Homes and Interiors | Trending now: plots & independent homes

Bengaluru is a bustling metropolis and is the fifth largest city in the country with a population of over nine million. From a pensioner’s paradise to the ‘Silicon Valley’ of India, the metamorphosis of the city has been nothing short of remarkable.

Post liberalisation and globalisation, multi-national companies (MNC), especially from the information technology (IT) sector, came to the city in droves, which improved the employment rates and drastically increased the per capita income rates. The IT sector was directly responsible for the aggressive real estate development in the city since it prompted the demand for quality accommodation; thus, the era of high-rises and luxury villas began in the city.

What’s the verdict?

Since Bengaluru is essentially an end-user driven market, the real estate sector is far less volatile than the other metropolitan cities in India, in both the residential and commercial segments. Studies have proven that the city has the lowest unsold residential property inventory in the country. Last year was extremely eventful for the realty sector and set a new benchmark for the sector to follow; with the implementation of Real Estate Regulatory Authority Bill (RERA), goods and services tax (GST) and demonetisation.

All these measures altered the playing field and improved the level of awareness among prospective buyers. However, for a variety of reasons, these recent changes have had little or no impact on the Bengaluru real estate market. In fact, Bengaluru was recently named one of the top cities in the world for prospects in terms of both investment and development, beating cities with better infrastructure like Sydney and Tokyo. The reasonable pricing structures, multicultural environment and rapidly improving infrastructure has turned Bengaluru into a dominant force in the realty sector of the country.

Purchase scene in the city

Zippserv recently conducted a Bengaluru specific study by analysing over two lakh property transactions in the city, tracing their buying patterns and the impact of pricing on buyers when it comes to residential transactions. The results revealed the behavioural trends and preferences of buyers over the past year. According to this study, the market for plots, independent houses and resale apartments is around three times the market for new apartments in terms of the number of transactions.

With the onset of RERA and GST, most builders have revised their strategies and operations resulting in a dip in the construction of new apartment blocks. According to the study, close to 40,000 units were launched in 2016 in comparison to 16,000 units in 2017 in Bengaluru, and the percentage drop in sales came to 26% in 2017. The only silver lining was that the total unsold inventory decreased from about 1,20,000 units to around 95,000 units.

The total number of plots sold in 2017 in the three most popular sizes, 30x20, 30x40 and 60x40, were more or less equal to the total number of primary apartments sold. More than 80% of these transactions for plots were resales. This is markedly different from the behaviour pattern for apartments, where only 25-30% of the total apartments sold in Bengaluru were resales.

This contrast may largely be due to the fact that traditionally Bengaluru has had more plots and independent houses and hence, there is a greater chance of resale transactions in this case. The buyers of these secondary properties are mostly middle-aged and fall in the age group of 35 to 45. They are mature, careful and actively look for returns on investment, which means that they tend to prefer convenience over pricing.

There are region-specific differences as well. North Bengaluru and South Bengaluru account for around 70% of the plots and independent houses sold in Bengaluru, whereas 65% of the total transactions for apartments were in South and East Bengaluru. South Bengaluru is generally considered a much better investment or residential destination, as it accounts for a significant portion of the newer apartments and plots. Prospective residents of East Bengaluru prefer apartments over plots as well, whereas in North Bengaluru the trend clearly leans towards independent houses or villas over apartments.

Plotting investments

Most people believe that empty plots in prime areas are usually a better investment option than apartments since it is easier to resell them. Another way of looking at this information is that people seem to be buying plots purely from an investment angle than a consumption angle. Buyers of resold apartments prioritise convenience (proximity to office, school etc) over price. Hence, they are typically open to higher price purchases. Also, since their intention is end-user rather than investment they opt for an apartment which comes with a far lower chance of legal hassles (like khata or occupancy certificates).

Neeraj Venugopalan, a resident of Bengaluru, works with a large software company and lives with his family in an independent house near Whitefield. In spite of the fact that he is not originally from the city, he preferred to buy a plot and have a villa constructed according to his specifications. He says, “After years of living in rented apartments, both my wife and I had very specific ideas about how we wanted our home to be. None of the existing projects matched our demands and budget, which is when we decided to take this step. It was definitely more time-consuming than just buying an apartment or a villa in a township but also more fulfilling and cost-effective.”

There are different market segments and demand chains in every city, but the fact is that homebuyers today have evolved. A decision is taken only after thorough research and for the most part, they cannot be swayed by flashy offers or brand names, instead opting to do whatever feels best for them as buyers.

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(The author is co-founder & CEO, Zippserv)