Mid-market segment spurs revival
The Hindu Business Line, November 1, 2009, Page 17
Bangalore developers shift focus to the Rs 35-45 lakh residential segment as they see growing demand.
Anjana Chandramouly
The mid-market segment could again be driving Bangalore’s residential market. Developers now believe that this is where demand could be in the immediate future.
“Today, there is a lot of opportunity in high-rise projects. There is a huge demand in the Rs 35-45 lakh price bracket,” says Mr N. Anantha Naarayanan, Head – Homes (Karnataka), DLF Homes. And who are the customers? IT professionals with an annual income of about Rs 12 lakh. “There are more people who can afford a Rs 35-45 lakh home now than those who would want a Rs 80-lakh home,” he adds.
This is clearly the thought that is even forcing the company to take a fresh look at another project in Bangalore. A row-house project in Jigani Industrial Estate, 12 km from Electronics City, which even has almost all approvals in place, could be converted into a high-rise apartment project “if that is where the demand is”, says Mr Naarayanan.
The decision, he adds, would be taken in a couple of months “as we are trying to feel the pulse of the market now.”
What he feels works in the favour of high-rise projects is the easy saleability factor. With another project in the city from the same company having tasted success, being a high-rise apartment project with about 1,100 units out of the total 1,962 units planned being sold, the company wants to get the choice of segment right. “In today’s market, you cannot afford to go wrong. If the probability of success is higher with high-rise projects, we would want to go with the market,” he says.
Now, affordable villas
A little over a year ago, the mid-market segment in Bangalore meant the Rs 50-70 lakh price category. But today, as Mr Naarayanan points out, the mid-market is way below the Rs 50-lakh mark. It’s not just the mid-market where the price definition has changed.
The accent is on the affordable segment clearly, it seems, even if one were to be talking about villas! How else would one explain a villa in the Rs 50-70 lakh segment?
FIRE Luxur, a joint venture between FIRE Capital Fund and Mr Prabhu Ramachandran of the Nilgiris Group, recently launched an affordable villa project in the city — The Empyrean. Located on the outskirts, near Whitefield, the project will have two-bedroom and three-bedroom apartments starting at Rs 27 lakh and Rs 30 lakh, respectively. The row-house prices start at Rs 47 lakh, while villas have been priced above Rs 50 lakh and go up to Rs 1.6 crore for a 5,500-sq-ft property.
Mr Om Chaudhry, CEO, FIRE Capital Fund, says that the market for villas has evolved now from what it was in 2005 or 2006.
“In the last year or so, villas have become more affordable and the distinction between villas and apartments has blurred a bit,” he adds.
While affordable villas are “still a dream, that’s where we would like to be,” says Mr Chaudhry. Describing the Rs 50-70 lakh price bracket as a “sweet spot”, he adds that a bulk of the project’s offerings “is in this bracket”.
Demand picking up
Some developers feel that even in a recession-hit residential market such as Bangalore, the demand for villas has been quite strong.
“The valuations though have dropped just as other valuations. The market is not as large as before as the rental market for villas has come down quite a bit,” says Mr Koshy Varghese, Managing Director, Value Designbuild Private Ltd.
Mr Prakash Gurbaxani, CEO and Managing Director, QVC Realty, says his QVC Hills project, offering a gated community of single-family homes or villas, has seen enquiries picking up in the past two-three months. “Demand is also picking up,” he says.
He admits that villa prices have come down by 20-25 per cent from the peak pricing that Bangalore witnessed. “There is clearly a market for villas in most cities, not just Bangalore. Villas or gated community offer the community living and security option that apartments offer — and, at the same time, the privacy of an independent house.”
The silver lining, Mr Varghese adds, is the fact that villas are now being purchased by end-users mainly. “However, there are also investors trying to cash in on reasonable deals in this segment,” he adds.
Presence of speculators
Though those in the realty sector claim that speculator demand is waning, he says that speculators are already in the market.
“Many of them came in and picked up units that were going at low prices or distress sales. Even today, prices are worth the time of the investor.
“Many units will appreciate in time. Attractive investment opportunities are still available,” he adds.
And would an aggressive pricing strategy as adopted by FIRE Luxur bring back investors into the market? Mr Chaudhry of FIRE Capital says that as long as developers know who they are selling to, speculators could be avoided.
“We have deterrents in place to ensure that re-sale is avoided in a short span. The lock-in period would depend on the stage of construction that a buyer comes in and the price. We are also selective about our channels of distribution,” he adds.
Mr Sandeep Trivedi, Director - Development Consulting at Cushman & Wakefield, says that an aggressive pricing strategy does enable the investor community to consider the projects seriously and “from a long-term perspective the projects are likely to earn a fair return.”
The Hindu Business Line, November 1, 2009, Page 17
Bangalore developers shift focus to the Rs 35-45 lakh residential segment as they see growing demand.
Anjana Chandramouly
The mid-market segment could again be driving Bangalore’s residential market. Developers now believe that this is where demand could be in the immediate future.
“Today, there is a lot of opportunity in high-rise projects. There is a huge demand in the Rs 35-45 lakh price bracket,” says Mr N. Anantha Naarayanan, Head – Homes (Karnataka), DLF Homes. And who are the customers? IT professionals with an annual income of about Rs 12 lakh. “There are more people who can afford a Rs 35-45 lakh home now than those who would want a Rs 80-lakh home,” he adds.
This is clearly the thought that is even forcing the company to take a fresh look at another project in Bangalore. A row-house project in Jigani Industrial Estate, 12 km from Electronics City, which even has almost all approvals in place, could be converted into a high-rise apartment project “if that is where the demand is”, says Mr Naarayanan.
The decision, he adds, would be taken in a couple of months “as we are trying to feel the pulse of the market now.”
What he feels works in the favour of high-rise projects is the easy saleability factor. With another project in the city from the same company having tasted success, being a high-rise apartment project with about 1,100 units out of the total 1,962 units planned being sold, the company wants to get the choice of segment right. “In today’s market, you cannot afford to go wrong. If the probability of success is higher with high-rise projects, we would want to go with the market,” he says.
Now, affordable villas
A little over a year ago, the mid-market segment in Bangalore meant the Rs 50-70 lakh price category. But today, as Mr Naarayanan points out, the mid-market is way below the Rs 50-lakh mark. It’s not just the mid-market where the price definition has changed.
The accent is on the affordable segment clearly, it seems, even if one were to be talking about villas! How else would one explain a villa in the Rs 50-70 lakh segment?
FIRE Luxur, a joint venture between FIRE Capital Fund and Mr Prabhu Ramachandran of the Nilgiris Group, recently launched an affordable villa project in the city — The Empyrean. Located on the outskirts, near Whitefield, the project will have two-bedroom and three-bedroom apartments starting at Rs 27 lakh and Rs 30 lakh, respectively. The row-house prices start at Rs 47 lakh, while villas have been priced above Rs 50 lakh and go up to Rs 1.6 crore for a 5,500-sq-ft property.
Mr Om Chaudhry, CEO, FIRE Capital Fund, says that the market for villas has evolved now from what it was in 2005 or 2006.
“In the last year or so, villas have become more affordable and the distinction between villas and apartments has blurred a bit,” he adds.
While affordable villas are “still a dream, that’s where we would like to be,” says Mr Chaudhry. Describing the Rs 50-70 lakh price bracket as a “sweet spot”, he adds that a bulk of the project’s offerings “is in this bracket”.
Demand picking up
Some developers feel that even in a recession-hit residential market such as Bangalore, the demand for villas has been quite strong.
“The valuations though have dropped just as other valuations. The market is not as large as before as the rental market for villas has come down quite a bit,” says Mr Koshy Varghese, Managing Director, Value Designbuild Private Ltd.
Mr Prakash Gurbaxani, CEO and Managing Director, QVC Realty, says his QVC Hills project, offering a gated community of single-family homes or villas, has seen enquiries picking up in the past two-three months. “Demand is also picking up,” he says.
He admits that villa prices have come down by 20-25 per cent from the peak pricing that Bangalore witnessed. “There is clearly a market for villas in most cities, not just Bangalore. Villas or gated community offer the community living and security option that apartments offer — and, at the same time, the privacy of an independent house.”
The silver lining, Mr Varghese adds, is the fact that villas are now being purchased by end-users mainly. “However, there are also investors trying to cash in on reasonable deals in this segment,” he adds.
Presence of speculators
Though those in the realty sector claim that speculator demand is waning, he says that speculators are already in the market.
“Many of them came in and picked up units that were going at low prices or distress sales. Even today, prices are worth the time of the investor.
“Many units will appreciate in time. Attractive investment opportunities are still available,” he adds.
And would an aggressive pricing strategy as adopted by FIRE Luxur bring back investors into the market? Mr Chaudhry of FIRE Capital says that as long as developers know who they are selling to, speculators could be avoided.
“We have deterrents in place to ensure that re-sale is avoided in a short span. The lock-in period would depend on the stage of construction that a buyer comes in and the price. We are also selective about our channels of distribution,” he adds.
Mr Sandeep Trivedi, Director - Development Consulting at Cushman & Wakefield, says that an aggressive pricing strategy does enable the investor community to consider the projects seriously and “from a long-term perspective the projects are likely to earn a fair return.”
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