Bangalore property market is showing steady signs of improvement on the back of a pick up in hiring activity and wage growth returning to the IT sector. Managements’ confidence in the physical market has markedly improved as seen in aggressive new launch plans for FY11 which are now being announced after a gap of almost 2-3 years. Most companies are launching projects that are 3-4x their historical sales levels in FY11 as unsold inventory levels have started to decline.
Our recent trip to Bangalore involving site visits and meetings with listed and unlisted developers/brokers/financiers shows that while the recovery is as yet nascent it is expected to pick up steam going into 2H. Transaction volumes in the residential segment have picked up noticeably over the last few quarters and the trend seems to be holding. Affordability both for residential and office segment remains healthy and this should propel volumes as demand returns.
Affordability in Bangalore’s residential market is healthy as pricing has not picked up materially, even as wage growth of 10-15% has started to return. Transaction volumes in the market have increased by 25% Y/Y over 2HFY10 and the trend seems to be holding. Our interactions with HFCs suggest that Bangalore is the only market which is showing growth in new customer acquisitions. Office rentals too seem to be bottoming out and leasing transaction is picking up driven by large MNCs.
No comments:
Post a Comment