Bengaluru Real Estate Takes a Cool Turn After Stampede
Bengaluru's real estate market, which saw a significant uptick in mid-2023, is now experiencing a cooldown. Rental inquiries and sales have both seen a downturn, with experts predicting a further correction in the coming months.
Real EstateBengaluruRental MarketProperty SalesHousingReal EstateNov 06, 2024
Rental inquiries, especially in prime areas such as Indiranagar and Koramangala, have dropped by at least 20% in the last three months. Industry experts anticipate a correction in rents by up to 15% within the next 2-3 months due to the slowdown in the real estate sector. “The rental inquiries in the city, especially for prime areas such as Indiranagar and Koramangala, have dropped by at least 20 per cent in the last three months. We anticipate a correction in rents by up to 15 per cent within the next 2-3 months because of a slowdown in the realty sector,” said Kiran Kumar, Vice-president, Hanu Reddy Realty.
The slowdown comes after a major hike of close to 30-40% in most areas over the last two years. The skewed demand and supply ratio is the primary cause behind the rental stabilization across the city, according to industry experts. Potential tenants now have more options to choose from as more inventory is available compared to the year-ago period.
During mid-2023, the real estate sector in Bengaluru had become a hot seat for auctions, with tenants bidding hard for their choicest apartments. The robust demand led to a rental hike of between 20% and 40% in prime IT corridors. “The price correction started in the April-June quarter this year due to the addition of more inventories in the rental market,” said Sunil Singh, Vice President, Realty Corp.
The decline in sales volume is also evident. According to data from ANAROCK, the Bengaluru residential market exhibited a notable sales downturn in the third quarter (Q3), ending September 30. Data shows that around 15,000 housing units were sold — a dip of 8% between Q2 and Q3. East Bengaluru, traditionally a dominant force in the city's residential market, continued to hold a significant share in Q3 and accounted for 48% of total sales. However, this region reported an 18% quarterly decline in sales volume. North Bengaluru, which has a 26% market share, also reported a contraction in sales activity, with a 6% dip compared to the previous quarter.
In contrast, South Bengaluru demonstrated resilience amid a 13% quarterly increase in sales volume. West Bengaluru, despite its smaller market share of 4%, recorded a substantial 33% quarterly increase in sales. New housing launches in Q3 accounted for a significant 17% of new housing launches across India's top seven cities. While the overall pace of new residential supply in Bengaluru experienced a marginal decline of 1% compared to the previous quarter, the city reported a 7% increase in new launches year-over-year.
East Bengaluru remained the dominant zone, accounting for 35% of all new launches. West Bengaluru, which had seen limited activity in Q2, reported a surge in new launches, reaching nearly 1,000 units. The Q3 market in Bengaluru was characterized by a strong preference for high-end residential properties. This segment experienced a 10% quarter-on-quarter growth and accounted for 54% of the city's new launches.
Despite the slowdown, the real estate market in Bengaluru continues to attract investors and developers. The availability of more options and the potential for price corrections make it an interesting time for both buyers and renters in the city.
Frequently Asked Questions
What is the current state of the rental market in Bengaluru?
Rental inquiries in Bengaluru, especially in prime areas like Indiranagar and Koramangala, have dropped by at least 20% in the last three months. Industry experts anticipate a correction in rents by up to 15% within the next 2-3 months.
How has the sales volume in the Bengaluru residential market changed recently?
The Bengaluru residential market experienced a notable sales downturn in Q3 2024, with approximately 15,000 housing units sold, marking an 8% decrease compared to both Q2 2024 and Q3 2023.
What caused the rental market to cool down?
The cooling of the rental market is primarily due to the skewed demand and supply ratio. Potential tenants now have more options to choose from as more inventory is available compared to the year-ago period.
Which areas in Bengaluru are performing better in terms of sales?
South Bengaluru demonstrated resilience with a 13% quarterly increase in sales volume. West Bengaluru, despite its smaller market share of 4%, recorded a substantial 33% quarterly increase in sales.
What is the trend in new housing launches in Bengaluru?
Bengaluru accounted for a significant 17% of new housing launches across India's top seven cities in Q3. The city reported a 7% increase in new launches year-over-year, with a strong preference for high-end residential properties.
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