The Bangalore real estate industry has long been regarded as an appealing investment prospect due to its high returns and satisfactory responses. This city, often referred to as the ‘Silicon Valley of India’, has always provided excellent areas for people to live, with an abundance of lakes and open spaces mixed in with a cosmopolitan vibe. Needless to say, the city never failed to enchant its citizens.
The rapid formation of startups and IT centers that demand a workforce, as well as expanding corporate investors willing to engage in real estate, has provided the groundwork for the city’s real estate expansion. Bangalore real estate market is the most preferential market in the country where every investor finds ample investment opportunities.
This article will provide an overview of the market statistics, data, and rising trends to help you discover the Bangalore real estate market.
- 1 Growth in Office Leasing Momentum
- 2 Declining Vacancies and Rental Appreciation
- 3 Reputed Developers Dominate Fresh launches
- 4 Healthy Sales of Residential Units
- 5 Improved Retail Activity with Rental Appreciation
- 6 Factors Improving Bangalore Real Estate Market
- 7 To Sum Up
Growth in Office Leasing Momentum
Bengaluru has recorded robust growth in office space leasing. The highest quarterly lease volume recorded in Q2 2022 is 6.2 mn sq. ft of gross leasing which projects 2.4x growth quarter-to-quarter. New demand for office spaces and fresh leases contributed to the net rise in leasing activity. The IT-BPM sector drove leasing momentum with a major share of 34% in the first quarter, followed by the Engineering and Manufacturing sector at 30%. The market is observing an improvement in the share of flexible workspace with deals increasing from 6% in Q1 to 15% in Q2.
Declining Vacancies and Rental Appreciation
With an upswing in office leasing momentum, the office sector is moving towards single-digit vacancies. Prime submarkets of Outer Ring Road, Suburban East CBD/off CBD recorded a further decline in their vacancy levels in Q2 2022. The vacancies depreciated from 9.4% in Q2 2021 to 8.2% in Q2 2022. With the low availability of office spaces and fresh supplies coming with healthy commitments, rental appreciation could be predicted in the short to medium term.
Reputed Developers Dominate Fresh launches
Bengaluru observed a healthy launch of new residential units with new 8830 units launched in Q2 2022. The major IT corridors of the city, Southern and Southeastern submarkets accounted for 61% of launches in Q2 2022. Healthy demand will drive the launch and sales activity in the time to come.
Project releases from reputable developers dominated Bengaluru’s residential market in Q2 2022. Sobha Developers, Brigade Group, Prestige Group, Mahindra Lifespaces, Assetz Lifestyle, and Casagrand Builders accounted for approximately 60-65% of the unit launches. This could be attributed to customer preference for projects and developers with a proven track record of success. However, the remaining 35-40% was contributed by regional and local players.
Healthy Sales of Residential Units
With the establishment of new IT industries all over Bangalore, we observe an increase in demand for residential sales. Many real estate builders and developers experienced massive sales of residential units in Bangalore, with a year-on-year increase of 34% in the first three months alone. Brigade Enterprises, Prestige Estates, Puravankara, and Shriram Properties, among others, achieved record-breaking sales increase in FY 22. These businesses anticipate a revenue increase in the second half of 2022.
Improved Retail Activity with Rental Appreciation
There is a healthy retail space leasing momentum with 0.2 mn sq. ft leases in Q1 2022 on freshly completed malls. The city observed healthy traction, with the expansion of fashion and luxury brands in prominent main streets of central Bengaluru such as Brigade Road, Lavelle Road, and Vittal Mallya Road. As footfalls in major malls and complexes will increase, retail outlets will expand in the short to medium term.
The city’s mall inventory stood at 13.0 mn sq. ft with Grade A+B mall stock dominating the vacancies by occupying 9.5 mn sq. ft. The vacancies in the retail market are struggling with a decline amid straightening demand for quality space. Owing to the tight vacancies, a q-o-q growth in rentals is expected across the main streets. Prominent main streets of central Bengaluru recorded an average q-o-q rental growth of 10- 12%, while those in south Bengaluru witnessed a growth of 16-18% during the quarter.
Factors Improving Bangalore Real Estate Market
Bangalore real estate market will see an improvement in the time to come. With the attraction of prospective home buyers and investors in the city, the property market will observe a high demand. Below are some factors that influence the Bangalore real estate market:
Reduction in Stamp Duty
The cut in property stamp duty from 5% to 2% on properties within the price range of 20 lakhs, and 5% to 3% for properties within the price range of 21-35 lakhs is a significant relief for affordable section buyers. This decision by the government of Karnataka is bound to encourage investors and buyers of properties.
Digital Home Buying
The Bangalore Real Estate Market has a great potential to adapt to fluctuating market conditions. The city has proactively shifted its focus to digital tactics like virtual reality(VR), Augmented Reality(AR), real estate photography, and 3D modeling for virtual tours and site visits. These tactics will facilitate digital home buying and enhance customer experience.
Robust Connectivity and Infrastructure
Bangalore is one of the most advanced and developed in the country. With a solid infrastructure and ease of connectivity, there is a significant advantage for property investment in Bangalore. The Bangalore real estate market is providing ample opportunities for developers and buyers. With a robust supply of homes following the pandemic, and an increase in entrepreneurship, IT sectors, and residential launches in the city, there will be adequate demand for properties, driving additional development for connectivity and enhanced infrastructure.
To Sum Up
Bengaluru is set to see a rise in the sale of residential units. The development of additional offices and an increase in staff employment and remuneration will stimulate house sales. As more and more employees settle in the city, the demand for residential units will increase. As a result of increased demand and price increases for raw materials, the city’s property prices will rise. The city will also see an increase in office rentals. Overall, the Bangalore real estate market will improve by the end of 2022 prospecting improvements in connectivity, infrastructure, digital house hunting, and residential sales.
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