Muthuraman S doesn’t hear any lighthearted banter about cars and real estate in the cafeteria anymore. “The buzz around property is dead, blame it on the rising interest rates. I have even stopped looking at letters that my bank sends me. The interest rate for my home loan has increased from 8.9% to 13% in the last two years,” says the business development manager with an IT firm.
But some of Muthuraman’s colleagues are looking keenly at the sub Rs 40 lakh homes. “It’s a question of affordability,” he says.
It’s the segment that’s still growing at a decent pace. And even branded developers are increasingly focusing on it.
Suresh Rangarajan, CEO of Artha Property, says his customers are those who are buying entrylevel hatchbacks. “We offer value deals in large gated communities.” The company has sold 175 out of the 350 villas in Grihasta in Sarjapur priced in the Rs 26 lakh to Rs 40 lakh range (excluding registration charges).
Developers are leveraging on lower land valuations on the city periphery and creating smaller units to bring prices down. Mantri Developers’ project Mantri Alpyne in Uttarahalli, where flats start at Rs 27 lakh (excluding registration) is seeing higher sales compared to Mantri Glades in Sarjapur, priced at over Rs 60 lakh.
Both the projects were launched around the same time. “We have got more queries for Alpyne compared to any other project. Though the operating profit in affordable projects is not high, volumes are better,” said Sushil Mantri, CMD of Mantri Developers.
Mantri is selling Alpyne at Rs 2,700 per sft. The profit margin is around 15%. The land was bought many years ago, so that cost is low. “But high inputs cost is hurting our margins,” Mantri says.
Brigade Enterprises has launched Brigade Meadows in Kaggalipura village near Kanakapura Road priced between Rs 17 lakh and Rs 25 lakh. DLF is planning an affordable housing project in Hosur at Rs 25-30 lakh.
Prestige has launched Prestige Tranquility, a 38-acre residential development in Budigere off Old Madras Road where a studio apartment comes for about Rs 20 lakh and a 2 BHK flat measuring 1,100 sft is priced at about Rs 28 lakh.
Real estate analytics firm PropEquity finds that the unsold inventory in Bangalore in the Rs 50-75 lakh apartment category has increased from 5,118 units in Jan-March quarter to 5,482 units in the second quarter. “The Rs 60-75 lakh market usually meet an investment option,” said M R Jaishankar, CMD of Brigade Group. “They are usually second home buyers. There is a larger chunk of buyers in the sub-Rs 40 lakh category,” he said.
The unsold units in the sub Rs 30-lakh category shrank to 7,322 in the April-June quarter, from 7,689 units in the January-March quarter, says PropEquity. However, this very segment had the highest unsold inventory, at 9,806 units, in the January-March quarter of 2010.
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