CA highlights challenges in the Bangalore housing market as the IT sector slows down

Bangalore’s real estate market is one of the safest places to invest for investors and homebuyers, as it has a growing IT market. But now many experts feel, whether Bangalore's Real Estate Bubble in borrowed time?

The risk is listed as below,

• Real estate, which rose as a result of the IT boom, may face a demand shock with the decrease in IT salaries.
• Layoffs in IT jobs and AI will replace mid-level roles – It will result in slow salary growth and a decrease in investment.
• By the year 2028, disposable income will shrink to a great extent
• A slowdown in spending power will occur due to the ripple effects across malls, startups, and hotels.

When the main backbone, which is the IT industry, gets weakened, the city’s economy can feel the real tremors. The real estate market will not crash overnight. It will erode quietly when all the buyers disappear.

For many buyers, Bangalore’s glittering real estate market hides a harsh reality. Prices in IT hubs such as Sarjapur, Whitefield, and Electronic City have increased at a huge rate. Banks are now cautious with home loans, as the job insecurity in the IT field has left many people to take on 20 to 25-year mortgages.

Buyers who booked under-construction flats are now having delayed possession times. As there is an increase in interest rates, they are struggling a lot.

Increased rental rate

The rental market has increased now. In the last two years, rents in prime areas have increased by 30 to 50%. As many people move to the city in search of jobs, the rental market is increasing at a fast rate.

Also, landlords demand 10 to 12 months of advance rental amount as a deposit. Investors who invest in luxury upcoming properties like Prestige Evergreen can get high rental income, as it is in Whitefield near prime IT hubs.

A slowdown in disposable income threatens housing demand. It can also hit sectors like malls, startups, and hotels that thrive on IT workers’ spending power. While the present market still looks floating, ignoring the early cracks could result in severe changes, as Real estate does not crash overnight, but it will erode quietly.

Prestige Group prelaunch project is Prestige Evergreen.