99acres India’s No.1 Property Portal INSITE REPORT Bangalore January - March 2018 www.99acres.com 99acres 99acres 2 INSITE : BANGALORE India’s No.1 Property Portal India’s No.1 Property Portal INSITE : BANGALORE 3 Methodology FOREW0RD The Insite Report by 99acres.com captures the quarterly capital trends and the annual rental analysis of residential apartments in key The first quarter of 2018 countersigned a revival in market real estate markets – Delhi sentiment and enquiries, amid a modest impact on overall sales NCR, Mumbai Metropolitan volume across metros. Supply in the ready residential segment Region (MMR), Bangalore, outstripped demand, particularly in case of luxury and ultra- Pune, Chennai, Hyderabad, luxury units. The under-construction market, too, narrated a Kolkata and Ahmedabad. In similar tale putting a downward pressure on average weighted order to assess the prevailing capital ‘asks’. With new launches down by around 40 percent, sentiment, the report delves YoY, any improvement in property prices is now dependent on the deep into demand and absorption of excess housing stock, which ranges between 15 and supply of properties across 48 months for different metros. Additionally, the increasing cost varied budget segments and of compliance resulting from stringent rules and adherences may occupancy stages. While push the real estate prices up, especially for new launches. Resale demand is a function of segment, however, may not witness any substantial change in ‘ask’ queries received, supply is rates due to the inherent competition characteristic to the segment. based on property listings posted on 99acres.com in On a micro-level, Hyderabad, Pune and Bangalore exhibited Jan-Mar 2018. resilience and showed signs of revival more prominently than other metros. Low inventory levels and fast-paced commercial expansion serve as demand and sales catalysts for these markets. Mumbai and Delhi NCR maintained status quo w.r.t. prices and sales velocity despite multiple infrastructural overhauls ranging Impact of Union Budget 06 North, West and Central 10 from metro rail project to new airports and redevelopment drives. Contents Bangalore Any noteworthy improvement in the realty ambience of these Impact of Union Budget 2018-19 on the Key highlights - North, West & Central cities now relies on an effective RERA implementation. Plausibly, Indian real estate market Bangalore’s capital and rental market RERA-compliant projects might command a premium over others because of the additional costs borne by the developers in the process. Marketers could employ buyers’ trust while Foreword 03 Market Movers 07 Demand-Supply Analysis 11 deciding the price and sales strategy for RERA-approved projects. 99acres’ perspective on current market News that impacted Bangalore’s realty Demand-supply trends of residential The raft of reforms and legislations passed in the last two years – sentiment market in Jan-Mar 2018 apartments in Jan-Mar 2018 Demonetisation, RERA and GST – have now started coxswaining the market into a consolidation mode. This could mean fewer National Outlook 04 Bangalore at a Glance 08 Annexures 12 new project launches across budget segments. The increasing preference for affordable homes, however, would drive realty Snapshot of real estate ambience across Capital price movement in key dynamics in the long haul. Apart from a healthy end-user demand, top 8 metro cities micro-markets of Bangalore the Government’s thrust through incentives such as granting infrastructure status in Union Budget 2017-18 and the setting up of Market Indicators East and South Bangalore an affordable housing fund in this year’s Budget announcement will 05 09 ensure a rising appetite and supply for such projects across country. Changes in capital rates and inventory Key highlights - East & South status QoQ; and rental values YoY Bangalore’s capital and rental market 99acres 99acres 4 INSITE : BANGALORE India’s No.1 Property Portal India’s No.1 Property Portal INSITE : BANGALORE 5 National Outlook Market Indicators HOME BUYING SENTIMENT Capital Values Rental Values Supply With the industry getting accustomed to RERA and GST, market was seen regaining normalcy in the first quarter of 2018. Enquiries from fence-sitters resurfaced across metros with a reinstated interest in the under-construction category. Growing transparency and improved processes are expected to fuel BANGALORE this trend in the future. DELHI NCR PROPERTY PRICES MUMBAI Despite burgeoning enquires, piling inventory restricted price appreciation, particularly in Delhi NCR. Infrastructural overhauls, a few new launches and incremental ‘asks’ in the resale market, fuelled price growth in some micro- markets of Mumbai, Pune and Bangalore. Affordable pockets will monopolise CHENNAI end-user demand, keeping capital growth in check in the forthcoming quarters. PUNE HYDERABAD RENTAL LANDSCAPE The obtuseness in the buying market has unabatedly benefitted the rental landscape over multiple quarters. Lease values burgeoned across metros, YoY. Affordable pockets and areas in proximity to transport corridors ruled the KOLKATA roost with maximum traction, pushing rental ‘asks’ further. Speculations of an improvement in the rental values in the ensuing quarters are rife. AHMEDABAD * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com SUPPLY Stringent laws under RERA circumscribed new supply; however, progress on project registrations spiked under-construction inventory across cities. The resale market swarmed with properties across budget segments. RERA-approved supply in the affordable segment remained low this quarter. New launches are anticipated to resurface with increased compliance in the months to come. 99acres 99acres 6 INSITE : BANGALORE India’s No.1 Property Portal India’s No.1 Property Portal INSITE : BANGALORE 7 IN F CUS Market Movers BUDGET 2018-19 The real estate sector expected Union Budget 2018-19 to address concerns pertaining to concessional GST Private equity deals swarm residential and retail markets for housing sector, regularisation of stamp duty charges, and changes in income tax slabs. While these were left The city witnessed multiple private equity deal closures in the residential, unanswered, a slew of announcements pertaining to ‘Housing for All’ counterbalanced the lack of attention to real estate expectations. commercial and retail segments. An influx of institutional finance is expected to improve real estate sentiment. Blackstone is amongst the biggest fund-raisers in the city. INFRASTRUCTURE UPGRADES Focus on infrastructure development is anticipated to create new real estate pockets and boost housing Bangalore Development Authority delays Master Plan 2031 demand with BDA has further delayed the release of the city’s Master Plan 2031 after the initial Funding worth Rs 5.97 lakh crore to infrastructure upgradation rd A capex of Rs 5.35 lakh crore to Bharatmala project Phase I for strengthening road network January 23 deadline. The final report of the Revised Master Plan (RMP), which was National highway budgetary allocation of Rs 71,000 crore to be released by May-June 2018, will now face a delay of around six months, leaving the city’s development dependent on the timeworn RMP 2015. AFFORDABLE HOUSING FUND Authority privatises redevelopment of commercial complexes Increased focus on the affordable segment is evident from the establishment of a dedicated affordable housing BDA has partnered with private developers to rebuild seven commercial complexes fund worth Rs 60,000 crore under the National Housing Bank (NHB) located in Indira Nagar, Koramangala, HSR Layout, Sadashiv Nagar, Vijay Nagar, A target of 37 lakh homes in urban areas and 51 lakh homes in rural India in 2018-19 RT Nagar and Austin Town. Access to cheaper and alternative funds to boost low-income housing Reduction of GST to an effective eight percent from earlier 12 percent on homes purchased and constructed under Credit linked subsidy scheme (CLSS) State ends land acquisition woes at Kempegowda Layout The 10-km long Peripheral Ring Road-II between Magadi Road and Mysore Road cleared its final hurdle with BDA managing to acquire the required 321 acres of land DISINVESTMENT from farmers. Post this breakthrough, work on development of Kempegowda Layout A disinvestment target of Rs 80,000 crore for FY 2018-19 will open new pockets for private developers is expected to start soon. This will offer aid to private developers for buying landlocked parcels The move is expected to address the housing shortfall that India currently faces Karnataka RERA approves 1,500 realty projects Out of the 2,100 project applications received, Karnataka RERA approved more than 1,500 real estate projects, with majority of them located in Bangalore. Additionally, approximately 1000 agents/brokers, too, have been registered under the Act. 99acres 99acres 8 INSITE : BANGALORE India’s No.1 Property Portal India’s No.1 Property Portal INSITE : BANGALORE 9 SOUTH AND EAST BANGALORE Bangalore at a Glance Undeterred by the piling residential stock in select pockets, the East and South zones managed to stand resilient to the uncertain market forces elicited by snail-paced project registrations process under RERA. Robust commercial expansion kept stakes high for residential investments, resulting in the zones to maintain status quo in the current quarter. Price movement in key micro-markets Key Highlights Locality Average ‘Ask’ Rate QoQ YoY Residential