Bengaluru - India's Silicon Valley ranks highest on socio economic scale

When it comes to socio-economic growth, Bengaluru emerges as a clear winner, driven by its thriving service sector that attracts a highly skilled workforce from across India and beyond, according to the Knight Frank Prime City Index report. 

 

 The city boasts the highest workforce participation rate in the country at 76% and an unemployment rate of just 1.8%—the lowest among the six cities ( Delhi NCR, Mumbai Metropolitan Region, Hyderabad, Bengaluru, Ahmedabad and Chennai) analysed. 

 

"Despite recent challenges in the start-up ecosystem, Bengaluru’s economic profile remains resilient due to its diverse business activities, as evidenced by strong real estate sales in recent years. The city continues to solidify its reputation as a prime destination for global investments and talents," real estate consultancy firm Knight Frank said in a statement.

 

In the last two years, despite the volatility in start-up ecosystem, the economic profile of Bengaluru's population continued to remain strong as witnessed in record home purchases in the city. In 2023, the city registered a residential sales volume of 54,046 units, which is a nine-year high, noted Knight Frank. 

 

As per the Hurun India Rich List 2024, Bangalore ranks just below Hyderabad in 4th with a total of 100 wealthy individuals including 27 billionaires. 

 

 The city also continues to be the most favoured market by commercial occupiers, accounting for 21% of the overall transactions across the top cities. Bengaluru’s office market fundamentals remain strong supported by the acceleration of return to office by firms and the growth in India-facing businesses along with stable business inflow from multinationals into India.

 

Meanwhile, Hyderabad has emerged as the fastest-growing city in India, according to Knight Frank India's India Prime City Index report. Driven by robust infrastructure, booming real estate demand, and a surge in ultra-high-net-worth individuals (UHNWIs) and high-net-worth individuals (HNWIs), Hyderabad has become a prime destination for investors and residents alike. 

 

In 2023, residential annual sales rose by 6% YoY, driven by homebuyers prioritizing lifestyle upgrades, showing a preference for amenity-rich communities in well-established areas

 

The city outperformed others in real estate growth, with a 10% compound annual growth rate in residential launches over the past decade. Bengaluru ranks second, buoyed by its thriving tech ecosystem and highly skilled workforce. Meanwhile, Delhi-NCR leads in physical infrastructure, with an extensive metro network and top-tier healthcare facilities.

 

One of the driving factors behind Hyderabad’s real estate boom is the rise in the number of UHNWIs and HNWIs calling the city home. According to the Knight Frank report, Hyderabad has seen a surge in the wealth of its residents, with an increasing number of affluent individuals seeking luxurious properties. These high-net-worth individuals are flocking to the city, attracted by its economic prospects, quality of life, and relatively affordable real estate compared to cities like Mumbai and Delhi.

 

Meanwhile, the National Capital Region (Delhi-NCR) leads the country in physical infrastructure, particularly in terms of its extensive metro network and high-quality healthcare facilities. Delhi-NCR continues to attract business and investment with its connectivity and top-tier amenities, making it a major player in India’s urban landscape.

 

"Delhi-NCR’s e-governance initiatives, such as the Delhi Government Services Portal, provide streamlined and user-friendly access to public services, with regular updates enhancing user experience. Alongside Delhi, Hyderabad and Ahmedabad also ranks among the top cities for information security and privacy, showcasing its commitment to digital advancement," said Knight Frank. 

 

Price appreciation: 

Residential prices in Hyderabad increased by 11% as of 2023. Mumbai-MMR and Bengaluru experienced moderate price appreciation of 7% and 9% respectively, supported by sustained demand, with Bengaluru particularly exhibiting strong demand in the premium segment. 

 

In Delhi, residential prices have continued to appreciate, with a 6% increase. 

 

Chennai and Ahmedabad have the lowest appreciation rates at 4%, with significant increases in neighbourhoods such as Mogappair, Anna Nagar, and Perambur. Ahmedabad also has the lowest per-square-foot residential prices among the top markets, with most sales occurring in the affordable category (below Rs 5 mn).

 

EMI to Income Ratio: While affordability levels have improved marginally, Mumbai is the only city beyond the affordability threshold of 50%, a level exceeding which banks rarely underwrite a mortgage. Hyderabad follows with 30%, while Bengaluru, Chennai, and Delhi-NCR show similar levels ranging between 25% and 27%. Ahmedabad remains the most affordable housing market in the country with an affordability ratio of 21% which implies that on average, a household in Ahmedabad needs to spend 21% of its income to pay EMI for a housing loan, noted Knight Frank. 

 

Housing Loans Per Capita: This is the average amount of housing loans taken by individuals in a particular city. A higher value indicates that people in that city are taking larger loans for buying homes.

 

Chennai and Ahmedabad: These cities have the highest housing loans per capita. This means that residents of these cities are taking out relatively large housing loans compared to other cities. Additionally, these cities have a low EMI (Equated Monthly Installment) to Income ratio, which means that the monthly installment of the loan is a smaller percentage of the person's income. 

 

Bengaluru: Bengaluru also shows significant housing loan activity, which means that a large number of people in the city are taking out loans to buy homes. 

 

Hyderabad: Although Hyderabad has a higher EMI to income ratio compared to cities like Chennai, Ahmedabad, and Bengaluru (except for Mumbai), meaning the monthly housing loan installment is a larger portion of residents' incomes, it has still become an appealing market for residential property investors.