Want to buy a budget home in Bengaluru? Now is the time
There has been a six-fold rise in new launches in the affordable housing segment in the first quarter of calendar 2016, a clear indication that the policy push towards cheaper homes in Budget 2016 is showing results. A report from property consultant Cushman & Wakefield says such launches were 35% of the total, the highest in last two years. What’s more? Home in Bengaluru is leading the trend with 30% of such launches. The icing on the cake for buyers looking to find a home on a small budget is there has been a sharp drop in the launch prices of these new properties too. While the demand is yet to pick up, this might be your chance to land your dream home without stretching your budget.
Although there is no clear-cut definition of affordable housing, apartments below Rs 50 lakh are considered budget homes in metros and other major markets including Bengaluru. Meaning, projects in the price range of Rs 2,800 to Rs 3,700 per sq ft come under the affordable segment.
There were apartments in this range earlier but were housed in localities that lacked basic and supporting infrastructure. This was a big drawback for a realty market like Bengaluru that is end-user driven. “Schools, hospitals and shopping outlets in the vicinity as well as adequate connectivity are important to make a housing project viable. But these are often not available in the required magnitude in certain locations where affordable housing projects are being developed.So, there has been a mismatch of demand and supply, which will now hopefully be rectified,” says Anuj Puri, country head, JLL India.
“The exemption for affordable housing projects would bring in a 15-20% upside in profits after paying MAT for a real estate developer. That increases IRR which means it will be easier to attract foreign and domestic investment,” says Satish BN, executive director, South, Knight Frank India. More projects will mean the buyer will be spoilt for choices. Plus, this year’s Budget has provided an additional tax deduction of Rs 50,000 on interest repayment for loans up to Rs 35 lakh where the cost of the house is Rs 50 lakh. Another to book the flat this year. “The Real Estate (Regulation and Development) Act, 2016 getting implemented is also in favour of end-users and should give impetus to sales,” says Satish BN.
Basic and within budget
Although land prices have not been rising, they are still high and beyond the means of many. Builders are thus resorting to size modification to rein in prices. “Since 100% tax exemption will be provided to developers, along with exemption from service tax, for construction of houses up to 325 sq feet in metros and 650 sq feet in other cities, developers will surely take benefit of this -taking attempts to shrink the size of apartments,” says Satish BN.
To cut down on costs further, the projects usually have only basic amenities. Meaning, there will be a power back-up and car park (and may be a club house) but do not expect a swim ming pool or large playing areas.Also, remember that the market is driven entirely by end users and the used market is not very active.
Affordable projects are mostly located in Anekal, Attibele, Hosa Road, Begur, Bidadi, Kammasandra, Kengeri, Chandapura, Hoskote and Rajanukunte, areas outside the city’s periphery. “The city will continue to see more affordable housing projects in these areas as well as off KR Puram and Kanakapura Road (after NICE Road) due to availability of land at cheaper prices,” says Satish BN.