The mid-year review of the Bengaluru real estate market reveals an evolving landscape shaped by the aftermath of the pandemic. This analysis offers valuable insights into the industry’s current scenario and future expectations.
Whitefield (in and around Gunjur and Varthur), Bellary Road (Hennur Road and Doddaballapura Road), Hosur Road (in and around Electronics City), Kanakapura Road and Mysore Road.
The opening of the Purple Line Metro Extension (Whitefield-KR Puram) in March 2023 had a substantial
impact on the new launches and sales price appreciation in the under-construction projects. The inauguration of the Bengaluru-Mysuru Expressway has improved the connectivity between Bengaluru and Mysore and benefitted the surrounding region. Also, some of the Grade-A developers are buying/investing in developing gated communities, villas, farmhouses, etc.
Price appreciation trends
The selling prices appreciated by three-five per cent across the price segments due to high demand and limited ready-to-move inventory in the market. New phases of existing projects are also getting launched at higher prices; especially premium residential developments have witnessed substantial growth in selling prices over the last year.
Under-construction projects witnessed a higher appreciation rate of about 4.5 per cent per annum compared to three per cent per annum among the newly completed projects. Most developers are focusing on clearing the existing inventory to maintain their market share and positioning for future growth. This resulted in the decreased overhang from 2.8 years (Q4 2022) to 1.5 years (H1 2023).
North Bengaluru witnessed the highest selling price appreciation of six to seven per cent among under-construction projects compared to other markets that witnessed an average increase of three to four per cent. South Bengaluru (Hosur Road/Sarjapur Road) has also seen a similar increase in the prices for under-construction and newly-completed projects at about four to five per cent during the period H1 2023. However, select ready-to-occupy apartments have witnessed a price appreciation of eight to 10 per cent owing to high demand for Grade-A developments.
Unit size and residential types in demand
The new launches across the micro-market are dominated by mid-segment projects priced between Rs 40 lakh and Rs one crore per unit, constituting the highest share at 30 per cent of the total; followed by high-end segment units priced between Rs one crore and Rs two crore with a 27 per cent share. Another 20 per cent and 15 per cent of them are priced between affordable (Rs <40 lakh per unit) and luxury segment having Rs 2.5 crore and above, respectively.
Key regulations that affected real estate sector
The Karnataka government is proposing to increase the guidance value of properties by 15 per cent, which is likely to impact the land value and registration volume.
An overview of H1 2023
Bengaluru residential market accounts for 20 per cent of the total new launches and 23 per cent of the sales among the top seven cities in India. 14,485 housing units were launched during H1 2023, a 15 per cent drop when compared to the same period last year. However, it has witnessed 20 per cent growth in sales and has an unsold inventory of 86,000 units as of H1 2023. Whitefield accounts for 35 per cent of the new launches, followed by Bellary Road at 26 per cent and Hosur Road contributed 20 per cent share in the new launches during H1 2023
What does the future look like?
The preference for mid-segment homes continues to drive residential demand in Bengaluru. Bellary Road, Whitefield, Sarjapur Road, Kanakapura Road and Hosur Road continue to be prominent areas for residential real estate.
A majority of the homebuyers prefer immediate occupancy and ready-to-occupy developments due to flexible working hours/hybrid work model. Thus, demand for spacious homes, low-rise villa developments and plotted developments in suburban locations is expected to increase soon.
The completion of infrastructure projects such as Metro Rail Phase 2 (RV Road to Bommasandra), Metro Rail Phase 2B (KR Puram to Kempegowda International Airport) and Airport Link Road (Hennur-Bagalur Main Road) is expected to boost the real estate demand along Whitefield, Hosur Road, Sarjapur Road, Bellary Road, and Hennur Road.
With the above-improved Metro connectivity, both, capital and rental values across these regions are expected to increase by 15-20 per cent in the next two years. Some of the other proposed infrastructure projects that will fuel the residential development in the near future are the Satellite Town Ring Road (STRR), Peripheral Ring Road (PRR), Bengaluru Suburban Rail Project (BSRP), Bengaluru-Chennai Expressway, and six-lane, access-controlled Bengaluru-Vijayawada Expressway.