BENGALURU: Here is another indicator to the ongoing economic slowdown biting the real estate sector hard. Going by the number of applications Bruhat Bengaluru Mahanagara Palike (BBMP) received in the last two years for property development projects, there has been a degrowth in construction activities.
According to BBMP data shared with The New Indian Express, while 6,693 applications were approved for low-rise structures (upto four floors) last year, the number came down to 5,875 this year (for 11 months till November end). Whereas 166 applications were received for high rise buildings last year, it has been just 60 this year (till November).
There has been a dip of 20-25% in the number of applications received and processed for high and low rise structures in the city, BBMP Additional Director (Town Planning) R Prasad told TNIE.
BBMP officials cited liquidity crunch as the reason for the situation. They also blamed the Bengaluru Development Authority (BDA) for creating “land locks” and not opening areas for development.
“It has also been found that land cost is increasing and young couples and entrepreneurs are no more interested in purchasing flats or homes in the city. They are no longer keen on investment in properties... This is also the reason why rents have gone up in the city. The middle-class in the city are no longer able to afford plots and homes,” said another BBMP official.
It has also been observed that property owners are not able to construct houses on plots they have bought. This is another reason for the dip in the number of applications for construction. The stringent RERA rules have also tightened the procedures. This could be another reason for the dip in number of applications, he said.
Confederation of Real Estate Developers Association of India (Credai)-Bengaluru Managing Director Kishore Jain said there is no growth in the residential real estate market. The crises non-banking financial companies (NBFC) are facing and the liquidity crush have also had an effect on real estate, he said.
Jain added that real estate has a direct link with the commercial growth of the city. According to government data, on an average around 3,000 migrants come to Bengaluru daily. Migrants make up for 40 per cent of Bengaluru’s population. Normally, those who come to the city stay in rented accommodation for at least 2-3 years, but now it is increasing to 4-5 years, he said.
6,693 vs 5,875
6693 applications were approved for low-rise structures (upto four floors) last year, the number came down to 5,875 this year (for 11 months till November end).