The market for housing has been robust throughout the first third quarter of 2023. Surprisingly, this has happened in spite of a dramatic rise in interest rates as well as an increase in prices for residential properties over the past few quarters. (image) One interesting aspect of the current housing upswing is the continuous rise in demand and the absorption of larger houses (see Exhibit 1). (image) A Yes Securities report highlights that as high as 28 percent in 1Q2020, the percentage of houses with three bedrooms in the total number of homes being sold…Shankar stated Shankar said that Bengaluru is responsible for 33 million square feet of the land bank with 47 msf. In addition to Bengaluru, Chennai is the second-largest market for Brigade and is being followed by Hyderabad.
She stated that over 80 percent of launches within Bengaluru will be to northern parts of Bengaluru. “The upcoming infrastructure, including the metro and the proximity to the international airport has shifted a lot of residential demand towards the north. Though the eastern IT corridor of Whitefield remains a favoured choice, it is saturated and getting land is challenging there,” Shankar stated.
The majority of the forthcoming launches will fall in the middle-income category, and ticket sizes will range from Rs 80 lakh up to 1. 1.5 crore.
“Previously, the same segment was priced at Rs 60 lakh to Rs 1.3 crore. But customers have increased their price points. About two years back, the apartments we were selling at Rs 6,000 per square feet (psf) are today selling at Rs 8,000 psf,” Shankar said.
According to the company, its share of luxury apartments being launched has grown by 5-10% currently. The firm bought a piece of land at Mount Road in Chennai for more than 500 crore. Shankar stated that the project will include luxury apartments that cost up to six crore rupees.
Costs of living in apartments are rising.
The Karnataka state government announced on 19 September that the guidance value could increase by 20-30 percent as of 1 October 2023. However, it could increase by as much up to 50 percent in some IT corridors, the revenue minister Krishna Byre Gowda had said.
The Guidance Value is the minimum amount at which the selling of a property may be recorded with the state’s government. It is also referred to by the term “circle rate” in certain conditions.
Announcing an increase in the cost of apartments, Shankar added that the rising demand isn’t just due to an imminent rise in the guideline rate. “There are several reasons for the real estate demand in Bengaluru today. While the price of Brigade Group apartments should not increase much otherwise, the hike in general may be significant depending on how the guidance rates are changing,” Shankar added.
At present, Brigade Group has a debt of around 3,800 crore. A large portion of the debt is due to the building of office buildings.
In the past, Brigade Group told Moneycontrol that the firm will be adding around 2 million square feet of office space in Grade A in Bengaluru at the close of the current fiscal year.
“We have a debt ratio of 0.5 percent. With the residential segment comprising 70 percent of our business, we believe our debt will remain stable over the next few quarters,” she said.