Bengaluru’s residential property inventories overhang is at about 32 months at the end of the second (January-June) quarter of 2015.

“With more than 84,000 unsold housing units by the end of the second quarter, , Bengaluru has surpassed Mumbai for the first time and is the second-highest residential real estate inventory overhang after the National Capital Region (NCR),” said Anuj Puri, Chairman and Country Head, JLL India.

Talking on market dynamics, Puri said: “Generally, units in the price range of ₹35-80 lakh are sold quickly in Bengaluru. Units with ticket sizes of ₹1 crore and above take longer to sell.”

Location dynamics “Today, ticket sizes for most projects in the city range from ₹75 lakh-1 crore. Also, sales are slow only in relatively less popular locations such as the western parts of Bengaluru, Mysore Road, Tumkur Road,” he explained.

On the other hand, good and stable demand is observed in areas such as Sarjapur Road, Bellary Road, Kanakpura Road and Varthur (in Whitefield). Accessibility to IT parks is the prime reason for its popularity.

Referring to inventory overhang across the country, Puri said: “Given the rising land costs and expected cash flow issues, developers have been launching new projects in the last few quarters. The situation, however, does not reflect a disconnect between the developers and the buyers.”

User-driven market “Though the overhang is higher due to launches, developers are willing to wait until their projects are sold. The primary reason behind their confidence is the fact that Bengaluru remains an end-user driven market – quite unlike Mumbai and NCR, which have traditionally been speculative, investor-driven markets. The key characteristic of being a stable market still exists in Bengaluru,” he added.

Puri said: “It is important to balance out the existing demand-supply mismatch for two reasons - so that it does not start affecting price dynamics, and, the market does not move from stable to stagnant mode in terms of pricing due to increased overhang.”

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