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If rock-solid is personified by a city, it will be Bengaluru. This beautiful southern metropolis has emerged a winner from any kind of downturn, economic or pandemic-driven. It’s the same with the real estate scenario. At a time when home-seekers were undecided about the right time to buy a home, the Bengaluru property market sprang a surprise in the first part of 2021 and will continue its dazzling run the rest of 2021 too.
So, let’s have a dekko at what’s making the Bengaluru housing market look up in 2021.
Primary end-users
There was a time when both, investors and homebuyers had an equal share in the residential property segment in the city. Most investors bought apartments and land while homebuyers bought homes for their own use.
According to an ANAROCK Property Consultants report, Bengaluru has always been a rather unique real estate market. Heavily driven by IT/ITeS industries, it is nevertheless a city where most of the housing demand comes from end-users. The absence of more investors has historically kept the lid on housing price increases.
The sales keep rising
It is also a city which, despite its dynamism, remains deficient in terms of public transport and road infrastructure. Nevertheless, compared to its other southern counterparts Chennai and Hyderabad, Bengaluru has so far had several advantages as far as housing activity is concerned.
Despite the pandemic, the city saw property prices rise by 2% – from INR 4,975 per sq. ft. in Q1 2020 to INR 5,060 per sq. ft. in Q1 2021. This was the highest price rise among the top 7 cities, and it happened primarily because the city continued to see steady growth in housing sales q-o-q.
Amidst restricted new supply, ANAROCK data reveals that Bengaluru saw total sales of approx. 8,670 units in the first quarter of 2021, while its unsold inventory declined by 7% in a year – from approx. 62,800 units in Q1 2020 to approx. 58,350 units in Q1 2021.
In Bengaluru, the affordable and mid-segments are driving residential demand. Given the good sales, developers saw it opportune to increase the average prices. Also, property prices in the city had remained range-bound in the past few years, and growth was long overdue.
The areas in demand
In 2020, East Bengaluru was a top performer and accounted for 45% of the supply & 40% of the sales recorded, states a Colliers report. Whitefield, KR Puram & Varthur have catered to the pent up demand in this market. North Bengaluru and South Bengaluru also gained traction last year with 30% and 25% share in the sales, respectively.
This year, Yelahanka, Hennur and Hebbal in the North, and Kanakapura Road and Sarjapur Road in the South have witnessed good demand.
With a large number of NRIs heading back home to India, Bengaluru is literally hot property for them. There has been a higher demand for premium luxury apartments and villa properties within the city as well as on the outskirts.
NRIs and HNWIs (high net worth individuals) are lapping up luxury abodes in residential highrises in established neighbourhoods of RT Nagar, Fraser Town, Koramangala, and Whitefield, including the upcoming peripheral locations of Sarjapur Road, Kanakapura Road, Bannerghatta Road, Devanahalli, Rajankunte and Nandi Hills.
Prime drivers of residential real estate
Umakanth Y, Director, Advisory Services (South India), Colliers, is of the opinion that with work-from-home expected to continue for some time, there is an expected increase in demand from the IT/ITeS sector for mid-segment housing. Further, with increasing industrial activity in these cities, demand for affordable housing is also expected to rise in the coming years. There is an expected increase in traction in the mid-segment to upper-mid segment market, as the demand for larger space and openness are on the rise.
Improved infrastructure is another major driver of premium residential clusters.
In Bengaluru, under-construction metro lines, proximity to transit corridors such as metro and airport, proximity to office hubs, established social infrastructure, upcoming commercial hubs, land availability and good demand from the workforce have been major reasons driving the demand. Other infrastructure projects such as Satellite Town Ring Road (STRR), Peripheral Ring Road (PRR), Bengaluru – Mysore Industrial Corridor, Bengaluru – Chennai Industrial Corridor, and new terminal (TS) at Kempegowda International Airport are expected to propel real estate growth in Bengaluru.
2021 continues to hold immense potential for Bengaluru’s residential real estate as the employment market steadies itself and fresh recruitments are the silver lining on the job front. Home loan interest rates continue to be at their lowest and should propel fence-sitting home seekers to go in for their dream home with an ample choice of ready-to-move-in and under-construction premium apartments up for grabs.
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