When Kempe Gowda stood looking at the idyllic farmland that stretched out in front of him, he imagined a well-planned town with plenty of resources for its residents. He certainly did not believe it to be a magnet for immigrants from all over the country; a place for people to seek refuge, find jobs, or simply buy a house and settle down with their family.
In the 1990s, Bangalore began humming with commercial activity and development as IT, aerospace, and manufacturing companies began setting up shop in the city, attracted by its large, green spaces, quiet bylanes, and clement weather. Today, it’s the weather that remains a strong crowd-puller. Not to mention Bangalore’s cosmopolitan vibe and multicultural population; factors that have helped it withstand the enormous economic meltdown that the real estate industry has been facing.
Real estate crisis
Over the last few years, the Indian real estate market has seen one of the worst economic downturns in its history, diving with the demonetisation move, the introduction of GST and the Real Estate Regulation, and Development Act (RERA).
The credit pipeline slowly dried up as banks began tightening their purse strings and pushed lending activities to Non-Banking Financial Companies (NBFC). Then came the IL&FS scam resulting in the NBFC liquidity crisis, which squeezed funding for the real estate industry down to a trickle.
Now, several developers are wading deeper into bankruptcy fighting insolvency, and the skeletal frames of multiple under-construction projects dot the skylines wearing an abandoned look.
Bangalore stands tall
Bangalore, however, stood mostly strong, resiliently facing the storm. Just like its weather, Bangalore maintained a temperate front. So, what is Bangalore doing right that other cities are not? What is the spell it casts over visitors, turning them into residents?
Let’s take a look at some of the reasons behind Bangalore’s resilience.
Driven by end-users
Bangalore’s properties have always been built to suit end-users who are families seeking well-developed, ready-to-move-in, and conveniently located homes. The apartments and houses in Bangalore are built to cater to a family’s need for facilities and social infrastructure.
While end-users also consider buying a home as an investment, their focus is different from that of a property investor who purely seeks ROI in the long-term. Due to this, Bangalore’s real estate has had a firm foundation based on value and present market conditions that have helped avoid speculation-based inflation and keep prices stable.
Home loan protection
The onslaught of IT and the burgeoning of startups have showered copious blessings on the real estate sector in Bangalore. Demonetisation dealt a hard blow to the real estate markets in other cities since traditionally it’s a cash-intensive sector. But in Bangalore, most buyers being from the IT or startup sector opt for home loans, where cash involved is usually low. This provided excellent protection to the real estate sector in Bangalore.
Explosion of millennials
Bangalore’s thriving startup scene and deeply entrenched IT sector attract millennials from all across India to settle down in the city. With serious infrastructural revamps like wider expressways, new business parks, and better transportation networks being planned, millennials are finding Bangalore an ideal place to settle down and have been instrumental in driving up sales in the affordable housing category.
According to CREDAI research, millennials prefer homes in the Rs 40 to Rs 70 lakhs segment with good connectivity, amenities that are perfect for young and growing families, and projects completed by reputed builders that have a good resale value.
The good side of GST and RERA
Bangalore is a shining example of the positive outcomes of GST and RERA. Most homebuyers in Bangalore opt for home loans, which is a significant financial decision and understandably, there is a lot of hesitation before taking this critical step.
The introduction of RERA instilled more confidence in buyers as it now made transactions more transparent and enabled them to demand documents and approvals from builders and other authorities. Since Bangalore is essentially an end-user’s market, these regulations cut speculation down further, boosting affordability and improving processes for home buyers.
NRIs and expats
The property market in Bangalore has always remained one of the most affordable among metro cities. It also boasts a wide range of choices at all levels, from luxury to budget in both residential and commercial segments. There has always been a steady stream of expats who work with IT companies and need to relocate to Bangalore.
The city has also attracted NRIs who seek to return to India after stints abroad. Bangalore offers an environment that allows them to settle down without having to compromise on the facilities and convenience that they have grown accustomed to. The consistent weakening of the rupee against the dollar too has spiked the interest of NRIs who invest in real estate with a vision to eventually settle down in India.
“Sarjapur Road, Hoskote, Kanakapura Road, Mysore Road, and Whitefield are the major markets for affordable housing in Bengaluru,” says Kishore Jain, President, CREDAI Bangalore.
With millennials driving the market, smaller houses and better infrastructure seem to be the way forward to keep Bangalore’s real estate sector going strong. Just like Kempe Gowda envisioned.