Bangalore: From June, home buyers in Bangalore will have to shell out more. The Karnataka chapter of the Confederation of Real Estate Developers’ Associations of India (Credai) has decided to raise prices of all projects being developed by its members, citing escalating costs of construction material such as cement and steel.
This is the second time, after Pune, that a local chapter of Credai has decided to increase property prices. In Bangalore, all the 124 Credai members including developers such as Brigade Group, Sobha Developers Ltd, Puravankara Projects Ltd and Mantri Developers would increase prices by Rs75-500 per sq. ft.
“There has hardly been any rise in property prices in Bangalore in the last 16 months. This is still the most affordable city to buy property compared to even Chennai or Pune. This marginal rise of 3-7% of the current sale price is a small portion of the increased cost of construction,” said A. Balakrishna Hegde, president of Credai’s Karnataka chapter.
Real estate consultants say there hasn’t been a dip in prices in the recent past, but bookings in Bangalore have gone down by at least 40-50% in the last six-eight months.
There are nearly 150,000 housing units that are under construction in the IT hub and would be ready in the next three years. In 2007, around 26,000 units were sold.
The decision to raise prices would have various implications on the property market, said both developers and analysts, considering that in the last six months there has been a “wait and watch” period for many property buyers.
“This increase in property prices would impact the economy segment of buyers where sometimes the decision to buy property can be set aside. However it wouldn’t matter to the luxury category,” said Hari Menon, vice-president, Mantri Developers.
According to Credai, the last one year has seen a 56% rise in steel prices, 24% increase in cement prices and 35% rise in labour costs.
“Each project takes 8-10 months to get the approvals and this results in interest mounting on the land. Land costs too have gone up by 400% in some areas,” said Ramani Sastri, managing director, Sterling Developers.