Sandeep P • 26 Aug, 2024

Trends in Bengaluru's Real Estate Market: Current Statistics and Insights.

For surefire returns over the past two decades, it’d be hard to find a better investment than Bengaluru real estate. The Garden City has grown enormously since Texas Instruments became the first MNC to headquarter in Bengaluru, with the population more than tripling since 1990. Property prices have continued to skyrocket, with the value of some parcels of land increasing by multiple orders of magnitude.

However, yesterday’s growth is not the same as today’s, and the discerning investor would do well to carefully study both city-wide trends and identify future hotspots before deploying his capital. Previously prime neighborhoods like Indiranagar and Koramangala are consolidated markets with sky-high rents and little undeveloped land, making fast-growing areas on the city’s outskirts a more attractive investment opportunity.

In this article, we will explore three different aspects of the city’s current real estate market: general pricing trends, supply-demand dynamics, and emerging hotspots. An understanding of all three is critical to picking out a winning real estate investment in the Garden City.

PRICING: STILL GROWING

Red-hot growth has been the hallmark of Bengaluru real estate for years, and this trend shows no sign of abating. Pricing per square foot grew by 3% in just the second quarter of 2024, and, on average, is up 25% since Q2 2022. These increases are across multiple sectors of the residential market, including both under-construction and ready-to-move properties.

Indeed, while all of the 8 largest cities in India saw solid growth in 2024, Bengaluru took the crown for fastest appreciation, growing at 19% year-over-year in Q1 2024. This is doubly welcome after a period of slower growth due to structural reforms (the RERA Act, etc) and the 2020 Covid Pandemic.
The city-wide average of Rs. 9314 per sft belies significant variation between neighborhoods, with posh localities like the Dollars Colony priced at Rs. 17000 per sft. This sits in stark contrast to less-developed areas like Kalyan Nagar, where prices - around Rs. 7500 per sft - are less than half that amount.

SUPPLY AND DEMAND: IN THE SUPPLY OF LUXURY

Real estate is far from a monolithic asset class, and certain segments of the industry are often in higher demand than others. A successful real estate market - like Bangalore - must ensure that developments match what consumers are looking for, both in terms of pricing and amenities.

As the IT boom has nourished the city and created a new generation of HNIs, a number of luxury residential projects have launched, with prices starting well about 1 Cr for a 2 BHK in these opulent societies. Affluent techies, flush with cash and looking for a place to start a family, are opting for more spacious units, particularly 3BHK and 4BHK apartments. Developers have taken notice, with around 75% of the new housing supply in Q1 2024 (some 32,000 units) being in the upscale/luxury segment.

In contrast, affordable housing, defined as a property valued at less than 50 lakhs, has shrunken 68% during the same period, which sales of properties valued between 1 cr and 50 lakhs stayed relatively constant, registering a small decrease of 6%.

EMERGING HOTSPOTS:

After years of massive growth, the Garden City has expanded considerably, with areas like Varthur and Yelahanka going from villages to hotspots in the course of a decade. These neighborhoods - on the periphery and outer-east micro markets - saw the steepest price increase, registering a 32% YoY gain.

Localities like Whitefield, Sajarpur Road, Kanakpura Road, and Electronic City boast a combination of high-end developments, easily accessible tech parks, and increasing connectivity as the Namma Metro adds the periphery into the transit network. These areas tend to also sport numerous malls, hospitals, and top-tier schools, creating an ecosystem that continues to grow.

SOURCES: