Real estate scene changing

With working from home now the norm, many are leaving the central parts of the city to buy bigger houses on the outskirts

The pandemic has affected the real estate scene in Bengaluru in more ways than one. College students and professionals don’t feel the need to pay high rents to stay on in the heart of the city anymore.

The announcement of the second lockdown caused many to leave the city to return to their hometowns to be closer to their families.

All this coupled with the economic repercussions of the pandemic — job losses, salary cuts, businesses shutting down — have played a role in changing home rental and buying patterns. Metrolife spoke to some real estate agents to find out more.

Mohammed Jaffar, owner, Roof Makers, focuses on central and north Bengaluru. He says the demand for housing as completely dropped since the pandemic broke out.

“Many house owners are approaching us because their tenants have vacated. Many homes are left empty,” he says.

Rents, he says, have come down because most owners are willing to take lower rates. They feel it is better than leaving the house vacant.

Waquar Ahmed, proprietor, Ahmed Realty, says that after a complete lull during the first two lockdowns, things picked up by May.

However, the demand seems to have moved from the central business district and tech parks to the outskirts of the city.

“Those who have decided to stay on in Bengaluru are leaving the CBD area and moving to outskirts such as Devanahalli, Sarjapur, Electronic City or Whitefield. With commute completely removed from the equation, there is no compulsion to live close to work. Moving to these areas gives them the option of a bigger home at a much cheaper price,” he says.

A good portion of the city’s population comes from across the country. Given the pandemic restrictions, the chances of people moving to the city are close to zero, which also affects the demand for homes.

However, local movement seems to be picking up. With the need of the hour being to cut costs, downsizing is a new buzzword.

“Families who used to reside in 3BHKs are shifting to 2BHKs. They may stick to the same area, but this downgrading helps them reduce their monthly expenses,” Waquar explains.

He anticipates a decrease in rent in the near future if the current situation continues. He also predicts that the demand for gated communities may shoot up. “Apart from the hygiene and safety aspects, living in a community would guarantee you space to move around, should there be another lockdown or new restrictions on movement,” he says.

Time to buy

Saqib Ilyas, joint managing director, Trend Shelters, however, has a much more optimistic take.

While business was slow in March, demand for homes in areas such as Whitefield is at an all-time high, he says.

Apart from getting bigger homes at lower prices, the amenities and the promise of Metro rail in the near future makes the area promising for many.

The most interesting phenomenon has been the entry of a new group of buyers into the market — students and young professionals between 20 and 30 years.

While this is not the general house-buying group, the pandemic, he says, has created a shift in thinking. “Those who resided earlier in PGs or co-living spaces want their own homes because safety and hygiene are priority concerns. In many cases, the parents are helping them make this investment,” he says. Those who can’t afford to buy are looking to rent.

Resale is at a high with people purchasing from owners. “An apartment that was bought for Rs 85 lakh five years ago is being sold at Rs 88 lakh. It would be impossible to get such a deal a few years down the line,” he says.

Small business owners and others who invested all their savings in property are trying to liquidate their investments, and are not looking for profits.

People leaving the city has impacted the sector, but this is a temporary setback, he says. “Right now it makes sense for people to go back home, but they will come back. People love the city and what it has to offer and that’s why the real estate of this city has thrived and will continue to do so,” he adds.

Bigger spaces

Many offices have had to close their shutters temporarily and ask employees to work from home, and that has had an impact on the sector, says an employee at JLL, commercial real estate company.

However, this is just temporary. Office spaces aren’t shrinking but expanding. “Many global companies such as Accenture, Intel and Google have been signing deals over the past few months and are taking up spaces as big as 1,65,000 sq ft. They are planning ahead. Bigger space will allow them to build offices that allow for social distancing,” he says.

On the other hand, while some small businesses are trying to stay afloat, others are trying to acquire spaces that they wouldn’t have been able to afford earlier.

He says prices of commercial spaces have remained steady, despite speculation. However, the period has seen tenants and landlords come to new agreements.

“They need each other and this has resulted in a need to come to a middle ground and help each other out,” he says. Landlords have agreed to give rental support to tenants, who have in turn told landlords they would continue to stay on. It’s still a buyers’ market, and so real estate is still the best long term investment, he adds.

Tough time for brokers

With everyone trying to save money, cutting out the middleman seems to be the path that most are taking.

“Owners are trying to attract clients directly. If they had to post an ad on a site like No Broker, they would have to pay a minimal amount compared to the commission they would have to pay a broker. A tenant would also be more than happy not to pay brokerage. Even those who do approach agents are negotiating the commission percentage,” says Waquar Ahmed.