The Bengaluru residential real estate market is marked by its resilience, showcasing an impressive ability to weather challenges and emerge stronger. This remarkable attribute is primarily attributed to its unwavering focus on end-users, setting it apart as a market driven by practicality and genuine demand. Supported by a robust IT/ITeS sector, favourable socioeconomic conditions, and a salubrious climate, the city’s housing sector remains consistently buoyant, making it a lucrative investment option for both homebuyers and investors. With the COVID-19 pandemic subsisting, the demand for housing has continued to grow, with many people seeking larger homes that aid remote work.
Fluctuations in supply trends
The residential real estate landscape in Bengaluru underwent notable fluctuations in supply dynamics during Q2 2023, presenting a complex narrative of growth and decline. The period saw the launch of ~8,000 residential units, which when compared to the corresponding period in the previous year, depicted a significant 37 percent degrowth in new supply. This contraction in supply could be attributed to a myriad of factors, including potential disruptions in construction timelines, supply chain challenges, and market uncertainties arising from both global and local influences.
However, on a semi-annual basis, the market displayed a modest rebound.
“In the first half of 2023 (H1 2023), new supply marginally expanded by 6 percent when compared to H1 2022. This growth suggests a gradual recovery from the setbacks observed in the previous year and indicates a degree of adaptability within the market.”
It's plausible that developers and stakeholders responded to the challenges by recalibrating their strategies and adjusting to the evolving demands of potential buyers.
Which budget category is observing a surge in new supply in Bengaluru?
“The period Q2 2023 saw the residential real estate market in Bengaluru exhibit a distinct pattern in terms of price segmentation. Housing properties in the price bracket of INR 1 crore and above emerged as a dominant force, accounting for 34 percent of the overall new supply in the city during this period.”
The fact that properties priced at or above INR 1 crore, constituted such a considerable portion of the new supply indicates a growing demand for premium and upscale residential offerings. This could be attributed to several factors, including an expanding affluent demographic, an increase in investment-oriented purchases, and a rise in demand for larger homes with high-end amenities and features.
Developers and stakeholders in the real estate sector appear to be strategically aligning their offerings with this evolving demand. The concentration of new supply within this price bracket reflects their response to market signals, as they strive to cater to the preferences and aspirations of a discerning and economically robust segment of buyers.
A diverse market shaping up
While Bengaluru has long been known for its relatively affordable housing options, in comparison to cities such as Mumbai and NCR, the emergence of a thriving market for luxury and high-value properties speaks of its dynamic nature and its ability to cater to a wide range of customers. As the market continues to evolve, understanding and analysing these shifts becomes crucial for developers, investors, and industry experts to make informed decisions and anticipate future trends.
Thus, while short-term dips in supply might be attributed to various uncertainties, the ability to rebound and post a growth over a longer period underscores the city's inherent potential and its capacity to adapt to changing circumstances. Going forward, it will be interesting to observe how various stakeholders collaborate to maintain a balanced supply-demand equilibrium while responding to the changing preferences of homebuyers.
