Bangalore, often heralded as the Silicon Valley of India due to its vibrant startup and VC ecosystem, has been witnessing unprecedented growth over the past few years. This growth extends significantly to its real estate sector, especially commercial real estate (CRE), with HNI investors showing a growing appetite for investing in the space.  Its strong economic growth, coupled with a rising population and robust infrastructure development has fueled an unprecedented demand for residential and commercial properties. In this blog, we will delve into the current condition of the Bangalore real estate market with a specific focus on demand for commercial and residential properties and the driving factors behind the city’s real estate boom.

Demand for Commercial and Residential Properties

The demand for both commercial and residential properties in Bangalore is witnessing an upward trajectory. The city’s economic prowess and reputation as the IT Capital of India has resulted in an increasing number of corporate headquarters and offices being established here. Consequently, commercial property investment has become an attractive proposition for investors looking for steady rental income and capital appreciation.

Unlike some other cities that had attracted significant speculative investments,  Bangalore’s residential real estate has been driven primarily by end users. The city’s status as a technology and biotech hub and the presence of numerous multinational corporations made it a destination for skilled professionals who sought housing for the long term. This shift from speculative investing to genuine end-user demand helped create a robust foundation for the real estate market.

5 Reasons to Invest in Bangalore:

• Bangalore has always led the absorption for office space in India for over a decade. Again in 2022, office absorption was the highest at over 17.2 million Sq.ft, which is 30% of the total office absorption in India. Against such demand, total new office supply in the Bangalore market was only 10.9 million Sq.ft. This high demand has led to a rental yield growth and property price appreciation. (Source: CBRE India market monitor 2022)

• The growth in the Indian residential market in Q1 2023 was driven by several factors, including infrastructure growth, government policies, and robust launches. The top three cities in terms of quarterly sales were Bangalore, Mumbai, and Pune, with Bangalore leading the market with a 21% share.

• Year to Sales (YTS) is a well-known indicator of health of the Residential real estate market by giving a perspective of the demand & supply dynamics. It refers to the expected time to sell the unsold inventory in the particular market, i.e. a lower YTS indicates lower unsold inventory which will in turn lead to a higher price appreciation in the near term. Bangalore has a favourable YTS of only 2.2 years, which is one the lowest among all major cities in India. (India’s YTS in Q1 2023 was 2.7 years) (Source: JLL Residential Market Update Q1 2023)

• Bangalore also fares significantly better than other major cities such as Delhi, Mumbai, Chennai as per the JLL Home Purchase Affordability Index (HPAI). HPAI is the ratio of the Average household income to the Minimum income that a household should earn in order to qualify for a home loan on a 1,000 sq.ft. apartment at the prevailing market price. A higher HPAI means greater affordability for a home. Bangalore is forecasted to have a HPAI score of 167 in 2023. As compared to this, other cities like Mumbai (92), Delhi (121), Chennai (161) rank much lower in the HPAI.  Bangalore’s high HPAI score acts as a catalyst for continued housing demand. (Source: JLL Home Purchase Affordability Index 2022)

• Business, Cultural and Educational Hub: Bangalore’s position as India’s leading IT and startup hub continues to attract professionals from across the country and abroad. The demand for both commercial and residential properties is largely influenced by the influx of this talented workforce. Bangalore’s reputation as a cultural and educational hub attracts students and families alike.

In conclusion, the thriving real estate market in Bangalore stands as a testament to the city’s remarkable growth trajectory. The city’s robust economic foundation, coupled with a growing population and strategic infrastructure development, has propelled its real estate market to unprecedented heights.

By exploring Debt Investments backed by plotted developments in Bangalore on The Restack marketplace, investors can take part in the Bangalore’s growth story and can unlock institutional grade investments with high returns up to 16% p.a. with regular income, adding a valuable investment to their portfolio.

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