Bengaluru’s rains, traffic and water shortage add to blues; here’s how infrastructure challenges impact property prices
Two years after heavy rains wreaked havoc in Bengaluru and the recent water shortage problem reported in the city, homebuyers ensure they do thorough checks
Availability of essential services like healthcare and schooling, easy connectivity to workplace and supply of Cauvery water: These were the top three priorities for a techie-lawyer couple in Bengaluru who booked a 3 BHK property in North Bengaluru last month. They are expecting possession of their dream home in 2026.
Meanwhile Manaal Desai, a 29-year-old entrepreneur is debating between a 3 BHK purchase on the ground floor versus first. While minimal knee strain for his ageing parents is his prime concern, Desai wants to avoid any potential water logging issues in the future, despite what sales representatives say. “Horrors of the 2022 floods are not lost on me,” he said.
Local brokers and sales professionals who spoke to HT.com attested to increasing queries from prospective homebuyers with regards to water supply and management at new residential projects in recent years.
In September 2022, Bengaluru witnessed one of the worst episodes of heavy rains-induced flooding and water logging in the city’s recent history. Over 130 mm rain brought the city to its knees, submerging more than just the low-lying areas. India’s Silicon Valley reportedly registered a loss of over ₹225 crore.
Also Read: Bengaluru's Hebbal flooded after mild showers. ‘Can’t handle a small rain?' question netizens
Subsequently, residential launches in Bengaluru declined 27% quarter-on-quarter during the October-December period that year, according to a report by JLL Research. Meanwhile sales dipped 6.6% sequentially to 11,203 units during the three-month period.
“The quarter saw a decline in new lunches with developers going into a wait-and-watch mode and planning to launch their projects in 2023,” the report stated, adding that homebuyers had become fence-sitters in light of the rise in prices and interest rates.
“No reputed developer would want to attract bad PR when a negative experience is fresh in the memory of homebuyers. It is like they take a small term hit because in the long term they anyway know that they’re going to make money,” reasoned Sudhanshu Mishra, Principal Partner, Square Yards.
Manoj Agarwal, founder of Agarwal Estates, cited a 30% plunge in real estate activity in select localities following the torrential rains in 2022. “Certain areas such as Yemalur in East Bengaluru, are still reeling under the impact of the unfortunate event,” Agarwal underscored.
However, it was also the time when companies started urging employees to return to offices as the Covid-19 pandemic receded to improved levels. This led to a sudden spike in demand for rental properties, easing matters and expediting recovery of the city’s real estate market. As a result, aggregate real estate data following the event did not reflect a severe hit.
It is to be noted that certain pockets continued to be shunned by Bengaluru’s informed and savvy residents, for instance select layouts in Yemalur and Hebbal, however zonal data did not capture this as a distinct trend owing to the abnormal rise in rents in other pockets within the zone.
Average rent in Bellandur grew nearly 50% month-on-month to ₹53,500 in October 2022, from ₹36,000 in the previous month, data sourced from Housing.com shows. Interestingly, Mahadevapura zone in East Bengaluru was amongst the worst hit regions during the unprecedented heavy downpour seen in 2022. Meanwhile Whitefield within the same zone, another hub for the IT crowd in the city, saw average rent inflating by over 30% month-on-month, to ₹28,000 from ₹21,250 during the same period.
Rental data is often seen as an indicative precursor for what is to follow in the sales market, pointed out Madhusudhan G, Chairman and Managing Director, Sumadhura Group. “Generally immediate sentiments are soured and there is a short-term impact. But the long-term impact is a collective reaction to multiple factors. One particular incident cannot easily alter the overall market direction,” he added.
Two years on, how has the Bengaluru market moved and why?
As per JLL, Bengaluru emerged as the premiere housing market pan India in the April-June period of the ongoing calendar year with 18,548 housing units sold and 16,537 homes launched during the period. The IT capital accounted for approximately 21% of the total residential launches and around 23% of the home sales across India during the three-month period.
Clearly, the city has been on a general upward trajectory since Q4 CY 2022, marked with robust demand. What gives?
Demand exceeds supply
The IT corridor along the Outer Ring Road East was amongst the worst hit areas during the 2022 floods. However, demand for residential property has historically surpassed supply in this belt. Furthermore, with a metro line under construction, public transport connectivity is presently limited in this region. In fact, traffic congestion during peak hours along the ORR often makes it to local news headlines.
The demand-supply dynamic in this belt has kept property prices on a growing trajectory, Mishra explained. Furthermore, in a bid to conserve time and reduce commute expenditure, homebuyers are inclined to purchase properties close to their offices, ensuring an upbeat response to new residential projects in this region, he added.
Social infrastructure key priority
Sectoral experts who spoke to HT.com agreed that due to faulty urban planning several pockets in Bengaluru get flooded during heavy monsoons and experience shortage of water supply during the drier season, especially in North and East Bengaluru.
“Homebuyers often view these events as aberrations and tend to prioritise surrounding social infrastructure, schools and offices primarily, while choosing a location for their property purchase,” said Darshan Govindaraju, Director at Vaishnavi Group. This in turn keeps property prices and rental yields escalating, despite infrastructural issues, he added.
“These micro-markets have become self-sustained ecosystems where homebuyers have access to all amenities and lifestyle choices,” seconded Anshuman Magazine, Chairman and CEO - India, South-East Asia, Middle East and Africa, CBRE.
Technology to the rescue
As long as a potential project site enjoys developed social institutions around, and is close to a metro station, a developer would attempt to explore innovative solutions to address surrounding infrastructural issues than pass on the opportunity, industry players said.
“As a developer, if height is not an issue at the project, I can maybe take the podium level higher than the natural ground level, do stilt parking or one single basement stilt parking and take the apartments from a higher floor, so that even if the infrastructure around is not up to the standard the overflow from that would not come in and affect your building adversely,” Govindaraju added.