Bengaluru’s residential real estate market is experiencing notable price hikes, driven by rising demand and a shortage of inventory. As buyers and investors increasingly look northward, areas such as Bagaluru and Hennur are seeing a spike in demand. Additionally, areas like Whitefield and Varthur-Sarjapur are witnessing substantial price increases.
This price surge is attributed to the pent-up demand from a pandemic, with over 94 per cent of new supply in the mid and premium segments.
Additionally, the scarcity of ready-to-move-in inventory is exacerbating the situation. “The shortage of ready-to-move-in inventory in key micro-markets is one reason causing the hike in demand, explained Shivam Agarwal, Vice President Strategic Growth, Sattva Group.
High-demand areas such as Whitefield, Varthur-Sarjapur areas, areas of North Bengaluru, etc., witnessed prices shoot up drastically, told Viswa Prathap Desu”, COO of Residential, Brigade Group.
A recent report by real-estate consultancy firm ANAROCK highlights that Bagaluru in North Bengaluru has experienced the most significant price appreciation, with residential property values soaring by 90 percent, from ₹4,300 per sq. ft. in 2019 to ₹8,151 per sq. ft. in the first half of 2024.
Sarjapur Road recorded a 58 per cent jump in prices with a new supply of approximately 36,150 units, of which 74 per cent was in the mid and premium segments and 18 per cent in the luxury category. The average prices rose from ₹5,870 per sq. ft. in 2019 to ₹9,300 per sq. ft. in the first half of 2024.
Whitefield noticed 18,600 launched this year, 66 per cent in the mid- and premium segments and 34 percent in the luxury category.
However, this trend of rising prices has not affected sales, according to Desu. He attributes this stability to steady interest rates and a strong economy.
Affordability Challenges
With rising property prices, affordability is becoming a major concern, particularly for first-time buyers. This year, Whitefield saw 18,600 new launches, but no new affordable housing units were introduced. In Sarjapur, out of 36,150 new units, only 8 percent were classified as affordable housing.
“First-time buyers may opt for smaller homes or properties located farther from the city center where prices are more affordable”, observed Abhishek Raj, Founder, CEO, Jenika Ventures.
Additionally, renting in Bengaluru is becoming more expensive with rental prices increasing approximately by 5-8 per cent over the past year. This upward trend is fuelled by the growing demand for rental properties, primarily in sought-after neighbourhoods close to work centres and amenities. Besides, the escalating costs of homeownership are prompting more people to choose renting as a more feasible option, he added.
Future Outlook
Bengaluru real estate is expected to remain strong led by residential and commercial spaces guided by the city’s growing IT sector and ongoing infrastructure projects, such as the metro expansion.
“There is still considerable potential for further price increases, as the market is only three years into a seven to ten-year upcycle”, said B S Nesara, Chairman, Concorde.
Developing areas are likely to experience a steady increase in property prices, reflecting their rising popularity and improved connectivity, notes Raj of Jenika Ventures.