APPD Market Report Article

Bengaluru

November 29, 2022

Dr Samantak Das, Head of Research, India & Sri Lanka

1.2%

INR 41.0

N/A

Demand for high-end residences down by 13% q-o-q

  • Demand was slightly sluggish during the quarter, which also coincided with a period of heavy rain. Buyers deferred decisions in anticipation of more discounts and offers from developers in the upcoming festive season, which led to a decline in sales by 13% q-o-q. Launches were also down in the quarter, likely affecting the sales momentum as well.
  • Better job security and salary increments in the tech industry have improved purchasing power in the city, resulting in a paradigm shift in buyer confidence towards large and trusted developers, as well as increased demand for more spacious homes with flexible configurations that allow for a lifestyle upgrade.

High-end residential supply down q-o-q

  • A large number of high-end project launches is expected given the upcoming festive season.
  • Several major launches during the quarter were by reputed developers like Assetz, Sobha, Maia Estates and Living Walls.

Capital values continue to rise alongside rents

  • Capital values rose by 2.5% q-o-q, largely due to the rise in construction costs, which developers have been passing on to buyers in phases. Some projects have also seen price growth due to healthy sales traction while new launches are being offered at higher prices as well, all contributing to the increase in capital values.
  • Rents rose 0.4% q-o-q. The return of the workforce to the city has pushed up the demand for high-end rental homes in a few city submarkets.

Outlook: High-end residential market to build on its gains

  • The rupee depreciation is supporting increased non-resident Indian (NRI) activity in the market, while attractive prices for the festive season and an increase in demand for high-end residences are likely to support sales going forward.
  • On the back of higher input costs, prominent developers plan to raise home prices again in the coming months. Rising interest rates may also cause disruption, but as rates are likely to remain below 9%, sales should not be too affected.

Note: Bengaluru Residential refers to Bengaluru's prime residential market.

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