Bengaluru, the capital of Karnataka, has experienced rapid economic development on the back of growth in the IT sector. The central and state IT policy reforms such as the New Computer Policy (1984) paved the way for early tech start-ups like Infosys and Wipro to establish their operations in this city which was already home to public sector aerospace and heavy industries. Currently, the fastest-growing tech hub with nearly 7,000 registered start-ups, Bengaluru has earned the sobriquet of being the ‘IT capital’ and the ‘Silicon Valley’ of India. Its international airport, which had the third highest (32 million) annual passenger traffic in the country in 2019, has put Bengaluru on the global map. Multinational companies such as Google, IBM and Accenture and many more, are setting up their offices in the city.
The burgeoning office and commercial sector have attracted large-scale working-class migrant population to the city, from all over India. However, the rapid influx of people has resulted in issues such as water scarcity, excessive pollution and traffic snarls, which is also evident from the 58th country-wide rank of the city in the Ease of Living Index (2019). Despite the issues, the city is among the fastest growing economies as per Oxford Economics, with the gross domestic product (GDP) projected to grow at 8.5 percent YoY till 2035. Infrastructure projects such as the metro and the special economic zones (SEZs), are further boosting the economic prospects of this city. Moreover, projects such as the construction of Metro Phase-2, the Satellite Town Ring Road, the Peripheral Ring Road, the new terminal (T2) at the Kempegowda International Airport and the Bengaluru-Mysuru Industrial Corridor, have been announced to augment the infrastructure requirements of the growing city.
The residential market has also grown along with the growth of the IT sector in the city to accommodate the ever-increasing workforce. The housing market here is primarily driven by end-users with the propensity to spend on mid-segment residential properties. The city has established itself as a thriving residential market among the top metros, over the years.
The latest property market trends in the city suggests the following:
- The residential markets in Bengaluru are out of the pandemic’s shadows as both demand and supply demonstrated an upward movement in 2022 compared to the previous two years. A total of 42,215 new units were launched in Bengaluru in 2022, 106 per cent higher than the preceding year.
- On a quarterly basis, the launches have sequentially dropped to half and stood at 7,801 units. However, this can be attributed to developers holding on to launching new projects in the upcoming quarter, especially in the month of January (Makar Sankranti), which is considered an auspicious period in southern India.
- Most of the new supply (34 per cent) was concentrated in the INR 45-75 lakh price bracket. Developers focused on 2BHK and 3BHK units, respectively, which took 46 per cent and 45 per cent share in the new launches. The majority of the new supply during 2022 was concentrated in the micro-markets of Sarjapur, Varthur, Chandapura, Whitefield and Kengeri.
- Similar to the new supply, residential demand also maintained an upward trajectory, registering a growth of 22 per cent YoY in 2022. Major IT and ITeS firms are now embracing hybrid working as the new normal post the work-from-home stretch since 2022. The same is evident for the office offtake, where Bengaluru is amongst the top cities with high leasing activity back to the pre-pandemic levels. Also, the market trends indicate that amid the current macroeconomic scenario, the city is slowly garnering investor interest as well.
- The majority of demand (38 per cent) was concentrated in the INR 45–75 lakh price bracket. Notably, the combined share of INR 75 lakh-1 crore and more than the INR 1 crore price bracket have increased from 36 per cent in 2021 to 40 per cent in 2022.
- Bengaluru homebuyers preferred units with 2 BHK and 3 BHK configurations, which took 45 per cent and 39 per cent share in overall residential demand. Maximum sales took place in localities such as Varthur, Whitefield, Sarjapur, Krishnarajapura and Bagaluru.
- Bengaluru is also witnessing heightened homebuyer interest in residential plots, especially since the pandemic. The rise in demand has made plots one of the major offerings, along with apartments and villas in projects by notable developers across Bengaluru.
- The unsold inventory in Bengaluru registered an uptick of 18 per cent YoY and stood at 78,502 by the end of 2022. At the current sales velocity, it will take 31 months for developers to offload the current stock.
- Prices for the new supply and inventory in Bengaluru registered an uptick of 9 per cent YoY on account of end user demand and improving homebuyer sentiments.
Renuka Kulkarni, a seasoned real estate professional, brings over five years of diverse experience in research, consulting, and architectural design within the urban sector. Her expertise spans public and private projects, showcasing proficiency in real estate research, trend interpretation, and policy analysis. With qualifications in architecture and a master’s degree in Data Science (Business Intelligence & Data Analytics) from IIIT Bengaluru, along with an M. Tech in Urban Development and Management from TERI School of Advanced Studies, New Delhi, Renuka seamlessly blends data analytics with market insights, offering a holistic understanding of the industry in her research pieces.
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