The mid-segment housing, priced around Rs 75 lakhs, witnessed a temporary lull in demand after the 2008 price correction. However, the surge in demand for these units of late is a clear indication of the changing market perception. The reasons are not far to seek. Property developers can create more amenities hitherto unheard of for such units in the city. With the improvement in connectivity levels and transportation network, homebuyers are keen to invest in such units, particularly when they are associated with a range of amenities. In fact the midsegment constitutes most of the demand in housing in the country today.
While location-specific city centric homebuyers are keen to invest in mid-segment units even if the area is reduced, the perception is now changing for the same units when accompanied by a range of amenities in suburbs. Property developers can provide such amenities in suburbs due to availability of larger land areas at lower prices in suburbs. In fact, the reality among industry circles today is that what was available in the price range of Rs 30-40 lakhs per unit a few years ago is now priced at Rs 50-75 lakhs. This is due to the steep increase in land prices, input cost, labour shortage and government levies. Steel, cement and labour are the key components, and they alone constitute almost 75 percent of the overall construction costs.
A significant difference in the mid-segment housing available in city, and in suburbs, is the range of amenities like club house, lush greenery, more open area, gymnasium, swimming pool, shopping and a creche. This has encouraged a number of homebuyers looking for investments in the midsegment category to plunge into investing in the suburbs. This is yet another reason for the leading developers to enlarge their area of operation in suburbs where the number of units can also be increased to justify provision of such amenities as an integral part of the project.
According to leading developers in the city, when wellknown developers enter the mid-segment, homebuyers are convinced that there will be more value for money in terms of construction quality, delivery schedule and amenities. This is one reason for the sudden revival of demand for midsegment units in areas such as Sarjapur Ring Road, Whitefield, Old Madras Road and Electronic City.
Property consultants feel that more developers might join the bandwagon in the months to come as the demand for such units is growing especially with the improved connectivity levels and transportation network across the city. Inclusion of education, hospital and other recreational facilities would further enhance the demand for such units in the years ahead. They feel that this can only happen in suburbs where land availability at competitive rates would be feasible.
The mutual funds that are focusing on the residential segment are also keen to enter this segment as there is continued demand for such units and the exit route would be shorter. This has enabled a number of mid-sized developers in the city to focus on this segment. Even the promoters of joint venture developments on the anvil across the city are focusing on this segment as developers are convinced about the growing market for such units in the years ahead, say property consultants monitoring the market scenario in the city.
In spite of the consecutive hikes in home loan lending rates, the number of enquiries received for investments in units in the price range of Rs 60-75 lakhs is constantly growing in the city, according to banks. End-users are keen to enter the market defying the rate hikes. The continued level of interest evinced by them is a clear indication of the robust demand for such units in the city.
Source: Times Property in The Times of India, Bangalore
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