Demand Trends for Budget, High-End, and Luxury Apartments in Bengaluru

Declining Demand for Mid-Segment Apartments

Demand for mid-segment apartments in Bengaluru, with prices between Rs 60 lakh and Rs 1 crore, dipped by more than 8% in the April-June quarter of 2024 compared to the previous three-month period. This decline was driven by a consistent rise in property prices and lower supply of affordable homes in the city. The fall in demand for these once-affordable homes has pushed their prices out of reach for many buyers.

Spike in Demand for High-End and Luxury Homes

In contrast, demand for high-end premium inventories - upwards of Rs 3 crore - saw a 4% spike in the second quarter of 2024. Most of the new supply in the city also came from this premium and luxury segment, accounting for 83% of the total new units added. This enhanced supply of upper-end housing has been driven by developers wanting to cash in on the pent-up demand, fueled by factors like the desire to upgrade post-pandemic and easier access to funds for buyers in the higher end of the market.

Downgrading to Cheaper Homes for Lower-Segment Buyers

At the lower end of the scale, due to low available inventory and slow income growth, the majority of homebuyers in the Rs 60-80 lakh segment have downgraded to below Rs 60-lakh homes. This is likely due to the widening gap between salary increments and rents in major cities, triggering a cost-of-living crisis for many.

Rental Demand on the Rise

Experts add that more potential buyers, unable to afford an apartment in the city, are turning into renters, reflected in the steadily increasing rental demand in Bengaluru.

Slowdown Across Segments, but Premium Segment Resilient

Overall, the real estate sector in Bengaluru is seeing a temporary slowdown, with local brokers reporting a 30-50% drop in queries across segments. However, the premium and luxury segments have remained relatively resilient, continuing to see increased supply and demand.

In summary, the Bengaluru real estate market is experiencing divergent demand trends, with mid-segment apartments seeing a decline, high-end and luxury homes witnessing a spike, and lower-segment buyers being forced to downgrade or turn to renting. The premium segment appears to be the most resilient in the current market conditions.