The Information Technology (IT) sector has always played an enormous role in the development of India. This is because the competency of the Indian IT sector has made it the next exporter of services to other countries. Being a significant foothold in the Silicon Valley of India, Bangalore, the IT industry is rapidly growing and creating new job opportunities.
With the increased job opportunities and staffing, IT/ITES segment growth has made it easy for real estate to boom in Bangalore. In the last quarter, many companies have seen huge y-o-y in 2022. Like the Prestige Estates, revenue growth is estimated at 90% y-o-y in 2022. On top of that, the housing market has also increased its valuation a little to clear its directory and make living affordable for the customers.
In this article, you will learn how the IT industry has paved the way for a whole new concept of the real estate market in Bangalore and helped it flourish.
Table of contents
Impact of IT Sector on Real Estate
Many big IT firms and businesses have set up their head offices in Bangalore. Starting from IBM, Infosys, Google, and Microsoft to Gartner and many more have built the IT infrastructure of the city. As more space is needed for the emerging IT sector offices, more spaces are also required to accommodate the increasing residential space needs. With the set-up of these offices, the relocation of employees to Bangalore has also seen a surge in the last decade. These industries have also created a trend to create more job opportunities by giving salary hikes in the IT sector. The rush has increased the demand for residential and commercial properties. Adding to that, the developers got a chance to launch new projects to fulfil this increasing demand.
In the present situation, Bangalore remains a predominant city for launching new firms, leading to housing market growth. The experts in the real estate market also believe that the reduced GST will lessen the burden of buying a property in Bangalore. Moreover, those people who found it harder to buy a property because of the tax rules have been buying a property after the new tax rate cuts.
Affordable Housing Locations for IT Industry Employees
Bangalore is one of the fastest-growing metropolitan cities in India. The strategically built infrastructure is the major reason behind the growth of affluent and affordable housing segments in Bangalore. Additionally, the demand for human resources in the IT segment/market has made many professionals come to the city and start their livelihood. The city has accommodation for all, from low-income to high-income groups or people with salary hikes in the IT sector. Here are a few places that are residential hot spots for IT professionals.
- Whitefield
- Electronic City
- Koramangala
- Rajaji Nagar
- Ulsoor
- Bannerghatta Road
- Hennur
- North Bangalore
- Benson Town
- Indira Nagar
- Richmond Town
- Basavanagudi
- Malleshwaram
- Horamavu
- Mysore Road
- Magadi Road
Price Escalation for Residential Property Market
The price of land in Bangalore has escalated from ₹ 2,500 per square foot to ₹ 4,500 per square foot in the last two years. The 2.25 times growth in land prices is believed to be continued for the next few years as the IT industry has been hiring more manpower and will keep the work contract three to four years long.
The developers in Bangalore have also considered housing market growth post-pandemic and increased the prices very little on the properties. The ready-to-move-in homes have prices surged 20-25%, while the prices for the newly launched project have been increased by 5% to 6%.
After the post-pandemic period, the salary hike in the IT sector was high, and the employees started their investment in the share market. However, after a certain period, the stock market was corrected( market declination), and the employees found it no longer a safe option. Consequently, they started investing in the Bangalore real estate sector, resulting in escalated demand for the residential property market.
Record-Breaking Sales for Real Estate Leaders in Bangalore
Many real estate builders and developers saw an immense sale for their residential units in Bangalore, with y-o-y growth of 34% in the first three months itself. Top real estate masters like Brigade Enterprises, Prestige Estates, Puravankara, and Shriram Properties saw a record-breaking FY 22 sales growth. These companies are also expecting sales growth in the next half of 2022.
Prestige Estate saw a huge surge in FY 22 sales growth and sold properties worth ₹ 10,382.2 crores. This is 90% up y-o-y in 2022 as compared to last year. The IT industry’s increased hiring and salary hike have contributed heavily to the Prestige Estates’ revenue growth.
Another real estate property developer, Shriram Properties, saw a high FY 2022 sales growth volume of 3.76 million square feet, which is 25% y-o-y from last year. Moreover, the company had 12 new projects launched in the same time period. As a result, the aggregate value of sales reached ₹ 1,482 crores, i.e., 19% y-o-y in the financial year 2022.
Bottom Line
The win-win situation for developers and customers with the emerging need for manpower in the IT sector has positively impacted the residential property market. The developers get the chance to clear their property inventory with more buyers coming to purchase and rent houses with no GST and risk-free executions. Also, the reduction in stamp duty and other property-related charges made homeownership easy and hassle-free. The IT industry’s contribution to the property market of Bangalore is a vital growth tactic, making the city a better place to live and grow.
