Floods take a toll on real estate prices in east, south-east Bengaluru

The recent massive flooding in select parts of Bengaluru has not just made a big dent in Brand Bangalore as an IT capital, but also had an impact on the city’s real estate market that is undergoing a post-COVID recovery. 

The realty sector has been affected, especially in east and south-east Bengaluru, where roads and homes were under water and severely hit by the recent flooding. According to real estate agents, the sale and resale value of apartments and sites in this part of Bengaluru are predictably falling.

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The sale value of apartments in the flood-hit areas, which included Bellandur, Whitefield, Outer Ring Road, Sarjapur Road, Yemalur and  Marathahalli, have come down, a realtor told The Federal.

Few buyers

“There are no buyers now for the thousands of sites in private layouts in the flood-hit areas. And, real estate companies and agents are receiving inquiries only to find property in Bengaluru away from the flood-prone areas in the city,” he added.

Rammohan Reddy, a real estate agent in Whitefield, echoed the same view. There are very few people showing interest in buying properties in these areas, while the numbers wanting to sell and get rid of their investments have increased, he observed. “We’ve had hundreds of applications wanting to cancel registrations and to buy properties elsewhere.”

According to real estate agents, there are early signs a few industries are even contemplating moving out of the city. During the flooding, many IT bigwigs criticised the “crumbling infrastructure”, with industry veteran TV Mohandas Pai slamming the state government for its bad governance, rampant corruption and lack of urban reforms that had led to the heavy flooding after the heavy rains.

While companies may be able to shift to “safer areas”, some residents of apartments in the area also realise that moving out may not be an option as the resale value of their property has dropped.

Booming business in select parts

Even if this is the dire situation in east and south-east Bengaluru, the real-estate business in north and north-east Bengaluru is booming. The real-estate business in the city had picked up this year slowly, after being hit by the pandemic. In fact, according to a report by real estate consultancy firm Knight Frank, Bengaluru registered a 34 per cent year-on-year growth in the first quarter of 2022 in the residential home space market. There are 13,663 housing units sold in this quarter.

Better wage growth, increase in the relevance of housing to the family after COVID-19, and consolidation of supply-demand towards credible developers were some of the factors.

Also read: Bengaluru: IT firms, startups ask staff to WFH amid rain, floods

Umashankar Gowda, a real estate agent in Bellandur, said nearly 3,000 houses have been vacated by IT employees and they have shifted to other parts of Bengaluru. The companies have given them WFH facilities, while a few companies have quickly moved out of their rental offices, he added.

IT companies with around 300 employees had rented several buildings in the area to accommodate their staff in other places, mainly in north and north-east Bengaluru, including Devanahalli Road (International Airport Road), Sahakar Nagar, Nagavara, Amruthahalli, Jakkuru etc.

Still attractive

However, a few real estate experts do not agree that companies are deserting Bengaluru. “Bengaluru is a city where there is a big talent pool, it has a beautiful climate and a very cosmopolitan culture when compared to any other city, and so companies will not leave the city despite its infrastructure problems,” said a senior manager of a private builder’s group.

Suresh Hari, the chairman of Real Estate Developers’ Associations of India (CREDAI), Bengaluru, too brushed away any negative impact of the flooding on the city’s real estate market. Instead, he felt, people have become more conscious about wanting to know more information on government sanctions and such related matters.

“Only the unofficially built buildings have problems,” pointed out Hari.

Also read: Bengaluru: Villas submerged in water; hotel prices at an all time high

D Muralidhar, the former president of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), however, said that there is a marked slowdown in real estate activity in flood-affected areas.

“I believe there is pressure from the Central government on the state government as BJP rules at both places and they will find a way out to solve the flood issue,” he added.

Who’s to blame?

A senior official with a prominent real estate company in the city said that Bengaluru has been one of the biggest markets for commercial real estate in India. “One can’t blame industries for encroaching on the lake or drains, they just built on the land legally given to them by the KIADB, a government body. So, the duty of finding solutions lies with the government,” he added.

CREDAI felt that if the government clears the issues related to the encroachments of lakes and drains, it will go a long way to develop Brand Bengaluru and the real estate business.