Tuesday, February 19, 2008

One lakh apartments may remain vacant in Bangalore by April

BANGALORE: Is Bangalore’s real estate market heading for a slump? Such is the impact of the real estate slowdown in Bangalore that the number of unoccupied apartments in and around the city is expected to touch nearly one lakh by April.

Citing the outcome of an “informal survey,” Inspector-General of Registration and Commissioner of Stamps H. Shashidhar told a workshop organised here on Tuesday by the Building and Other Construction Workers’ Welfare Board that these indeed were the current market trends.

Later, speaking to The Hindu, he said that the figure included both old and new apartments, i.e., those that had not been sold, those that had not been rented out and those now under construction. Mr. Shashidhar said that registrations of property in the State had reduced by 45 to 50 per cent, partially due to the ban on registration of revenue sites.

Lack of infrastructure such as proper roads, drinking water supply and availability of schools had also contributed to the slowdown in property transactions. Moreover, people had become cautious while buying property and choosing only those which had clear titles.

It appears that only genuine users were buying the properties now while speculative investors were keeping themselves away from property transactions, he said.

Feroze Abdullah, realtor and proprietor of Feroze Estates, confirmed the slump in the sales of apartments, particularly on the outskirts of Bangalore in areas such as Whitefield and Marathahalli, over the last three months. He said his own business had seen a 50 per cent drop during this period. “There is more supply than demand. Prices in the last three years have risen unnaturally and the market is now seeing a levelling. But in the central districts, the prices are still high.”

Unrealistic prices, poor infrastructure and traffic problems had also contributed to the slump in sales of apartments, Mr. Feroz said. However, the builders have not reduced the prices of apartments hoping that they may pick up once the new airport commences its operations.

President of Karnataka Ownership Promoters Association A. Balakrishna Hegde maintained that the industry was expected to grow at a rate of 15 per cent this year and refuted any suggestion of a slump.

The upward revision of guidance value for property in Bangalore has deterred a number of apartment buyers from registering their property as the revision has increased the stamp duty burden. Over 50,000 housing units would be added this year in Bangalore, he said.

C.J. Roy, general secretary of Karnataka Township Developers Association, said that the real estate market had not gone down overall, though there was a small slump in prized locations


Anonymous said...

As the rupee keeps appreciating, and as layoffs become a fact of life in Bangalore and India, it is prompt engineers to be careful in not assuming too much in terms of debt. Given that most engineers make about 1 lakh/month, and at 12%, they can afford an EMI of 30-40 thousand at most, this means that any flat that costs over 40 lakhs is going to be potentially overvalued.

And salaries are not going to keep going up, so engineers taking on more debt in the hope that a higher salary later in one's career can be used is short-sighted. Particularly if jobs are not secure. Time will tell. For now I am waiting out this bubble.

Anonymous said...

Please note that most engineers dont get salary of 1 lakh/month. If you take the average salary of all the engineers in Software profession i may be somewhere around 45000 per month.

That means still the affordable EMI is way below 30-40 thousand as mentioned. An affordable EMI will be 20000 per month.

Anonymous said...

Quite true and realistic assessment

Anonymous said...

My view is that salaries for only those who are employed with multinationals is 45000 Rs or higher. Most other software engineers make 25,000 to 30,000 Rs. With inflation and high cost of living overall, a lot of people can afford only 10,000 per month for rent /mortgage at most. With real estate asset prices declining, a lot of people would develop distaste for flat ownership in a few years.

Anonymous said...

Well, I would see the true color like this: What had happened in Shangai, and Beijing 10 years back is happening now in India. I would not compare any citi in India other than China because of population density and income levels comparable to India. To streach further, irregularity in India is more due to bad business practices. China is way better in terms of discipline. Coming to housing prices in Bangalore, they are way overpriced. Living abroad for nearly 10 years in Singapore and USA, I too feel that I can't afford to buy an apartment in Bangalore for 70-90 lakhs. Builders are greedy. For sure, housing bubble will burst. Prices ought to be adjusted to reflect reality. As US economy is pushed down slowly Indian property developers will run like rats on fire. Instead of having hell out of debt and making life miserable why don't we find a far away place, somewhere in our home town and live happily without debt. Please don't take loan that you can't clear. As the gas prices go further up people gets poorer. In USA a person with $50000 annual salary can afford to have EMI of around $1200 for a sq.ft. 2400 house. Now in USA people abandon houses becauses they could't pay EMI's. Foreclousers are more. Housing slump in USA will spread to India too but to realize it it takes a while. Only difference is, India some sections of people earn by bribes (rampant corruption). For them no rules will be applicable. No software or hardware engineer can compete with them. Thief can afford any amount, but not hard earned guy.

SVA Search said...

True...The main reason why real estate is slumping in bangalore is because of the IT profeessionals...You might argue that they earn lakhs of rupees but it is worthwhile to keep in mind that most of those working in bangalore are not based out of bangalore...Most of my friends in Bangalore are building their homes in Mumbai and Chennai...They just work in bangalore...With such a huge fleeting population of IT engineers, it's not a surprise that real estate is slumping in Bangalore

Anonymous said...

Its true as bangalor property prices have shot up considerably and thebuilders have become greedy day by day,living abroad and it difficult to buy property because of many cheets and banks do not give loans to NRI as they have too many regulation and leaving to back.If this process continue bangalore will head on to a deserted appartments soon (too many black holes)Authority should look

brave said...

Rs8000-10000 pm EMI needs another 5 lakh homes.

punter said...

Someone mentioned layoffs on B'lore on this thread. I try to keep my ears to the ground on this layoff issue, but dont see or hear any firings going on. Are they going on under the radar with no announcements?
Appreciate any honest feedback.
Full Disclosure: I hang aroung ORR in B'lore and 'software' traffic is still maddening in these shitty roads.

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