The Reality of Realty
In the past three months, residential property prices in Whitefield, a plum location in Bangalore until recently, have dipped 10-20 per cent. “Prices could go down further to 30 per cent,” says Santosh Martin, CEO of DivyaSree Developers. In fact, a few weeks ago, a developer of residential apartments in Bangalore stated that he got no response to an advertisement for an upcoming project. Furthermore, when he went to bankers to tie-up retail home loan funding for his prospective customers, just one public sector bank was willing to fund 65 per cent of the flat cost. This as opposed to 85 per cent till a year ago!
Prices are dipping selectively in other cities as well; the offtake is slowing down. The National Capital Region (NCR), which saw 150-200 per cent appreciation in the past three years, is sluggish. “There is a clear slowdown in the past 45 days as people are deferring purchases of homes,” says Sunil Gupta, managing director, Omaxe Housing. “This should have a cool-off effect on the high levels of speculative investment activity in the real estate markets and should help in stabilising prices in the short to medium term,” says Vincent Lottifier, country head-India, Jones Lang La Salle.
There is an oversupply of commercial space in many pockets of the tier-I cities, which, in turn, impacts other segments. However, the trigger was pulled when the government decided to tighten money supply in the market by introducing a series of fiscal reforms, including retail interest rates.
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