Hubballi, Mysuru, and Belagavi, may gain from the new announcement, he added.


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Printable version | Sep 27, 2021 6:37:06 AM | https://www.thehindu.com/news/cities/bangalore/second-wave-dealt-blow-to-real-estate-sectors-slow-revival/article35727584.ece

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