www.99acres.com BANGALORE RESIDENTIAL MARKET UPDATE JANUARY - MARCH 2020 Market Sentiment INSITE 99acres India’s No.1 Property Portal FROM CBO’S DESK The calendar year 2020 began with some Real Estate (Regulation and Development) hopes of a revival for the residential realty Act 2016, Goods and Services Tax (GST), market in India with an increase in property and more lately the liquidity crisis amongst enquiries in January and February. Sales NBFCs and developers. The industry expects volume, too, reported growth over the home buyers to returning to the market only previous months in most metro cities, gradually as social distancing restrictions get barring Delhi NCR and Mumbai, where lifted, even though prices are likely to come supply overweighed demand. New housing down. Pro-realty measures announced by the launches remained low as the liquidity crisis Government, including loan moratorium and continued troubling developers; however, repo rate cut by 75 basis points have helped the silver lining was the upcoming festive soothe the sentiment of uncertainty among season in March. Fast-forward less than a homebuyers, but the industry is looking to month and the outbreak of novel COVID-19 in more support from the government. India turned tables as construction activities Currently sitting with an unsold inventory came to a sudden halt, and restrictions on of around 6.24 lakh residential units and site visits shrunk property sales significantly. 15 lakh under-construction homes in top The announcement of the 21-day lockdown eight metros, the real estate industry would further marred hopes of a quick revival in need more definite growth stimulators business activities. The event is most likely such as further cuts in borrowing costs for to delay project deliveries by at least 2-3 homebuyers, staggered/deferred payments quarters, defer any new launches planned of various levies, support to NBFCs to and drive real estate prices downwards in improve their liquidity which in turn would most markets. mean better access to capital for developers, The real estate sector in India has and penalty exemptions for the delay in project completions for developers. It will Maneesh Upadhyaya effectively survived several past challenges starting with demonetisation, be interesting to see how the market Chief Business Officer followed by the implementation of behaves post-COVID-19. 99acres.com COVID-19 AND REAL ESTATE: A SNAPSHOT The outburst of novel Coronavirus in India has undoubtedly been detrimental to the economic health of the country, and both real estate and construction sectors have been at the receiving end, like many others. The initial impact was noted with reducing number of site visits, which gradually converted into fewer sale conversions. The subsequent 21-days nationwide lockdown put a temporary break on the construction work of over 15 lakh housing units across the top eight cities alone, further delaying project deliveries by a minimum of 2-3 quarters. IMPACT ON HOMEBUYERS IMPACT ON DEVELOPERS • Stalled work on under-construction units to further • Construction work comes to a halt due to curtailed delay completion timelines imports from China, soon followed by the lockdown in India • Reduced payment capacity amid economic slowdown and job cuts • Lack of sales to impede cash flows, further straining the financial health of developers • Festive offers postponed to the subsequent quarters • New launches and festive offers deferred for at least • Deal closers become challenging in absence of physical 2-3 quarters movement • Possible identification of COVID-19 outbreak as a • Reduced payment capacity amongst homebuyers amid Force Majeure event under Real Estate (Regulation and economic slowdown and job cuts Development) Act, 2016, to bring some relief • Extension of project completion deadlines amongst the IMPACT ON SELLERS biggest requests by the developer community • Reduced demand for under-construction units, and restrictions on site visits IMPACT ON REAL ESTATE AGENTS • A possible hike in negotiations in the favour of buyers • Direct hit on business during COVID-19-induced lockdown • Governmental initiatives resulting in reduced home loan interest rates, extended timelines to pay property • Increased dependence on digital platforms for taxes and deferment of EMIs via loan moratorium for networking three months to benefit homeowners 99acres India’s No.1 Property Portal NATIONAL MARKET OUTLOOK INDICATORS Capital Values Rental Values Supply HOME BUYING SENTIMENT While and January and February saw moderate recovery in sales across metro cities, barring Delhi NCR, the month of March saw site visits and transactions coming to a halt due to the outbreak of COVID-19 in India. Enquiries in the affordable segment stayed afloat; however, sale conversions are expected to remain bleak until the next quarter. DELHI NCR PROPERTY PRICES Barring Hyderabad, Bangalore and Ahmedabad, which posted a one percent uptick in capital ‘asks’, each, all metros saw prices remaining stable, QoQ. Unlike KOLKATA expectations, property prices may dwindle in the short- AHMEDABAD to-mid term due to dented home buying sentiment. Eventually, the COVID-19-infused slowdown might also mar the pace of realty growth across metros. MUMBAI PUNE RENTAL LANDSCAPE HYDERABAD Mumbai, Pune, Bangalore and Hyderabad posted a 3-4 percent growth in rental ‘asks’, YoY. Surplus housing stock in Delhi NCR kept rental rates under check. A slowdown in sales in the upcoming quarters may drive the rentals across cities. Bangalore and Kolkata were the most lucrative for rental income with the yield ranging between 3.65 and 3.75 percent. BANGALORE CHENNAI SUPPLY With sales limiting to the first two months of the quarter and developers missing on the opportunity to boost absorption around the festive season, unsold inventory remained largely unchanged at 6.24 lakh units in the top eight metro cities. There are about 15 lakh delayed under-construction units, which have been stalled 99acres temporarily due to COVID-19 crisis. India’s No.1 Property Portal * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com MARKET MOVERS K-RERA to improve dispute redressal mechanism Karnataka RERA has drafted a proposal to grant judicial rights to the authority to expedite the dispute resolution process between builders and buyers. In another move, the authority has set up a conciliation forum to enable out-of-court settlements by referring cases to an adjudicating officer. Work on Namma Metro in full swing Following the successful trial runs, the two metro corridors under the Phase 2 of the Namma Metro, Yelachenahalli Road to Anjanapura Township and Mysore Road to Kengeri would become operational from August and November this year, respectively. In addition, the metro authority acquired 93,000 sq metre land parcel on Bellary Road for the development of the elevated Metro corridor connecting Kempegowda International Airport. Tax burden to increase on homeowners COMMERCIAL The civic body has planned to levy Land Transportation Cess on all the property owners in Bangalore. The owner will bear the additional tax burden of two percent from April 2020 onwards. The proposed cess would be REAL ESTATE utilised for various urban infrastructure projects such as roads, drains, and installation of streetlights at different locations across the city. OUTLOOK State amends land reforms • Bangalore continued to dominate the office space market in The State amended the Land Reforms Act to allow companies to sell their India with an absorption of 15.6 million sq ft in 2019, a hike of land parcels with the condition that the entity is on the verge of collapse 15 percent, YoY. and require assets for debt settlement. However, the company can dispose of their land only after seven years of acquisition. In addition, the State has • Avant Garde Estates bought a 15,000 sq ft commercial land parcel proposed to introduce a process under the Act to procure agricultural land worth Rs 42 crore in Indiranagar. easily for setting up industrial projects. • Blackstone Group and Salarpuria Sattva acquired Global Village Tech Park, a 3.3 million sq ft office space, at Rs 2,500 crore. • Myntra leased three lakh sq ft office space at an annual rent of Rs 31 lakh from workspace solutions provider, IndiQube. • Google and Amazon plan to lease office space of about 1.2 million sq ft in Bagmane Rio Business Park and 2 million sq ft in North Bangalore, respectively. • Kovorks & Marvel Infrabuild plan to lease 15 lakh sq ft of co-working 99acres space with a capacity of about 25,000 desks in Whitefield. India’s No.1 Property Portal * 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 Jan-Mar 2020 QoQ YoY Rental % Change % Change Yield Whitefield 4,760 - 6,240 3% 4% 4% Demand Supply Electronic City 3,880 - 4,970 3% 6% 4% JP Nagar 5,390 - 6,370 2% 9% 3% Yelahanka 4,590 - 5,390 1% 5% 3% Marathahalli 5,010 - 6,460 3% 5% 4% Thanisandra 5,270 - 6,030 3% 0% 3% * 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 Hebbal 5,370 - 7,590 0% 2% 3% Bellandur 5,780 - 6,880 1% 5% 4% Kaggadasapura 3,690 - 4,460 -3% 0% 5% Uttarahalli 3,910 - 4,670 2% 5% 3% * 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 11 99acres DEMAND & SUPPLY India’s No.1 Property Portal DYNAMICS 99ACRES‘ 17% OUTLOOK 32% 22% Bangalore garnered steady flow of property enquiries in the first two months, however, sales remained meek in the quarter due to the economic slowdown.