Bengaluru witnessed a supply boost in the form of new housing units, resulting in a 6.9% QoQ increase in Q1 2021 due to opening of the economy, resumption of construction, and new launches, reports the latest Magicbricks PropIndex.
The report states that most of this new supply is concentrated in the city’s eastern and southern outskirts. Both the Under-Construction (UC) and Ready-to-Move (RM) property segments saw positive price changes, but the UC segment saw greater gains in Q1 2021. The dynamics of the Bengaluru residential market were bolstered by factors like improved affordability resulting from lower home loan rates and various developer-led initiatives like cash deals, discounts, and deferred payment plans. Reflecting the dominance of mid and upper-mid segment buyers in the city 2 and 3 BHKs account for 90% of the demand and 92% of the supply in Q1 2021.
Despite a heightened preference for multi-storey apartments in the past, buyers are now searching for larger homes within their budget, which is driving up demand for residential plots and villas in the outskirts of the city. Puravankara Ltd entered the plotted construction sector to leverage this demand and is planning to launch a 5.5 million square feet of plotted development in Bengaluru and other south Indian cities. Whitefield, Sarjapur Road, and Bellary Road consistently ranked high in terms of searches as well as active listings.
Commenting on the PropIndex report, Sudhir Pai, CEO, Magicbricks, said, “The first quarter of the year 2021 has indicated a strong revival in the economy. The Indian economy is expected to grow by 10-13% in FY 22 as per predictions by various multilateral agencies. After the festive season euphoria, we saw rationalisation of the surge in traffic volumes in some cities in Q1 2021. Various confidence-building measures by the central government such as liquidity infusion in stressed projects through the SWAMIH fund and RERA extensions have supported the sector when most needed. Reduced home loan interest rates along with cuts in stamp duties in some states have improved the demand. From the price perspective, the southern region witnessed the most price increments in Q1 2021 in both under-construction and ready-to-move segments. We foresee the momentum gained in the last six months to continue across both supply and demand, backed by new launches tailored to the emergent needs of consumers and all-time low interest rates.”
Magicbricks PropIndex also states that the ready-to-move segment, in Bengaluru, posted a marginal QoQ growth of 0.7% but still declined on a YoY basis at 3.3%. “Due to revived confidence, the under-construction (UC) properties witnessed an increase in prices by 1.3% QoQ. Although, both UC and RM witnessed price increments across all price segments.
Properties costing more than INR 7,000 per sqft occupied a significant share of 36% in the demand pie, which increased from 32% in Q4 2020. The demand for mid-sized homes has propelled the share of 2 BHK configurations even as the share of 3 BHKs has come down by 5% of the overall pie over Q4 2020.
In other news, the recent Karnataka budget reduced stamp duty by 3% for apartments that cost between INR 35 lakh to INR 45 lakh. The recent inauguration of the Airport Railway Halt Station has boosted the last-mile connectivity from the city center to the Kempegowda International Airport.