Bangalore propertyBANGALORE (Sept 10): Bangalore's residential property inventory overhang hit new peaks at 32 months, with more than 84,000 unsold housing units by the end of 2Q15, reported JLL India.

Bangalore has surpassed Mumbai in this respect for the first time, taking the runner up position in this residential real estate inventory overhang with only the National Capital Region (NCR) ahead of it, said JLL.

“Given the rising land costs and expected cash flow issues, developers have been launching new projects in the last few quarters. The situation, however, does not reflect a disconnect between developers and buyers,” said JLL India chairman and country head Anuj Puri.

“Developers say there have been sales but buyers’ sentiment has been affected by macro-economic conditions, causing them to put their buying decisions on hold,” he added.

He also highlighted that although there is a high hangover rate, developers are willing to wait until their projects sell off.

JLL India attributed developers' confidence to the fact that they believe Bangalore is still a very end-user market, quite unlike Mumbai and NCR, which have traditionally been speculative, investor-driven markets.

The key characteristic of a stable market still exists in Bangalore it added.

In general, units in the price range of Rs35-80 lakh (RM221,827-RM507,035) sell off quickly in Bangalore while units with ticket sizes of Rs1 crore (RM633,794) and above take longer to sell.

Most of the ticket sizes for most projects in the city range from Rs75 lakh to Rs1 crore, said JLL India. It is also observed that sales are slow only in relatively less popular locations such as the western part of Bangalore-Mysore Road and Tumkur Road.

“Meanwhile, there is a good and stable demand in areas like Sarjapur Road, Bellary Road, Kanakpura Road and Varthur (in Whitefield) because of the good accessibility from IT parks,” Anuj remarked.

Anuj said that without a doubt, developers should have waited longer before launching so many more projects over the last few quarters.

“Though they may be confident of the situation changing for the better due to the latent demand in the market, sales and buyer sentiment are both likely to remain slow for some more time,” he said.

Moving forward, Anuj said developers would be well-advised to launch projects after fully understanding the prevailing market conditions.

“It is important to balance out the existing demand-supply mismatch for two reasons -- so that it does not start affecting price dynamics and so that there is no convergence from a stable to stagnant mode in terms of pricing due to the increased overhang,” Anuj concluded.

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