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Stability at last?
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The demand-and-supply mismatch in India leaves us with a shortage of over 23 million residential units, says CREDAI-Karnataka. A look by RANJANI GOVIND
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A huge colourful map with nearly 200 housing projects spread across the length and breadth of Bangalore welcomed visitors at the CREDAI’s two-day real estate exposition (formerly KOAPA) last week in the city at Hotel Grand Ashok, Kalinga Hall. Sponsored by LIC Housing Finance and co-sponsored by ICICI Bank Home Loans, the two-day event featured 36 property developers from Bangalore who had projects not only in the city but also in Mysore, Chennai, Hyderabad, Pune, Goa and Kochi.
Advantage
Said Balakrishna Hegde, president, CREDAI-Karnataka, “The advantage lies in the fact that our body of real estate developers (bound by the Code of Ethics) bring to such expos not only projects in Karnataka but also from other cities where there is a boom. CREDAI-Karnataka also held an expo in Dubai earlier and its second international one is in Singapore this month.”
The growth in the real estate sector in India is evident from the Foreign Direct Investment (FDI) estimates for the next three years which is around $ 25 billion. The growing interest is due to increased earning capacity and change in perception of living standards, even as the real estate has emerged as a sunshine sector.
“The enhanced keenness of international private equity fund towards India is because of the unattractive options in the U.S. in the wake of sub-prime crisis and this is one of the factors directly creating a healthy environment for real estate in India,” adds Mr. Hegde.
Increased rates
Regarding residential demand, Mr. Hegde said, “The supply-and-demand mismatch in India leaves us with a shortage of over 23 million residential units, as of now. The growth story is therefore here to stay. Bangalore is still affordable with apartments available between Rs.2,500-Rs.3,000 per sq. ft. within 15 km from central Bangalore, whereas Mumbai is Rs.5,000-Rs.6,000 per sq. ft. for far- flung areas.”
CREDAI has announced an increase of Rs.75 to Rs.500 per sq. ft. in apartment costs due to increasing input costs, which works out to three to eight per cent of the existing rates.
Media reports since January 2007 had been stating that there would be a dip or crash in the real estate prices in Karnataka. However, the story from the ground told a different tale altogether. Though enquiries from prospective purchasers continued to be satisfying, the purchasers started to postpone their decisions, hoping that media reports would come true.
Study reports from top research organisations strongly refuted this myth, and one of them even said in November 2007 that capital values have stabilised in most micro-markets, especially in the suburbs, offering extensive development, but values are not dropping. This is because of the end user demand that continues to lend stability to the Bangalore market. The reports clearly indicate that Bangalore market has been stable all along.
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Property Plus
Bangalore
Chennai
Hyderabad
Kochi
Malabar
Thiruvananthapuram
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