The Bangalore residential property market saw absorption of 4,290 units in the second quarter this year against 4,182 units in the first quarter, pushing the absorption rate up from 11 to 12 per cent, according to Jones Lang LaSalle's survey. While unsold stocks in Q2 remained at 32,854 units when compared to 32,978 units in Q1, vacancy rate has declined from 51.1 per cent to 49.5 per cent. This increase in demand was due to a combination of factors like improved sales for built units, investor sentiment over buying than renting and the entry of investors from other Tier I and II cities.
In all 18 residential projects were launched across the city's submarkets in Q2, offering 4,130 units against 5,791 units in Q1. Meanwhile, 15 residential projects comprising 2,336 units across various sub-markets were withdrawn from the active stock as they were completely sold out.
The Hosur road sub-market, comprising Electronic City, Bannerghatta Road, Sarjapur Road and the south-eastern parts of the outer ring road, contributed 35.0 per cent of the total new units available in Q2, while Bellary road sub-market accounted for 10.6 per cent. The secondary sub-market, comprising Indiranagar, Koramangala, RT Nagar, Sanjay Nagar, Old Airport Road, Banashankari, BTM layout, Marthahalli and parts of Sarjapur road, contributed 10.0 per cent of the total and the Tumkur road sub-market accounted for 17.2 per cent.
Among the landmark projects launched during the second quarter, specific mention should be made of DSR Sunrise Towers, Vaswani Brentwood, Embassy Lake Terrace, SJR Paddington, Brigade Orchids and DivyaShree 77'East.
Capital values appreciated marginally across various sub-markets due to increase in sales volumes and prices at most projects that are nearing completion. In fact, rentals rose in Q2 due to the influx of people and shortage of built apartments. The trend is likely to increase over the remainder of the year due to expected improvement in IT/ITES employment figures.
"The residential market is likely to continue its steady demand during the remainder of the year. Capital values are expected to stabilise and rentals for residential properties in the city are forecast to record marginal growth," says N S Srinivasa Reddy, Assistant Vice-President-Research, Jones Lang LaSalle. There may be fewer residential launches during the remainder of this year due to stable demand and large inventory of unsold space. However, areas like Whitefield, Sarjapur Road, Bellary Road and secondary sub-markets are expected to see a modest number of launches.