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Bengaluru + Chennai - Residential Realty Update

Wednesday, December 28, 2011

Bangalore / Bengaluru
Absorption in Bengaluru remains healthy; average for the past one-year is more than 6msf per month.

New launches were the least in past one-year. 4msf of new launches compared to monthly average of 7msf for the past one-year.

Inventory level maintained at 80msf, high but not alarming. Inventory level in months of sales is at 15, within the range of 13-15 for past 12 months.

In nutshell, even after series of launches, high absorption has helped inventory level to keep in check. While absorption at ongoing rate and slower pace of new launches can keep the prices stable or help them to rise, a weak quarter in terms of absorption can push the inventory level higher and result in price correction.

Chennai
Absorption in Chennai has come down to 3msf from 5msf six months back; however, it is still much above the level of 1-1.5msf it witnessed two years ago.

Absorption in October was at a respectable level of 3msf, considering the city’s appetite.

New launches have reduced considerably due to lack of approvals from government authorities. Launches in the past three months together were as low as 5msf, which is lower than the average monthly launch a few months back.

The slower pace of new launches and reasonable absorption levels have reduced the inventory level to 32msf from 41msf six months back. Inventory in months of sales is also at a manageable level of 12.

In nutshell, the city is well placed compared to most other metros in the country. Slower pace of new launches combined with reasonable demand has
managed the property prices to stabilise at current levels and we don’t see possibilities of significant property price correction here.

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