Bengaluru's realty market emerges unscathed from economic slowdown

Besides the traditional segments, the demand for co-living, co-working and senior living is keeping the sector buzzing

Last year, the real estate sector reeled from new GST regulations, NBFC crisis, and liquidity crunch, yet Bengaluru managed to emerge unscathed as one of the most active markets in both the residential and commercial segments.

According to an Anarock report, overall housing sales increased by 80 per cent in the first quarter of 2019 as compared to 2018. Some builders such as the Brigade Group even surpassed this number, reporting a 90 per cent increase in residential sales in the first half of the current financial year. 

“The Bengaluru real estate market has always been driven by end-users coupled with steady economic activity which is powered by a high percentage of the white-collar migratory population. It is one of the primary reasons which keeps the city’s realty market stable in comparison to other key cities,” said Ashish R Puravankara, managing director, Puravankara Limited, which has registered an increase in sales of almost 25 per cent year on year in FY20 so far.

Another striking feature is the reasonable pricing of luxury homes which begins from Rs 75 lakh. “Among the NRIs too, Bengaluru continues to be the most favoured destination for luxury real estate investment in India, due to the presence of infrastructure and homes designed with the latest facilities that match their international lifestyle,” explained Surendra Hiranandani, chairman and managing director, House of Hiranandani.

The city is also witnessing a shift in consumer behaviour that has prompted developers to modify their offers to accommodate the demand for smart homes, co-living, and co-working space.

Co-living spaces are becoming more popular with millennials looking for more dynamic options that provide more features and amenities than the usual rented space. 

According to data, there will be a demand of 37 million co-living spaces by 2025 from millennials who form 42 per cent of the total workforce in India. Predictably, several builders such as Embassy, Puravankara, and Brigade are investing in this segment. 

On the commercial front, with the rise of the gig economy and technology that allows the concept of a ‘liquid workforce’, co-working spaces are receiving more attention. Demand for co-working spaces in the city has been rising. Over a dozen brands are gaining momentum — CoWrks, WeWork and Innov8 Coworking to mention only a few. 

“Of the total office space leasing in India, 10 per cent is now going to flexible workspace,” said Nirupa Shankar, executive director at the Brigade Group which has launched its own brand of co-working spaces called BuzzWorks. 

WeWork India, owned by Embassy, is in talks to raise around Rs 1,400 crore this year to expand the business.

Acting on the high demand in commercial realty, Puravankara is aiming to have 20-25 msft (million square feet) of commercial space operating in the next four to five years. As of now, it has sold approximately two msft of projects. 

Prestige Estates which reported over a two-fold jump in consolidated net profit at Rs 161.8 crore for the December quarter has also announced four new commercial projects in Bengaluru.

Senior living is another sector that is gaining attention. Research data shows that there will be around 300 million elderly Indians by 2050. With less than 1 per cent of the demand for senior living units available today, this segment is set to explode in the coming years. “The current hurdles facing this sector of consumers are social stigma, manpower, and affordability. The real estate industry has to put forth efforts to facilitate this surge of seniors who will need housing. We are now getting ready to launch projects in the space of senior living,” said Reeza Sebastian, president, residential business, Embassy.  

The Brigade Group has already launched Parkside (independent living for seniors) across three locations in the city. “Brigade is also experimenting with hybrid models where half the project is senior living and half is regular, based on feedback from senior citizens who want to feel connected to the wider community,” said Pavitra Shankar, executive director of the Group.