An aerial view of Bengaluru.
Credit: iStock Photo
By Rishabh Krishnakumar Menon and Vikramaditya Singh
Over the past decade, the residential real estate market in Bengaluru has undergone significant transformation.
Boom and its causes
About 10 years ago, Bengaluru witnessed a real estate boom, fuelled by a combination of factors. Its emergence as India's IT capital attracted a massive influx of professionals seeking job opportunities. The ensuing demand for housing led to a surge in property prices. Additionally, favourable government policies, increased foreign investments, and easy access to home loans contributed to the growth of the real estate sector.
Geo variation
Central business districts and tech hubs, such as Koramangala and Whitefield, witnessed substantial appreciation, with property values rising by an average of 60 per cent to 80 per cent. Some peripheral localities experienced more moderate growth, with a 30 to 50 per cent increase in prices.
The slump years
About five years ago, the real estate market faced a period of stagnation, as the initial euphoria began to wear off. Several factors played a role in this slowdown. Firstly, the oversupply of housing units in certain areas created a demand-supply imbalance, leading to a reduction in property prices. Secondly, changes in government policies and economic uncertainties brought about by demonetisation impacted investor sentiment, resulting in a lull in property transactions.
Regulatory reforms
In response to the slowdown, the government introduced reforms. The implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA) brought transparency and accountability to the market, boosting consumer confidence. Additionally, the new Goods and Services Tax (GST) regime provided further impetus to homebuyers. Consequently, the market saw a gradual recovery, and property prices started to stabilise.
Next five years
Looking ahead, the Bangalore residential real estate market is poised for steady growth. The city’s robust economy, coupled with its reputation as a hub for innovation and technology, will continue to attract professionals from across the country and abroad. Moreover, Smart City initiatives and the government's focus on infrastructure development will enhance the overall living experience, making the city even more attractive to homebuyers. While predicting property prices is challenging, it is reasonable to expect an average annual growth of 5 per cent to 8 per cent in most localities. Tech corridors may see slightly higher appreciation, while peripheral regions might witness more moderate growth.
In conclusion, the last decade has been a rollercoaster ride for Bengaluru’s residential real estate market. The boom and slump were essential learning experiences that laid the groundwork for a more robust real estate sector. As the city continues to evolve, the future appears promising, with sustained growth on the horizon.
(Rishabh Menon studies at Texas A&M and Vikramaditya Singh at Mallya Aditi International School)