Our Lessons on Bangalore Real Estate (May 2023)
A brief picture of the real estate dynamics in Bengaluru that we have noticed over the past few months
Disclaimer: Everything in this article is a personal opinion formed by the Author based on the author’s personal experiences. This is not meant to give advice or be relied upon in any manner whatsoever. The author will not be responsible for any loss or inconvenience caused due to this Article.
For the past few months, my wife and I have been searching for an apartment that we could purchase in Bengaluru. Unfortunately, we have not been able to find anything yet and it has a lot to do with the way the property market is in Bangalore right now. We are sharing some of our learnings from the search:
Don’t trust the price
There are high variations in prices across agents and flats within the same building/society.
First Incident: Two different agents quoted two different prices for the same flat. One was 30% higher than the other.
Second Incident: In another case, in the same building in the same society difference in prices quoted for flats on the 8th and 9th was more than 50%. There was no substantive difference between the two!
Now, once we narrow down a project, we reach out to multiple sources (agents, owners or builders) for price quotes. We also generally shortlist more than one flat in the same society.
No such thing as an area-wise price variation
Ironically, it appears that there is much more variation in prices between agents than between areas. Throughout the areas we looked at, we saw little variation in per sq. ft. price:
· Electronic City: 10,000 - 14,000
· Sarjapur: 11,000 - 16,000
· Koramangala: 12,000 - 17,000
· Whitefield: 12,000 - 15,000
· JP Nagar: 14,000
It hardly makes sense for prices in Koramangala to be comparable to prices in Electronic City. We have been checking flats in areas that we had originally removed from consideration as we had assumed that they would be unaffordable (Just like how nobody goes to look for houses in Malabar Hills in Mumbai). However, there are quite a few places in areas like central Bangalore and Koramangala that are equivalently priced to those in the outskirts!
Builder Flats? Forget it!
Most projects by reputed builders that are handing over possession or slated to hand over possession in the next one to one and a half years are sold out. In most of Bangalore, reputed builders like Sobha, Prestige, Adarsh etc mostly have builder flats available in good quantity only from 2026.
Along with the availability issue, the prices for builder flats have gone through the roof. For new projects, these reputed builders are charging anywhere between 30-50% premium on the prevalent market rate.
Google Maps was not built for Bangalore
If you are trying to shortlist an area based on Google Maps’ estimate of the time taken to reach your office from that area, don’t. It is a recipe for disaster. Traffic in Bangalore is no joke. Non-peak time is very different from the peak time. It may take you 15 minutes to get to Koramangala from Sarjapur in non-peak time and this will be 40 minutes during peak time. During the rainy season, I, myself, have spent 75 minutes on this. If you are deciding upon a place to buy, ask a local just like in the olden days.
Be Ready for Unreasonable Rents
Rents in Bengaluru have been the greatest winner of the tech/startup valuation bubble. From 2018 to 2019, the rents have seen anywhere between 50-110% increase! This is particularly true for gated societies with facilities like walking spaces, gyms, pools etc.
We have inquired about rents in a few societies scattered over different areas. Here are the prices we were quoted (INR/month) for a 2.5BHK to 3BHK:
· Electronic City: 50,000 - 60,000
· Sarjapur: 60,000 - 65,000
· Koramangala: 80,000 - 90,000
· Cooke Town: 90,000 - 1,25,000
· Indiranagar: 1,00,000 to 1,50,000
Conclusion
As rents and prices rise higher than the waves in the movie Poseidon, Bangalore is rapidly becoming unaffordable. One of the major culprits is the lack of infrastructure and consequent traffic. This greatly limits how far one can live from their respective workplace that one can. Perhaps, things will change once the metro becomes fully operational. But for the next 5 years, Bangalore is likely to see a tough real estate market.
Personally, going through the same journey,
My point of view is the brokers are rigging the game. Plus, given the higher rental yields, people who are getting good salaries, NRIs, people living within 300 km radius of the city are owning/buying flats as investment. We tried asking the agent if the owner is ready to sell, and many times owners say yes and quote a 5-10% bit higher price. Personally feel the current demand is a wave which is about to reside in next 6-12 months or may be longer as the real-estate cycles are slow and long