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BANGALORE RESIDENTIAL MARKET UPDATE APRIL - JUNE 2020

Market Sentiment INSITE acres ’s No.1 Property Portal

FROM CBO’S DESK

A drastic drop in the number of new providing some relief from the residential launches and poor sales volume COVID-19-induced crisis. After some defined the ‘real’ story of residential setbacks, the traffic and responses on realty across metro cities in Apr-Jun 2020. 99acres returned to pre-COVID levels by Shortage of construction workers, liquidity the end of June 2020. A survey by 99acres constraints faced by developers and the revealed that 75 percent of its registered withdrawal of homebuyers impacted market buyers now prefer shortlisting or buying sentiment adversely. a property through real estate portals. Further, 60 percent of the participants Delhi NCR, Mumbai and Hyderabad lost averred that they would prefer undertaking the largest share of new launches and a virtual tour before physically visiting the reported a dip of 80-95 percent, each, project site. QoQ. Cumulatively, the period witnessed an addition of a mere 1,400 units in the Nonetheless, to witness a complete revival, top eight metros. The ensuing credit the industry would need more support from crunch with both buyers and developers the Centre beyond measures such as home is expected to shrink housing sales from loan moratorium and declaring COVID-19 as four lakh units in 2019-20 to 2.8 lakh units a Force Majeure event to witness revival. in 2020-21. While all metro cities reported status quo in average weighted capital prices, experts foresee average ‘asks’ in the resale segment dipping by an average of 10-15 percent in the months to come. To sustain businesses, several developers Maneesh Upadhyaya underwent digital transformation with Chief Business Officer virtual project launches and e-site visits 99acres.com COVID-19 AND NATIONAL REAL ESTATE OUTLOOK

HOME BUYING SENTIMENT Home buying sentiment remained muted during April due to the nationwide lockdown; with enquiries picking up slight pace in June. Genuine homebuyers flocked the market looking for attractive schemes and discounts. NRI demand, too, resurged, with some conversions in the mid-income housing bracket across cities. IMPACT ON INDUSTRY The COVID-19 crisis disrupted the supply chain of realty raw materials, and led to reverse migration of labourers and fund constraints PROPERTY PRICES at developers’ end. The sector went through a major digital While the negotiation window widened up to 10-15 percent transformation as developers shifted online to market their projects across budget segments, any actual correction in prices was and engage with customers, and Government bodies, such as NCLAT not noticed. Barring Delhi NCR, all metros maintained status and RERA started addressing homebuyers online. quo in average weighted capital ‘asks’, QoQ. With wafer-thin The Apr-Jun 2020 quarter saw the lowest number of new launches margins at the hand of developers, any price correction in since 2013 and sales remained 75 percent lower than the previous future is unlikely. quarter. Invoking of Force Majeure brought some relief as ongoing projects got up to a nine-month extension under Real Estate (Regulation and Development) Act, 2016. The suspension of Insolvency RENTAL LANDSCAPE and Bankruptcy Code (IBC) for a year, too, is a relief for developers. Amid restrictions to move around, the rental market remained intact in Apr-Jun 2020. There was no movement in average ‘asks’ across cities, except for some discounts and IMPACT ON HOMEBUYERS leeway offered by property owners to support the tenants With ongoing projects delayed by at least six months, homebuyers struggling financially. PG accommodations and guesthouses expecting possessions received a setback. Job losses and pay cuts took the brunt as people moved to their hometowns due to affected the paying capacity of homebuyers, who shelved their buying an extended lockdown. decisions in the wake of market uncertainties and expectations of price cuts. While reduced home loan interest rates from most banks make it an opportune time to invest in real estate, a large share of prospective SUPPLY homebuyers await more clarity in the ensuing months. New project launches remained nil during the quarter and progress on ongoing projects suffered on account of reverse The extension of the Credit-Linked Subsidy Scheme (CLSS) under migration of labourers and disruptions in the supply chain. Pradhan Mantri Awas Yojana (PMAY) might be a benefit for those Property owners unwilling to sell at a reduced price exited looking for affordable homes. Existing homeowners welcome home from the secondary market. Unsold inventory stood at 6 lakh loan moratorium of six months announced by the Government in April. units at the end of Apr-Jun 2020. acres India’s No.1 Property Portal INSITE : 5 MARKET MOVERS K-RERA extends validity of project registration The Real Estate Regulatory Authority (K-RERA) has extended the registration validity of all the approved projects by nine months amid Coronavirus-induced lockdown. The extension has been granted under Force Majeure. In addition, the authority has made it mandatory to have the consent of two-thirds of the buyers before a builder makes amendments to an approved building plan.

State to reduce guidance value The State is planning to reduce guidance value (circle rate) by 5-10 percent to help the industry combat the housing demand crisis due to COVID-19 outbreak. The move is aimed at reviving the market sentiment by reducing the property prices across the State. Infrastructure projects stall due to COVID-19 COMMERCIAL Infrastructure projects worth over Rs 27,000 crore may be shelved or scrapped in Bangalore as an aftermath of the pandemic. The State may also shelve the Rs 1,000-crore investment to develop over 100 villages within REAL ESTATE Bruhat Bengaluru Mahanagara Palike (BBMP). In addition, the delay in land acquisition has hit road projects in Nadaprabhu Kempegowda Layout (NPKL). OUTLOOK State to regularise illegal properties • Google leases 1.4 million sq ft of office space in Bagmane Rio The State has approved an ordinance to regularise around 75,000 illegal Business Park. Intel and Microsoft plan to lease 1 million and 1.2 properties, which are over 12 years old, against a penalty in Bangalore. The million sq ft of office space in Bangalore. penalty will vary from 10-50 percent of the guidance value on the basis of the plot sizes, which are spread over 6,000 acres of land. In addition, the BBMP • Commonwealth Bank of Australia signs 2,400 seats with WeWork at has urged the State to regularise B-Khata into A-Khata properties. It is aimed Manyata Tech Park. at increasing the revenue flow amid COVID-19. • ANSR, a global consulting firm, leases three lakh sq ft office space in Embassy NXT at a monthly rent of Rs 120 per sq ft. • PayTM to lease about 1.5 lakh sq ft space to accommodate its e-commerce, mutual funds and travel businesses in Bangalore. • Co-working space providers, such as WeWork, Smartworks, Simpliwork and Awfis Space Solutions, seek rent-free period up to three months and foregoing of their electricity bills. • Toyota Kirloskar Motor moves out of the UB City Towers on Vittal acres Mallya Road. India’s No.1 Property Portal INSITE : Bangalore 7 * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com BANGALORE’S REALTY AT A GLANCE

Property Rental Prices ‘Asks’

Price movement in key micro-markets

Localities Apr-Jun 2020 QoQ YoY Rental % Change % Change Yield Whitefield Rs 4,970 - 6,500 1% 5% 4% Demand Supply Rs 3,950 - 5,050 -3% 0% 4% Rs 5,200 - 6,730 3% 3% 3% Rs 4,630 - 5,560 1% 3% 4% KR Puram Rs 3,820 - 4,800 1% 2% 4% Rs 3,800 - 5,130 1% 5% 4% * Property prices represent quarterly change * Rental ‘asks’ represent yearly change * Supply is basis properties listed on 99acres.com * Demand is basis queries received on 99acres.com Rs 5,140 - 6,120 1% 4% 4% Rs 3,860 - 4,760 2% 3% 3% Hebbal Rs 5,880 - 7,840 1% 4% 2% Rajaji Nagar Rs 10,900 - 14,100 2% 8% 2%

* Average ‘ask’ rates have been calculated as per listings posted on 99acres.com ** Rental Yield has been calculated for a 1,000 sq ft apartment

INSITE : Bangalore 9 acres DEMAND & SUPPLY India’s No.1 Property Portal DYNAMICS 99ACRES‘ 18% OUTLOOK

34% 24% The months of April and May witnessed meek housing sentiment amidst the nationwide lockdown. While the realty sector saw renewed interest from the buyers starting June 2020, enquiries remained low in comparison to the pre-COVID times.

Nevertheless, East and South Bangalore garnered the 37% maximum sale enquiries. The demand for land parcels priced within Rs 25-50 lakh in Sarjapur, Devanahalli and Hoskote went up as buyers preferred affordable plots, which are not covered under RERA. However, the sales 39% volume remained meek due to unstable job market.

A handful of residential projects were launched digitally within Rs 45-90 lakh in Apr-Jun 2020. The validity extension of property registration by nine months 48% under Force Majeure was a breather for the developer community. With the current market condition, the builders are likely to concentrate on completing the ongoing projects and selling the existing stock to improve cash flow management.

On a positive note, the COVID-19 led lockdown opened Demand Supply up avenues for technology-assisted buying in Bangalore, making it feasible for buyers to inspect properties Affordable Housing online through virtual site visits, 3D floor plans and (Within Rs 40 lakh) e-brochures. The builders, on the other hand, started Mid-income Housing receiving enquiries mostly from serious buyers. (Rs 40 lakh - Rs 1 crore) Luxury Housing (Rs 1 crore and above) The reduction in guidance value and attractive offers before the festive season are likely to kick-off the revival cycle in Bangalore realty around Oct-Dec, this year.

* Graph depicts demand and supply of residential inventory across budget segments in the studied quarter INSITE : Bangalore 11 KEY HIGHLIGHTS

While site visits remained restricted in the Apr-Jun 2020 quarter, residential hubs offering ready 2 BHK homes at affordable rates garnered robust interest from buyers. Areas, such as , Yelahanka, Whitefield, Sarjapur and , scored maximum enquiries for homes priced within Rs 70 lakh. Emerging locales, such as Begur, Bannerghatta and KR Puram, reported increased enquiries CAPITAL & for properties within Rs 60 lakh. Overall, the average capital rates remained under pressure this quarter.

RENTAL The residential rental market reported a negligible hike of a percent in average ‘asks’, YoY. The tenant community renegotiated the agreements to reduce rental rates and sought for deferment of the rent by a few months. The 5% co-living sector also faced a major hit as tenants started looking for separate accommodations to maintain social distancing norms. It resulted in higher rental enquiries in the Apr-Jun 2020 quarter. The possibility of rental growth 3% 3% 3% 3% seems low due to increased unemployment and potential pay cuts. It will have an adverse impact on the rental yield 2% 2% of the popular residential hubs in Bangalore.

1% 1% 1% 1% 1% 1% The homebuyers are looking at better-priced deals, attractive offers and flexible payment plans to finalise their 0% 0% 0% purchase decisions. The developers, on the other hand, are Whitefield Hebbal Rajaji Nagar Yelahanka KR Puram Thanisandra Kadugodi Marathahalli Electronic City selling at an all-time low and are burdened with managing the cash flow due to rising raw material prices, interest costs and remobilisation of labour, and are not in favour of reducing the property prices further. This situation has -2% further caused a stalemate in demand.

-3% On the commercial front, many companies are interested to continue supporting “Work from Home” option even after Capital the lockdown ends. Companies are either planning to surrender a part of their offices or renegotiate -5% the deals to save on annual lease agreements. Rental

-9% INSITE : Bangalore * %change represents quarterly capital movement and yearly rental movement 13 CONCLUDING NEW LAUNCHES 1% REMARKS DELHI NCR The economic slowdown and potential job cuts due to COVID-19 led to 2% KOLKATA weakening of the market sentiment in Bangalore. While the site visits came 5% to a grinding halt, builders chose digital mediums to keep prospective HYDERABAD homebuyers intact. However, physical site visits will remain the key driver for closing sale transactions in the ensuing months. Many small-to-mid- sized developers may consolidate with branded players to withstand the 26% storm caused due to Coronavirus outbreak. The developers may also 11% AHMEDABAD consider altering floor plans in new homes so that these housing units CHENNAI can also accommodate the offices and classrooms. A stable job market and new housing options, coupled with attractive offers during the festive season, can act as a growth catalyst for the Bangalore real estate market. 11% MUMBAI

20% 24% BANGALORE PUNE BUDGET-WISE DEMAND SUPPLY The data depicts share of new launches across metro cities in the studied quarter

5%5% 12% 14% 11% 18% 19% 17% 20% 14% 24% 25% 17% 29% 34% 41% 40% 43% 22% 36% 37% 29% 36% 23% 48% 41% 40% 39% 44% 25% 34% 48% Demand Supply 35% 78% Affordable Housing 48% 64% 53% 51% 57% 40% 47% 40% 34% 37% 34% Mid-income Housing 31% -5% 26% 22% 18% Luxury Housing -6%

DELHI NCR MUMBAI BANGALORE PUNE CHENNAI HYDERABAD AHMEDABAD KOLKATA

INSITE : Bangalore 15 * Graph depicts demand and supply of residential inventory across budget segments in top eight metro cities in the studied quarter acres ANNEXURES India’s No.1 Property Portal

CAPITAL VALUES RENTAL VALUES RENTAL VALUES

Locality Apr-Jun 2020 Locality Apr-Jun 2020 Locality Apr-Jun 2020 Locality Apr-Jun 2020 17 Akshaya Nagar 5200 Kadugodi 4500 AECS Layout 21 18 Banashankari 6500 Kaggadasapura 4400 Akshaya Nagar 15 17 5580 Kasavanhalli 5450 16 Kasavanhalli 20 Bannerghatta 6010 4250 Banashankari 18 Kengeri 12 Basavangudi 9900 10700 Banaswadi 18 Kodihalli 20 Begur 4500 KR Puram 4650 Basavangudi 23 Koramangala 29 Bellandur 6400 Kudlu Gate 5550 Begur 15 KR Puram 15 Benson Town 9700 6000 Bellandur 22 Kumaraswami Layout 14 Billekahalli 5300 Mahadevpura 6100 Billekahalli 18 Kundalahalli 18 5160 Malleshwaram 10900 Bommanahalli 17 Mahadevpura 22 3450 Marathahalli 6400 Bommasandra 11 Malleshwaram 26 6300 4700 Brookefield 20 Marathahalli 20 BTM Layout 5950 Nagavara 6010 BTM Layout 18 16 Budigere 5200 Panathur 6100 23 19 Cooke Town 9300 Raja Rajeshwari Nagar 5100 Cox Town 24 Nagarbhavi 15 CV Raman Nagar 6640 Rajaji Nagar 13300 CV Raman Nagar 18 Nagavara 17 Devanahalli 5400 4300 Doddanekundi 19 Panathur 22 Electronic City 4970 RT Nagar 5750 27 RT Nagar 16 Frazer Town 9500 6200 Electronic City 16 Raja Rajeshwari Nagar 12 4800 Sanjay nagar 7500 Frazer Town 25 Rajaji Nagar 22 Gunjur 4500 Singasandra 4450 Gottigere 12 Ramamurthy Nagar 15 Harlur 6700 Subramanyapura 5100 HBR Layout 19 31 Hebbal 7500 TC Palaya 4650 Hebbal 15 Sahakara Nagar 16 Hegde Nagar 5300 Thanisandra 5910 Hennur 17 Sarjapur 16 Hennur 5500 Uttarahalli 4700 19 Subramanyapura 12 Hoodi 6200 4900 Hormavu 15 TC Palaya 14 Agara 4400 5200 HSR Layout 21 Thanisandra 18 Hormavu 4700 Vijayanagar 5900 16 25 HSR Layout 6100 Whitefield 6150 Indira Nagar 25 Uttarahalli 13 Hulimavu 6000 Yelahanka 5100 Jakkur 16 Vidyaranyapura 14 Indira Nagar 10200 Yeshwanthpur 7200 16 Vijayanagar 18 Jakkur 5800 Jayanagar 23 Whitefield 19 Jalahalli 5700 JP Nagar 18 Yelahanka 15 Jayanagar 10720 Kadubeesanahalli 21 Yeshwanthpur 21 JP Nagar 6000 Kadugodi 16

*All prices are per sq ft rates *All prices are per sq ft rates INSITE : Bangalore 17 METHODOLOGY The Insite Report by 99acres.com captures the quarterly capital trends, the annual rental analysis of residential apartments and rental yield in top 10 popular micro-markets across key real estate markets – Delhi NCR, Mumbai Metropolitan Region (MMR), Bangalore, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad. In order to assess the prevailing sentiment, the report delves deep into demand and supply of properties across varied budget segments and occupancy stages. While demand is a function of queries received, supply is based on property listings posted on D S PS 99acres.com in Apr-Jun 2020. U SELL RENT PRPERT

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