Bengaluru's Rental Market: Impact of IT Layoffs and Hiring Freeze
Bengaluru, known as the Indian Silicon Valley, has seen a significant slowdown in rental demand due to IT sector layoffs and hiring freezes. The market is showing signs of correction, with rents dropping and more negotiation power for tenants.
Real EstateIt LayoffsRental MarketBengaluruMarket CorrectionReal EstateAug 11, 2025
IT Layoffs Being the Trigger
Between January 2024 and mid-2025, Bengaluru witnessed a significant number of layoffs in the IT space, with estimates suggesting over 50,000 jobs lost in tech and IT-enabled services due to automation, AI adoption, and cost-cutting measures by global and Indian IT majors. Global names like Google, Microsoft, Amazon, and domestic heavyweights such as TCS announced significant local workforce reductions, targeting entry-level programmers, support staff, testers, and even senior managerial roles. These developments have generated anxiety across the city’s rental and housing ecosystem.
Rental Trends
2022 – Early 2024:
Rents in Bengaluru’s prime tech corridors, including Whitefield, Sarjapur, Koramangala, and Bellandur, soared by 15-35%, driven by the post-pandemic return-to-office wave and a severe mismatch between supply and demand. Some areas saw 8-10% quarterly rent spikes.
Mid-2024 – Early 2025:
The explosive upward trend has begun to moderate. In the first quarter of 2024, Bengaluru boasted the country’s highest rental yields at 4.45%, which rose from 3.6% in pre-COVID 2019, reflecting robust investor returns and high demand. By mid to late 2024, the saturation started to set in. Increased housing supply and more rental inventory in the market led to a 5-10% price correction in major neighborhoods such as Whitefield, HSR Layout, and Koramangala. Vacancy rates have ticked up, with landlords now more willing to negotiate rents, something not seen in the previous two years. Many tenants are managing to strike deals as low as 10-15% below the listed rents, especially in premium societies.
Reduction in Rental Demand
1. IT Sector Layoffs and Hiring Freeze:
A direct impact of job losses in the tech industry is that many are moving back to their hometowns, while others are shifting to more affordable localities, and some have started sharing accommodations to cut costs. The steady influx of well-paid IT professionals as renters has declined significantly in recent times.
2. Uncertainty in Fresh Hiring:
With tech hiring on a cautious pause, the pipeline of new renters has dried up. Even those who retain jobs are hesitant to upgrade housing or enter long-term leases due to the possibility of future layoffs. The market for PG accommodations and budget apartments is especially hit, with reports of up to 40% of PGs in tech hubs ceasing operations.
3. Increased Rental Inventory:
Rapid construction completions and new launches in the last 18 months have created more options for renters. With supply finally catching up, the pressure on rents is easing.
4. Shift in Landlord Behavior:
After a period where landlords dictated terms, including providing LinkedIn profiles and salary slips, the power is slowly shifting back towards renters, who now have more negotiating strength.
Most Affected Areas
Tech Hubs like Whitefield, Sarjapur Road, Marathahalli, Electronic City, and parts of Northern Bengaluru are facing the blow, with rents for 2BHK flats dropping from Rs. 35,000 to as low as Rs. 28,000-30,000 in some locations. The time taken to find tenants is longer, and many flats remain vacant for weeks. Premium Societies: Even the city’s priciest gated communities are seeing actual deal values fall below their headline rents, especially for 2BHK and 3BHK units.
What About the Long-Term Outlook?
The recent developments are more of a correction in the market rather than a complete crash. Rental markets are finding a new balance as supply increases and demand falls. While the IT sector’s hiring and layoff cycle might remain, Bengaluru’s overall rental yields and property fundamentals remain solid, with optimism on a rebound in tech job creation or broader economic growth.
Conclusion
Bengaluru’s rental demand is definitely slowing down due to mass layoffs, hiring freezes, and AI-driven disruption in the city’s tech economy. After record rent hikes, a cooling trend is now clear, with drops of 5-20% reported in several hot spots, especially those dependent on the IT workforce. Even though a market correction is underway, Bengaluru’s real estate industry will remain dynamic, with the long-term trajectory closely linked to the fortunes of India’s technology sector.
Frequently Asked Questions
What caused the slowdown in Bengaluru's rental demand?
The slowdown in Bengaluru's rental demand is primarily due to large-scale layoffs in the IT sector, hiring freezes, and the rise of artificial intelligence (AI), which have reduced the number of well-paid IT professionals renting in the city.
Which areas in Bengaluru are most affected by the rental market slowdown?
The most affected areas include tech hubs like Whitefield, Sarjapur Road, Marathahalli, Electronic City, and parts of Northern Bengaluru. Rents for 2BHK flats in these areas have dropped significantly.
How have landlords responded to the rental market slowdown?
Landlords are now more willing to negotiate rents and are offering better deals to attract tenants. The power is shifting back towards renters, who have more negotiating strength.
What is the long-term outlook for Bengaluru's rental market?
The long-term outlook for Bengaluru's rental market is cautiously optimistic. While the current slowdown is a market correction, the city's overall rental yields and property fundamentals remain solid, with potential for a rebound in tech job creation and broader economic growth.
How has the increase in rental inventory affected the market?
The increase in rental inventory has eased the pressure on rents and increased the options for renters. This has led to a more balanced market with more negotiation power for tenants.
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