'Bangalore sees record home sales'

City saw new launches of 10,000 units in the March quarter

Bangalore, the country’s information technology hub, has seen sales of 7,000 residential units in the January-March quarter, the highest since 2008, according to a Bank of America-Merril Lynch (BofA-ML) report.

“The flurry of new launches, affordability, rise in the number of investors in Bangalore and softening of rates expected in CY 2013” could be triggers for the record sales, BofA-ML analyst Abhishek Kiran Gupta said in a note.

Bangalore saw new launches of 10,000 units in the March quarter, the third time since 2008 where it has seen such numbers, Gupta said.

According to BofA-ML, the absorption of homes in Mumbai has slightly improved compared to the preceding quarters as the developers of new projects are offering discounts. “No developer has officially cut base prices yet. However, they are offering discounts through 20:80 schemes, stamp duty waivers, floor rise waivers and other freebies to attract buyers. Most new launches in the first quarter have been at a discount to average market prices. Projects announced by renowned brands such as Larsen and Toubro and Lodha witnessed robust sales in the first quarter of CY13,” Gupta said.

Prices in Mumbai city have grown at a CAGR of 14 per cent over the last 10 years. Gupta believes his trend is unsustainable and prices in Mumbai will have to correct and remain subdued over next two to three years. Today, the most affordable project within Mumbai city quotes at Rs 10,000 per sq ft which translates to Rs 1.5 crore for a two bed-room apartment. Further analysis shows, households with annual income  Rs 35 lakh will be able to afford such an apartment, he said.

According to BofA-ML, absorption of homes has slowed in Gurgaon due to rising prices. Average prices in Gurgaon have risen 4.5 per cent in the March quarter. “We attribute this trend to lack of new launches by renowned developers; Gurgaon has lowest unsold inventory in the country and high speculative market. We believe this trend of relentless rise in prices could prove a dampener in the future," Gupta said.