Unsold inventory issues to continue in Bangalore

With bank loans getting easier to access, Bangalore Kars are making hay out of it. But the gap in between available units and unsold units is blatantly high in the last 2 years. With new real estate reforms and other regulations, many realtors are finding it hard to manage their finances. Bangalore ranks first among all major Indian cities to have the highest number of unsold units for any financial year, despite the fact that it has one of the most respectable cost of living and buying capacities in the country! It is also one of the most crowded cities in the country.

So what will be reason for this huge gap in demand and unsold inventories in Bangalore city?

 Here are the 5 observations made by the real estate experts of Bangalore city and cities of India on unsold inventories at the start of this year’s festive season.

 Focus is on 1 BHK

There are over 2 lakh unsold units in Bangalore and its satellite towns. Majority of them are 2 BHK Plus units. Luxury projects account for 50 per cent of the unsold properties. As the maintenance and surcharges continue to rise in the market, buyers are sticking to the convenience-driven options of 1 BHK and even 1 RK. It is easier for buyers to repay the home loans available for cheap flats in Bangalore.

No change in attitude of the developers

Despite the piling up of the unsold units in the commercial capital of the country, the developers and investors are not ready to let go of the situation. For them the prices matter and they are holding onto it adamantly.  Bangalore’s unsold inventory term lasts for just under 4 years. Experts believe that the inventory should not be held for more than 12 months, but in city centre, it could be as high as 46-60 months. This has led to artificial deficit in the real estate market in some of the posh localities of South and North Bangalore.

Unproductive pricing index

At one end the city is facing shortage of affordable homes and on the other, the new projects are coming up like yeast moulds. The unsold inventories are a clear indicator of how flawed the pricing index is in the city. The highly unproductive prices require immediate correction to boost sales.

Vacant flat taxes futile

Moreover, despite levying of vacant taxes on unsold or vacant units, the investors are not worried about them. Even if the prices drop, the investors are not passing the benefits to potential buyers.

Base population demands ignored

The focus of the builders seems to be on high-end buyers who are ready to invest in INR 1 Crore plus. The average buyers prefer to move out of the city and invest in tier II townships around Sarjapur, Electronic City, and even Koramangala.

As developers continue to ignore base buyers, unsold inventory issue is not going to die soon.