Job losses are set to impact the residential property market in the information technology (IT) cities of Bengaluru, Hyderabad, Pune, Navi Mumbai and Noida.

“These cities rely heavily on IT companies for not only job creation but also to drive office and residential real estate demand. Resultantly, these real estate markets face the maximum risk from the recent IT meltdown,” said Shubhranshu Pani, Managing Director – Strategic Consulting, JLL India.

Industry estimates indicate that close to four million people work in the Indian IT and BPO sectors in over 16,000 companies. The middle management is at maximum risk of job loss due to disruption, increased automation and reliance on artificial intelligence.

Delay in recovery “With this bracket of consumers coming under risk of a job loss, there is a possibility that recovery of the residential sector in the mid-premium category will be delayed,” said Pani. Professionals aged 30-40 years and above typically earn anywhere between ₹20 lakh and ₹60 lakh per annum, and form an average of 17 per cent of the population across the IT cities.

Quoting Indicus data, he said: “The share of population for Bengaluru is around 19 per cent, or over two lakh people, in absolute terms. For the real estate developers here, these mid-level managers are an important set.”

JLL India’s REIS data on project launches over the last five years confirms this linkage, explained Pani.

The category that the middle management employees typically go for are apartments in the price range of ₹4,000-10,000 per square foot, which contributed close to 45 per cent of the total project launches on an average in the five-year period until the first quarter of 2017.

According to Pani, “If the current job market scenario continues, it could have a negative impact on residential demand, especially the mid-premium segment. Affordable and mid-segment homes, however, could see momentum thanks to a push by the Centre, low interest rates and the current slackening of prices,” he said.

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