BANGALORE: The global financial crisis seems to have hit the realty business severely, especially in Bangalore. Uncertainty in the Indian equity market and speculation over property prices have put the developers in a grim situation. Over 450 flats on Bangalore’s outskirts are still vacant despite advertisements and other promotion campaigns.
Kumar Gera, chairman of the Confederation of Real Estate Developers Association of India (CREDAI) said, “We are feeling the ripples of global slowdown. There is a 30 per cent drop in new projects this year compared to last year. It will stabilise only if the market returns to its sound health. Otherwise, the entire market will be affected badly.” Bangalore-based tier II developers are the worst hit, as their properties have not been sold in the past six months. Prakash, MD of Frontline Developers said, “I had constructed two apartments, both having 25 flats each and they have been up for sale for the last eight months. So far, I have been able to sell only four apartments.” The situation is the same with many top line builders of the city, though many don’t want to express it in order to maintain their brand equity. Balakrishna Hegde, former president of CREDAI, Karnataka said, “The situation is the same across the state and we have failed to attract many projects in the recent days. The interest rate has gone up on home loans steeply, and buyers are sitting on speculation and expecting prices to come down. This has made the situation worse.” The only silver lining for developers is the possible fall in interest rates on home loans, which has been assured by the Prime Minister and Finance Minister recently after the repo rate cut by the Reserve Bank of India (RBI). United Bank of India and Punjab National Bank have already decided to bring down the interest rates. However, other leading banks are still sitting over it.