Domestic buying sees a rise in real estate market

Once NRIs lapped up almost 40 p.c. of apartment units sold

Bangalore's real estate market, which once saw non-resident Indians (NRIs) lapping up almost 40 per cent of the total apartment units sold, has seen a change now, according to industry insiders.

With the increasing number of domestic buyers investing in the realty sector now, the NRIs share in total sales of apartment units has dropped to about 20 per cent in the recent times.

Bangalore's market has been attracting investments from the expat Indian population, mostly Kannadigas, residing in the U.S., West Asia, Singapore, Australia and New Zealand.

Approximately 30,000 apartment units are sold in Bangalore annually now. In fact, 2007 recorded the highest number of units ever sold annually at 40,000 units.

“The percentage of local buyers investing in apartment units has gone up from 60 per cent to almost 80 per cent now with increasing disposable income with families as well as accessibility to housing loan,” Shankar Sastri, Secretary of Confederation of Real Estate Developers' Associations of India (CREDAI), Bangalore, told The Hindu.

Bangalore as a real estate market, he said, always interested the NRIs so much so that many developers had representative offices in the U.S., West Asia and Singapore even two decades ago.

Besides, the realty market here had done well in the last two years due to stability, pricing, safety, said R. Nagaraj Reddy, president-elect of CREDAI, Bangalore.

He added that Bangalore has always remained a “preferred city” among those wishing to invest in housing sector.

This trend of change in the profile of apartment buyers is being seen in housing applications too, says State Bank of India Chief General Manager (Bangalore circle) Ashwini Mehra.

“There are more number of applications from domestic buyers now though there is a continued interest from NRIs residing in the U.S. and West Asia. Nearly 20 per cent of the total housing loan disbursement has gone to NRIs,” he said and added that nearly 80 per cent of the applications in the NRI category came from those residing in the U.S. and West Asia.

T. Venkatesh Babu, a strategist with a leading Bangalore-based real estate company, said that the number of NRI buyers may have come down, as those regions are facing economic uncertainty.

“People tend to conserve cash in such situations and may not like to make high value housing investment,” he said. Also, the speculative buying in Bangalore-market has come down significantly after the 2008-2009 crash, he said.

Interestingly, a large number of domestic purchasers of apartments in Bangalore are from Delhi, Bihar, Uttar Pradesh, and partly from Hyderabad and Chennai. “Most housing loan applicants are young service sector professionals, including those in IT and ITES, who may have come to work here,” Mr. Mehra said.

He also acknowledged that Bangalore real estate sector may have benefited from the Telangana crisis with some spill-over coming here, though a major share has gone to Visakhapatnam.

Source: http://www.thehindu.com/news/cities/bangalore/article2937502.ece