Bangalore has positioned itself as the melting pot of India. Courtesy of a thriving IT market, the city witnesses a high footfall of immigrant working population. As commercial space has become more prominent, the residential demand has also increased. Although the city offers several housing configurations, there has been a shift towards 3 BHK units in Bangalore. a
When it comes to describing the residential real estate of Bangalore, diverse is what comes to the mind. In terms of what kind of housing market the city offers, it largely caters to the mid-income and premium segments. While data suggests that 2 BHK units still dominate the inventory, 3 BHK units in Bangalore are fast tilting the scales in their favour. But what is contributing to this shift in preferences? This case study explores!
Bangalore residential market: How was it a decade back?
When talking about the current housing segment of Bangalore, it is imperative to understand how it was a decade back. Sharing his insight on the subject, Kareem Peer Khan, Managing Partner, Bangalore-based Prop Headlines, shares, “The demand for 3 BHK units has gone up since 2020. Developers who announced projects a decade back, would generally dedicate less than 10 percent of the units to 3 BHK flats. Homebuyers primarily searched for 2 BHK apartments.”
He further adds, “Homebuyers majorly focused on owning a property, while investors placed their money on flats that were expected to earn a decent Return on Investment (RoI).” In this regard, a 2 BHK flat in a developing market like Bangalore at the time, seemed to tick all necessary boxes for both the segments.
Bangalore residential market: How is it now?
Drawing parallel from how the Bangalore residential market operated in the early 2000s till 2010, Khan states, “Bangalore’s realty landscape has grown leaps and bounds since the city started gaining traction as the Silicon Valley of India. Developers have realised the potential of the market, and the immense residential opportunities commercial growth brings with it. As a result, the city saw over seven times more new launches between 2011 and 2020.”
Elaborating on the point, he avers, “The need for more livable space and increase in dispensable income are driving factors behind the popularity of 3 BHK flats across the city. Homebuyers today are looking for apartments sized 1,500 sq ft and above, which can easily fit in three bedrooms.”
Talking about the price-point, Khan shares that in a well-known locality like Thanisandra, a 2 BHK of around 1,250 sq ft fetches about Rs 65 lakh, while a 3 BHK of around 1,600 sq ft is priced approximately at Rs 85 lakh. Adding to this, around Rs 10 lakh for post-purchase expenses including stamp duty and registration charges, amenities like parking space, access to clubhouse, and a lumpsum maintenance fee. The hike in salaries helps bridge this gap of around Rs 15 lakh between a 2 BHK and 3 BHK flat in the city. As most homebuyers in the city still have several working years left, acquiring a home loan, and paying off a little higher Equated Monthly Instalments (EMI) or for a few extra years, is generally not a concern.
Interestingly, Kareem observes, “Most 2 BHK flat owners feel congested, and they are gradually shifting to bigger spaces with more sq ft and rooms. Thus, 3 BHK apartments are generating demand from first-time and seasoned homebuyers.”
3 BHKs in Bangalore: Impact of Covid
As is the case across the country, the pandemic has altered Bangalore’s market conditions, and buying patterns. While the city was previously an investor-centric hub, experts believe that policy changes and the subsequent Covid-induced slowdown have discouraged the investor community from parking their money here. Bangalore is now considered a homebuyers’ haven, and this community mostly comprises working professionals from different parts of the country. The pandemic compelled the workforce to revisit the common notion of purchasing a 2 BHK flat, as the living space also doubled up as a professional space. As most companies are still following a hybrid work culture, the need for additional room is prevalent. Hence, even when Bangalore-based homebuyers are unable to afford a bigger space, they still generally look for 3 BHKs in a smaller size.
Are 3 BHK units in demand in the popular localities of Bangalore?
In order to understand a shift in market conditions, it is crucial to check if the trend is visible across the city. In the case of Bangalore, a zone-wise overview showcases that in four out of five zones, 3 BHK units enjoy higher demand (Source: 99acres).
3 BHK units in popular Bangalore localities
Zones in Bangalore Localities Percentage of 3 BHK units Percentage of 2 BHK units
East Bangalore Indira Nagar 55% 25%
North Bangalore Yelahanka 45% 35%
West Bangalore Rajajinagar 50% 20%
Central Bangalore Frazer Town 60% 20%
South Bangalore Electronic City 35% 50%
Source: 99acres
Although industry insiders state that 3 BHKs are increasingly being purchased by buyers for dwelling, there is still a small section of buyers that place these units on rent to fetch a higher monthly rental. Such a unit is generally rented by two-three different individuals, who share the common facilities like kitchens and bathrooms while having rooms of their own.
Overall, the Bangalore residential market has been responding positively to the rising demand for 3 BHK units. It is hoped that as the city’s commercial footprint grows, it remains conducive for the residential segment also. However, it is recommended to duly gather the necessary knowledge and do sufficient research about the realty landscape of Bangalore before investing.
Source: www.99acres.com
