Are you planning to set up your dream home here? It's an excellent time, because prices are down and promotions are up. But it will help to have the cash, because loans are hard to come by in this age of recession.
Real estate developers in the Karnataka capital are bending over backwards by offering cars, some even plots, for either buying a flat or booking one.
The flip side is that many who had paid for their dream homes may have to wait a bit longer as several developers have stalled their projects for lack of funds.
"The past six months have been quite dramatic for Bangalore's real estate sector. Considered the city's fastest growing industry, after Bangalore's IT revolution, the global economic slump has almost grounded the real estate sector," said Girish Jain, branch manager, Jain Housing and Construction Limited.
"The effect has been so huge that many developers find themselves in a lurch and customers desperately wait for the completion of their dream homes," Jain told IANS.
Bangalore's IT boom and corresponding growth of the economy have seen a large-scale increase in the city's population, mostly due to migration from across India as the city has turned into a goldmine for young job hunters.
According to official figures, Bangalore's population has grown 35 percent in the last six years.
With Bangalore's current population at 8,084,676, the directorate of economics and statistics estimates that it is expected to touch 10 million by 2012.
The steady increase in population has meant a demand in housing facilities and real estate developers seized the opportunity to cash in on the boom.
In the past five years, the northeast, east and southeast parts of the city, covering areas like K.R. Puram, Marathahalli, Sarjapur, Bannerghatta Road, Kanakapura Road, J.P. Nagar and Jayanagar, have seen maximum growth in real estate development. Be it residential, office and retail, the city has never experienced such fast growth in its real estate scenario.
However, the past six months changed all that. The growth rate has been almost reversed.
"No survey has been done so far to estimate the exact number of unsold flats. But it could be in hundreds," said Raj Menda, president, Confederation of Real Estate Developer's Associations of India (CREDAI), Karnataka. "Such is the effect of global economic recession on the city's real estate market," he said.
CREDAI is the apex body of the organised real estate developers and builders across India.
"The ripples of global economic recession have made the developers put on hold many ambitious new plans and delay those which were already under construction. Moreover, decline in demand has also severely hit the sector," said a member of CREDAI who did not wish to be named.
"In order to attract buyers in this gloomy economic scenario, many developers have come up with new strategies. Along with offering discounts as high as 10 percent on each project, developers are also lowering the price, by scrapping extra amenities, like swimming pool," he added.
A few developers are offering gifts to attract buyers but have not met with much success.
"In order to attract buyers, developers are doling out several gifts, in the form of deluxe cars, land and other premium benefits. But still builders are finding it hard to get customers," said another member of CREDAI.
While the tightening money flow has hit the industry badly, analysts say the downward trend started with the Reserve Bank of India (RBI) increasing the risk weightage for the real estate sector a few months ago.
"The high risk weightage to real estate sector essentially meant a cut-down on lending to the sector - both to developers and buyers by the lending agencies," said T. Venkatesh Babu, senior manager, market research, at Nitesh Estates.
"Funds to the sector are choked as both the developer and the buyer find it difficult to secure loans. Several families have also postponed purchases. This has contributed to reduced sales, affecting project funding," he added.
CREDAI members are, however, hopeful that the slew of measures undertaken by the central government in the last three months to ease the credit flow to various sectors of the economy would bring back buyers.
The CREDAI held a two-day expo Saturday and Sunday in the city to showcase the real estate projects on offer with the slogan 'Right Time, Right Place, Right Price'. Around 35 developers took part.
"Several hundred people visited the expo and made enquiries. We are hopeful of converting many of them into buyers," said a participant.