Before the 2016 Budget was announced, real estate moguls and foreign investors bet big on the chances of revival of the real estate downturn in Bengaluru. The Budget, however, failed to keep up with the expectations of the sector. While some see it as a balanced budget, others think less of it. The sentiment is grim, and what’s making it worse is a demolition drive ordered by the Karnataka government in the city that is sending citizens into a tizzy.
The BBMP (Brihat Bengaluru Mahanagara Palike) alleged many properties to be situated on land encroached on the Stormwater Drain Network. They raised close to 2000 cases of encroachment, and in early August evacuated and demolished more than 800 such constructions. Many evacuees complained that they were not given prior notice or enough time to move their assets. And in many cases the properties were built on land with all governmental clearances and certificates. The irony was that much of those certificates were part of a bigger con game. The government is cracking down on bureaucrats, agents and builders who connived the encroachments.
These demolitions have flatlined the real estate sales graph in the city this year. However, premium builders who have adhered to governmental norms have nothing to hide. They continue at speed with the current projects, sure that the governmental crack down on shady builders will only add respect and value to genuine players.
There’s more bad news for the real estate sector. A new ruling by the by the National Green Tribunal (NGT) has barred all constructional activities within 75 meters from the site of any water body. The order also restricts builders from erecting buildings near feeder canals. Karnataka’s Environment Impact Assessment Authority has put on hold environmental clearance for 10 mega construction projects in Bengaluru, including large residential projects, for alleged encroachment of lakes and drainages.
The real estate market in Bengaluru is suffering a slowdown on the wake of the demolition drive and the recent National Green Tribunal order. The situation has compelled prospective buyers to reconsider their decision to invest in a house in the city. This has negatively impacted the property rates, which have slumped. Realtors say that sales so far have been rather flat as buyers want to wait and watch and that recovery has further slackened by 10 per cent which is not exactly good news for contractors, builders or real estate investors.
Sorry State? Not really!
The real estate of Bengaluru has remained one of the top high-performing markets in the entire country. It’s worthwhile to note that the slowdown is only a recent event that has affected the sales boom of the past few years. And so, although property prices have gone down by 30 per cent over the past quarters, there is no reason to lose hope. Seasoned industry experts are optimistic that the current circumstances will not deter potential home-buyers from investing in flats, apartments or villa projects in bangalore, which by all means is a city of opportunities.
Also, the slump in prices spells good news for foreign home buyers who have waited a long time for things to turn in their favor. Now is the time to book an apartment in the city without losing a fortune on it. As for the city economics, it’s only a matter of time before it revives and things get back to normal. Regardless, the rock-bottom prices are worth the wait.