While the months of April and May witnessed meek housing sentiment amidst the nationwide lockdown, the realty sector saw renewed interest from buyers starting June 2020. A report on the Bengaluru realty market in Q2 by property website 99acres states that East and South Bengaluru garnered the maximum property sale enquiries during the months of April to June.
The demand for land parcels priced within Rs 25-50 lakh in Sarjapur, Devanahalli, and Hoskote went up as homebuyers preferred affordable plots, which are not covered under RERA (Real Estate Regulatory & Development Act). However, the sales volume remained meek due to the unstable job market.
A handful of residential projects were launched digitally within Rs 45-90 lakh in April-June 2020. The validity extension of property registration by nine months under Force Majeure was a breather for the developer community. With the current market conditions, builders are likely to concentrate on completing ongoing projects and selling the existing stock to improve cash flow management.
On a positive note, the COVID-19 led lockdown opened up avenues for technology-assisted buying in Bengaluru, making it feasible for buyers to inspect properties online through virtual site visits, 3D floor plans and e-brochures. The builders, on the other hand, started receiving enquiries mostly from serious buyers. The reduction in guidance value and attractive offers before the festive season are likely to kick-off the revival cycle in Bengaluru realty around October-December, this year, the report says.
In Bengaluru, in the second quarter of 2020, the residential rental market reported a negligible hike of 1% on average ‘asks’, year-on-year. The tenant community renegotiated agreements to reduce rental rates and sought deferment of rent by a few months. The co-living sector also faced a major hit as tenants started looking for separate accommodation to maintain physical distancing norms. It resulted in higher rental enquiries in the April-June 2020 quarter. The possibility of rental growth seems low due to increased unemployment and potential pay cuts. It will have an adverse impact on the rental yield of the popular residential hubs in the city.
Homebuyers are looking at better-priced deals, attractive offers and flexible payment plans to finalise their purchase decisions. Developers, on the other hand, are selling at an all-time low and are burdened with managing the cash flow due to rising raw material prices, interest costs and remobilisation of labour, and are not in favour of reducing the property prices further. This situation has further caused a stalemate in demand.
On the commercial front, many companies are interested to continue supporting the “Work from Home” option even after the lockdown ends. Companies are either planning to surrender a part of their offices or renegotiate deals to save on annual lease agreements.
Overall, the pandemic forced the realty sector to undergo a sudden digital transformation as developers shifted to virtual tours and offered discounted schemes to close deals online. The tenant community faced a shift in sentiment in favour of owning a home and the popular commercial segment of co-working – felt the need for massive design alterations to meet the physical distancing norms. However, with the crisis bleeding the industry of a speculated Rs 1 lakh crore by the end of this financial year, these transformations are much required to ensure sustenance, the report says.
99acres.com was launched by Info Edge India Ltd. in September 2005. The website enables easy access to a vast property bank and allows direct connection with brokers /builders in cities as well as remote parts of the country.