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Bangalore firms turning to budget housing to beat crisis

The global financial crisis has hit the Indian real estate sector. Property consultant Cushman & Wakefield (C&W) says the realty sector will be impacted for the next 2-3 years and JonesLangLaSalleMeghraj (JLLM) issued a statement recently saying, “The global economic meltdown is, beyond doubt, taking its toll on India’s realty sector. We can safely expect the current dynamics to prevail to varying degrees for another 14-18 months. Residential, office and retail have all been impacted at various levels.”

In Bangalore, the residential market is witnessing a slowdown as potential buyers wait in anticipation that home prices, which have dropped over the last year, will continue to decline. Developers are doing everything possible to boost sales — discounts in prices couched in schemes such as bearing 2-3% of the interest cost, flexible rates for parking, floor rise pricing as well as throwing in freebies, including semi-furnished homes. Consultant Asipac Projects says land prices in most Bangalore suburbs continued to soften, with asking prices in the east, south-east and the south down 10-25%. According to Asipac, prices of residential projects in the technology hub of Whitefield and in Marathalli were 10-18% lower than the 2006 peak levels. Barring the Koramangala suburb, prices across segments in south were down 12-25% from 2006 peaks, it said. Prices in the central and north-west areas were stable while north and north-east saw continued upward movement, perhaps due to opening of the airport, the report said.

As the realty sector rushes into affordable housing to survive the slowdown, Bangalore-based firms too are innovating to cut costs and delivery time to contain the interest factor. Mantri Developers is working on ‘factory homes’ for its foray into budget housing. Citigroup-backed Golden Gate, Puravankara subsidiary Provident Housing & Infrastructure, UIOF-backed Ozonegroup and Vakil Housing have outlined similar plans.

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