Bengaluru's Infrastructure Woes: How Rain, Traffic, Water Shortage Take Toll On Property Prices

The Bengaluru real estate market has witnessed a major shift in priorities among homebuyers since the 2022 floods ravaged the tech capital.

Essential services like healthcare and schooling, connectivity to workplaces, and a reliable water supply have become top concerns for buyers, as seen with a techie-lawyer couple who recently booked a 3 BHK in North Bengaluru.

Photo Credit: PTI

Their emphasis on these factors reflects a broader trend where infrastructure reliability is increasingly scrutinised by potential homeowners, reported Hindustan Times.

Manaal Desai, a 29-year-old entrepreneur, faces a dilemma between choosing a ground floor or first-floor apartment. His primary concern is minimal knee strain for his ageing parents, but he is also wary of potential waterlogging issues, a lingering fear after the 2022 floods.

Desai's caution is not unfounded, as local brokers have noted an increase in queries related to water supply and management in new residential projects. The 2022 floods, which submerged much of Bengaluru, led to a sharp decline in real estate activity, with residential launches dropping by 27% and sales dipping by 6.6% in the quarter following the floods.

"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.

"Certain areas such as Yemalur in East Bengaluru, are still reeling under the impact of the unfortunate event," said Manoj Agarwal, founder of Agarwal Estates.

Despite the initial downturn, the city's real estate market has rebounded. JLL's research indicates that Bengaluru emerged as the premier housing market in India in the April-June 2024 period, with 18,548 units sold and 16,537 launched.

This recovery is attributed to the sustained demand, particularly along the Outer Ring Road East, where property demand continues to outpace supply, even in flood-affected areas.

"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," noted Darshan Govindaraju, Director at Vaishnavi Group.

This perspective has kept property prices and rental yields on an upward trajectory, despite ongoing infrastructural challenges.

Developers are also leveraging technology to mitigate these challenges. For example, Govindaraju suggested that projects could elevate podium levels or use stilt parking to prevent floodwaters from affecting buildings. Such innovations allow developers to capitalise on high-demand areas despite infrastructural shortcomings.

In summary, while the 2022 floods left a lasting impact on Bengaluru's real estate market, the city has shown resilience, driven by robust demand and strategic adaptations by developers.