Shaping The State’s Future
Karnataka’s real estate landscape has undergone significant transformations since its formation in 1956. Initially, the state faced numerous challenges, including limited infrastructure, sluggish economic growth, and regulatory hurdles. Bangalore, the capital city, was a quaint pensioner’s paradise with modest housing demands. Real estate development was largely confined to government-sponsored projects and small-scale builders during those times.
The IT revolution in the 1990s catapulted Bangalore to global prominence, sparking unprecedented real estate growth. Today, Karnataka boasts world-class infrastructure, thriving metros Bangalore, Mysore, Mangalore, luxury residences, and commercial hubs.
Upwards Growth Trend
Karnataka’s real estate market has seen growth in recent years, with Bengaluru and Mysuru acting as the main drivers. In the first half of 2024, Bengaluru’s housing sales increased by 4%, and average residential prices rose by 32% to Rs 7,800 per sq ft. The city also had the highest residential sales volume in India in the first quarter of 2024 with 16,995 units sold.
The IT, ITeS, and startup sectors are driving real estate growth in Karnataka. New concepts like co-living, coworking spaces, and senior living are also contributing to the growth of the industry.
Challenges and Concerns
However, the real estate industry in Karnataka faces some challenges, including a shortage of construction labour. Around 80% of construction workers in the state come from outside Karnataka, primarily from Jharkhand, Odisha, and Bihar.
Affordability, project delays, legal issues, and the lack of effective RERA enforcement are other challenges that need to be addressed. Karnataka struggles to recover Rs 627 Crore from delayed real estate projects, having only recovered 12% so far. These challenges can prove to be hindrances to the growth path of the state in the years to come.
Moreover, the recent Karnataka government’s proposed bill on job reservation, if implemented, could severely impede the growth of the state’s real estate ecosystem, according to industry experts.
The Growth Catalyst
Karnataka, a thriving state at the forefront of India’s growth trajectory, plays a pivotal role in the nation’s economic and social development. Ranked the fourth-largest state in FY 2022-23, Karnataka contributed 8.2% to the national GDP, steadily increasing to 8.4% in FY 2023-24.
As Karnataka’s growth story unfolds, showing strong growth amid challenges, the future of the state looks bright. The state’s potential to become a top state in the country in terms of the economy is evident. Karnataka’s continuous contribution to the nation’s growth will undoubtedly solidify its position in the years to come.
As real estate in Karnataka continues to evolve, taking steps to address the existing challenges and leverage growth catalysts will be crucial for sustained progress and prosperity in the sector.
