Bangaloreans see dip in property prices

Bangaloreans see dip in property prices
The Times of India

Bangalore: The somewhat berserk run that property prices in Bangalore saw for over three years appears finally to have ended. While prices, especially of commercial property, in some areas like Whitefield have actually dipped a little, those in other locations are rising at only a steady clip.
Between 2003 and early 2006, apartment prices rose by 40% to 50% per annum in many locations. And land prices even more. But now, the average price rise is seen to be no more than 5% to 10%. The only exceptions are north Bangalore —towards the upcoming international airport —and the city centre, where end-user buying and investor sentiments are still keeping prices buoyant.
“The buyer response in South-East Bangalore (which saw the biggest jumps in prices in previous years) is now less than enthusiastic,” says Manisha Grover, national director in property consultancy Jones Lang LaSalle India. “This is reflected in lower absorption and flattening growth rate of capital values. The growth in average capital values has reduced drastically to about 5% during the current year.”
A Balakrishna Hegde, president, Karnataka Ownership Apartments Promoters’ Association (KOAPA), agrees: “Though the number of jobs, as also salaries, are going up, buyers have become cautious and are delaying their purchase. So there is stability in the market, which is good.”
The phenomenon of speculative buying — people buying property with the intention to sell it within a few months and make some profit — is seen to have lost momentum, with investors believing that the Bangalore market is peaking. Earlier, when prices were rising at over Rs 50/sq ft a month, such speculative buying would have been rewarded with substantial gains.
“But now builders are unable to raise prices like that. In Whitefield, some developers have been forced to reduce their quoted prices from Rs 2,500-2,600/sq ft to Rs 2,000-2,300,” says I Mahabaleswarappa, MD of Ittina Group.
Feroze Abdulla of Feroze’s Estate Agency says central Bangalore is still hot, but the general market is not. While the city centre suffers a severe supply shortage, in other parts, supply has increased markedly. KOAPA estimates some 1.4 lakh flats are currently under construction (to be complete in 2.5 years), against the annual demand of 30,000 flats.
The same is true in the commercial property space. Here, while demand continues to be good, supply has kept pace, and in some locations has outstripped demand. Ankur Srivastava, MD of property consultancy DTZ Debenham Tie Leung, says lease rentals in the South-East belt (along outer ring road) has risen just about 5% in the last six months.