2014 can be the year for affordable houses in Bangalore

For developers in and around Bangalore, there is a common thread that runs through their plans-affordable housing. However, the concept is heading for a fall in the city, since Bangalore is laced with an oversupply of units in 2013. Although units in the price bracket Rs 40- Rs 50 lakh may have a lot of takers in the different micro-markets, demand is not picking up.

Fall in demand for affordable stock

One of the primary reasons for deterred affordable housing stock movement is-the location. Being away from city centers, such locations increase the commuting time incessantly. In addition to it, the rental prospects are also not appealing enough for investors. According to property consultants, poor connectivity levels and lack of adequate infrastructure are the two primary reasons that has contributed to low rentals.

Fall in the demand pattern has further compelled the real estate developers to go for 1BHK at 450m sq ft, in the affordable home section. Furthermore, builders intend to reduce the unit’s size in the new projects due to low demand. Private equity investment funds are also looking for investment in locations where promotion is not a hard nut to crack.

Demand for other segments

For luxury units, such as villas and row houses, the market has been steady since the demand in this category is mainly driven by NRIs, HNIs and corporate executives. Proliferation of major international schools and an influx of foreign expatriates has turned villa projects in the suburbs a good investment opportunity for the investors.

While Grade B developers have become active in the realty market of the city, Grade A developers suffer from delays in getting approval for the planning process from numerous government agencies. According to market reports, nearly 400 builders in the Grade B category are expected to launch new projects in all the micro-markets, together with Grade C developers.