The real estate markets in Bengaluru and Hyderabad are witnessing unprecedented growth, driven by a convergence of factors that make these cities attractive to investors and developers alike. This surge in demand is not just a fleeting trend but a reflection of fundamental shifts in the economic and infrastructural landscape of these cities. Several key elements are fueling this boom, transforming Bengaluru and Hyderabad into dynamic hubs for both residential and commercial real estate.
Key Drivers of Real Estate Surge
Global Capability Centres (GCCs)
- Increased Demand for Office Spaces: The arrival of GCCs, particularly from tier II companies in the US, has created substantial demand for office spaces. These centres are attracted by India's skilled workforce and competitive operational costs.
- Employment Opportunities: The establishment of GCCs generates numerous job opportunities, which in turn drives the need for residential spaces for employees.
Thriving Startup Ecosystem
- Continued Expansion: Both Bengaluru and Hyderabad have become major hubs for startups, contributing to the growing demand for commercial properties. The vibrant startup culture is a magnet for investors and entrepreneurs.
- Innovation and Growth: The influx of innovative startups fuels demand for flexible workspaces and modern residential units.
Infrastructure Development
- Enhanced Connectivity: Significant improvements in infrastructure, including better roads, public transportation, and utilities, are making previously peripheral areas more accessible and desirable.
- Economic Impact: Ongoing infrastructure projects are stimulating economic activity and increasing the demand for new residential and commercial developments.
Micro Market Growth in Bengaluru and Hyderabad
- Price Surge: Whitefield has experienced a remarkable 80% increase in property prices due to its attractiveness to tech companies and ongoing infrastructure upgrades.
- Investment Appeal: The area’s growth is supported by high-quality residential and commercial developments that cater to the needs of a growing tech workforce.
Dwarka Expressway and NCR
- Significant Appreciation: Similar to Bengaluru, areas along Dwarka Expressway and the National Capital Region (NCR) have seen substantial increases in property values.
- Strategic Location: The development of infrastructure and improved connectivity in these areas make them appealing to both residential and commercial investors.
Factors Contributing to Price Increases
- Past vs. Present: Between 2013 and 2019, property prices saw modest increases of about 2% per annum. The current surge represents a correction from this period of low growth.
- Current Growth Trends: Recent years have seen property prices increase by 50-60%, reflecting a significant rebound from previous slow growth.
Infrastructure and Connectivity
- Micro Market Development: Areas on the outskirts, such as Dombivli, Panvel, and Bagaluru, are witnessing rapid price appreciation due to improved infrastructure and connectivity.
- Hybrid Work Preferences: The trend of tech companies moving to these outskirt locations is driven by employees' preference for larger, more affordable homes while working part-time from the office.
Affordability and Market Dynamics
- Income vs. Mortgage: Despite rising property prices, affordability remains favorable compared to previous years. Current affordability levels are better than those observed in 2014-2016.
- Developer Strategies: Developers are managing price increases prudently to maintain sales momentum and avoid market disruption.
- Current Phase: The real estate cycle, which began around late 2020 or early 2021, is approximately halfway through its typical seven-year trajectory.
- Future Outlook: A moderate annual price increase of 7-9% is anticipated, provided that supply and demand remain balanced.
The Impact of Regulatory Changes
- Capital Gains Tax: Recent regulatory adjustments, including the grandfathering of capital gains tax concerns, have provided temporary market stability.
- RERA Implementation: Effective implementation of regulations like RERA in states such as Maharashtra serves as a model for other regions, contributing to market stability.
- Consolidation and Maturity: The real estate sector is maturing, with fewer disruptions compared to the pre-RERA era. Developers are focusing on completing projects and maintaining financial stability.
- Regulatory Impact: While current regulations are deemed sufficient, further tightening in some states could enhance market stability and transparency.
Conclusion
The real estate boom in Bengaluru and Hyderabad is driven by a combination of global business expansion, a flourishing startup ecosystem, and significant infrastructure development. These factors have created a robust demand for both residential and commercial properties.
Reliant Surveyors
is at the forefront of India's booming real estate sector, providing expert insights and tailored advisory services to help clients navigate surging micro markets in cities like Bengaluru and Hyderabad. Our comprehensive solutions ensure you capitalize on emerging trends and investment opportunities.
