Unsold units in Bangalore demands immediate attention
Unsold inventory, is perhaps one of the scariest terms in real estate and the Bangalore realty sector, at present is rewriting its definition. In a classic case of demand surpassing supply, the city has witnessed more than 60000 unsold residential units.
The prices are not likely to stabilize in the coming days since the residential real estate market suffers from oversupply of units. To make matters worse, more than 700 residential units that include- row houses, apartments, plots and villas valuing Rs 1.82 lakh units are in the making.
Increase of vacant units
Since 2008, the number of unsold units in the Silicon valley of the nation has ape up. Growth of nuclear families, rise in population and shifting to metros for employment purposes triggered the need for housing projects in the city. To be precise, due to the imparity that exists between demand and supply, unsold inventory has piled up in the city.
The absorption rate set upon the city moves around 3774 units every month, post IT boom. However, with the sales losing its pace, the existing inventory may need 16 months to sell out. According to market reports, in the last two quarters, the price has remained unchanged, which indicates a softening buyer sentiment.
Prevailing price
According to some property consultants, the average price of a 2-3 BHK apartments in the city rose up by 3% by the end of Dec. 2012 at Rs 4432. The average price per sq ft climbed to Rs 4556 in June and stood out to be of the prime reasons for lack property transactions and growth of unsold inventory. Not to mention, weaker buyer sentiments also played a key role to make it difficult for builders to look for buyers in this category.
Market survey confirms that there are more than 600 ready-to-move in housing units in the city that fall in the price bracket of Rs 7500- Rs 10000 per sq ft. Such residential units include penthouses and big 3000 sq ft plus units, which are yet to be sold.
Change of scenario
The present market scenario says that there has been a change of scene in the Bangalore realty market. Previously, with the launch of a projects, the sales figures used to shoot up incessantly, however, it has taken a different route for the last two years. Buyers, at present do not jump on investing in any project or booking an apartment. Investors are unsure of the completion date and hence take every step with careful consideration.
Rising oversupply and slight improvement in the demand has contributed greatly towards a slower absorption rate. This phenomenon can be confirmed by the fact that housing projects at present consume nearly 3-4 years to sell out, when in fact they took nearly 1.5-2 years during the period 2006-08. With the depreciation of the rupee, developers perceived a notion that property transactions by NRIs would pick up, however, the tables did not turn accordingly.
