Saturday, 03 Aug 2024
Source/Reporter : Bureau
“With the sky-high rents and security deposits, not to mention the shortage of decent rental properties, it makes more sense to purchase than rent a house in Bengaluru,” said Priyakshi Sharma, a 29-year-old software engineer presently settled in East Bengaluru’s Whitefield area. Demand for 1 BHK homes is gaining ground among millennials in Bengaluru (Representational photo)(Pexels)
With a comfortable annual pay scale to make the purchase, and bright prospects of a steady rental income in case she decides to relocate to another city, Sharma is mulling the idea of purchasing a 1 bedroom apartment in Bengaluru. Interestingly, Sharma personifies the thought process of many millennial and Gen Z professionals who’ve migrated to the IT capital for better career opportunities.
Demand for 1 BHK residential units in Bengaluru has seen a steady rise following the Covid-19 pandemic, developers and local brokers who spoke to HT.com unanimously agreed.
Also Read: Bengaluru tops list of cities with highest rental yield of 4.45% in Q1 2024; Mumbai second with 4.15%
Brigade Group COO, residential, Viswa Prathap Desu cited a roughly 30% increase in demand for 1 BHK apartments in Bengaluru in the last three years. Meanwhile proptech unicorn NoBroker stated a 35% year-on-year increase, inclusive of rental properties, particularly among the younger lot of tenants and homebuyers.
“Initially it was due to safety as people didn't want to share space for fear of infection. But this gave way to people appreciating their own space,” said Akhil Gupta, co-founder and CPTO at NoBroker.
Others agreed. “Demand for 1BHKs has gone up relatively in recent years in the city, particularly by bachelors, inevitably leading to growth in average rentals of this BHK configuration,” said Prashant Thakur, Regional Director and Head – Research, ANAROCK Group.
High rental yields encouraging buyers to purchase 1 BHK housing units
Homebuyers and industry players credited several factors - including high rental yields, rising affordability levels and alternative business models, among others - for this rise in demand.
“I would much rather convert my monthly rent into EMI and add a little to my security deposit to use as downpayment for a property of my own,” said Sharma.
Furthermore, those eyeing a property purchase from an investment perspective, are convinced by the high rental yields in the city. With property prices surging by 10-12% year-on-year in Bengaluru, many investors are opting for a 1 BHK as opposed to the traditional choice of a 2 BHK, several builders said.
Also Read: Bengaluru tops housing sales and launches pan India in Q2 2024, ₹1-3 crore homes capture 63% of new launches
According to proptech unicorn NoBroker, the average rental yield in Bengaluru ranges anywhere between 4-5%, against 3% in Mumbai and 2.5% in Delhi-NCR. Meanwhile, security deposits in the city range anywhere between 5-10 months’ rent, on average.
“From another perspective, the increase in demand for Airbnb’s is driving preference of one 1 BHK houses as an investment opportunity. We have noticed that buyers are purchasing these one-bedroom properties as it has become the perfect alternative to hotels,” said Nesara BS, Chairman, Concorde.
Who are these homebuyers?
1 BHK projects do well in the vicinity of IT offices, particularly in North and East Bengaluru, and around hospitals and colleges in the city, Desu said.
Real estate developers cited a roughly 40:60 split, with 40% of the 1 BHK homebuyers intent on end-use. These buyers are students from affluent families and early career professionals between 27-35 age bracket. These professionals work in the private sector, largely as techies and doctors.
Also Read: Relocating from Noida to Bengaluru? Here are 5 things you should know before renting an apartment in the city
Meanwhile, 60% of the 1 BHK buyers in the city aim to generate steady rental income or benefit from value appreciation of the property over time. These investors largely come from the 35-50 age bracket, with a varied mix of professional backgrounds.
Developers planning to give more attention to the 1BHK segment
Contrary to expectations, data suggests that fresh supply in the 1 BHK configuration has not increased in tandem with demand in the city.
As per Anarock Research, out of the total 650 projects launched in Bengaluru between 2022 to H1 2024, merely 115 projects offer 1 BHKs units. This is a mere 18% share. A closer look at the data showed that out of the total 261 residential projects launched in Bengaluru in 2023, nearly 43 projects comprised 1BHK units. Back in 2022, nearly 235 residential projects were launched in the city out of which 51 projects comprised 1 BHKs. Thus, while in 2022 the share of projects comprising 1BHKs stood at 22%, in 2023 it decreased to 16% and further to 14% in H1 2024.
However, developers who spoke to HT.com said that they plan to give the segment due attention, going forward.
Also Read: Should you buy or rent a house? Here’s why 42% people in Bengaluru prefer buying property over renting
Concorde, which usually reserves a 3% share for 1 BHK units in the brand's projects, has allocated 5-6% to units in this configuration in two upcoming projects, Nesara BS said.
Earlier in July, Brigade Group launched a residential project comprising 948 one-bedroom apartments in its township Brigade El Dorado, located in KIADB Aerospace Park.
With a comfortable annual pay scale to make the purchase, and bright prospects of a steady rental income in case she decides to relocate to another city, Sharma is mulling the idea of purchasing a 1 bedroom apartment in Bengaluru. Interestingly, Sharma personifies the thought process of many millennial and Gen Z professionals who’ve migrated to the IT capital for better career opportunities.
Demand for 1 BHK residential units in Bengaluru has seen a steady rise following the Covid-19 pandemic, developers and local brokers who spoke to HT.com unanimously agreed.
Also Read: Bengaluru tops list of cities with highest rental yield of 4.45% in Q1 2024; Mumbai second with 4.15%
Brigade Group COO, residential, Viswa Prathap Desu cited a roughly 30% increase in demand for 1 BHK apartments in Bengaluru in the last three years. Meanwhile proptech unicorn NoBroker stated a 35% year-on-year increase, inclusive of rental properties, particularly among the younger lot of tenants and homebuyers.
“Initially it was due to safety as people didn't want to share space for fear of infection. But this gave way to people appreciating their own space,” said Akhil Gupta, co-founder and CPTO at NoBroker.
Others agreed. “Demand for 1BHKs has gone up relatively in recent years in the city, particularly by bachelors, inevitably leading to growth in average rentals of this BHK configuration,” said Prashant Thakur, Regional Director and Head – Research, ANAROCK Group.
High rental yields encouraging buyers to purchase 1 BHK housing units
Homebuyers and industry players credited several factors - including high rental yields, rising affordability levels and alternative business models, among others - for this rise in demand.
“I would much rather convert my monthly rent into EMI and add a little to my security deposit to use as downpayment for a property of my own,” said Sharma.
Furthermore, those eyeing a property purchase from an investment perspective, are convinced by the high rental yields in the city. With property prices surging by 10-12% year-on-year in Bengaluru, many investors are opting for a 1 BHK as opposed to the traditional choice of a 2 BHK, several builders said.
Also Read: Bengaluru tops housing sales and launches pan India in Q2 2024, ₹1-3 crore homes capture 63% of new launches
According to proptech unicorn NoBroker, the average rental yield in Bengaluru ranges anywhere between 4-5%, against 3% in Mumbai and 2.5% in Delhi-NCR. Meanwhile, security deposits in the city range anywhere between 5-10 months’ rent, on average.
“From another perspective, the increase in demand for Airbnb’s is driving preference of one 1 BHK houses as an investment opportunity. We have noticed that buyers are purchasing these one-bedroom properties as it has become the perfect alternative to hotels,” said Nesara BS, Chairman, Concorde.
Who are these homebuyers?
1 BHK projects do well in the vicinity of IT offices, particularly in North and East Bengaluru, and around hospitals and colleges in the city, Desu said.
Real estate developers cited a roughly 40:60 split, with 40% of the 1 BHK homebuyers intent on end-use. These buyers are students from affluent families and early career professionals between 27-35 age bracket. These professionals work in the private sector, largely as techies and doctors.
Also Read: Relocating from Noida to Bengaluru? Here are 5 things you should know before renting an apartment in the city
Meanwhile, 60% of the 1 BHK buyers in the city aim to generate steady rental income or benefit from value appreciation of the property over time. These investors largely come from the 35-50 age bracket, with a varied mix of professional backgrounds.
Developers planning to give more attention to the 1BHK segment
Contrary to expectations, data suggests that fresh supply in the 1 BHK configuration has not increased in tandem with demand in the city.
As per Anarock Research, out of the total 650 projects launched in Bengaluru between 2022 to H1 2024, merely 115 projects offer 1 BHKs units. This is a mere 18% share. A closer look at the data showed that out of the total 261 residential projects launched in Bengaluru in 2023, nearly 43 projects comprised 1BHK units. Back in 2022, nearly 235 residential projects were launched in the city out of which 51 projects comprised 1 BHKs. Thus, while in 2022 the share of projects comprising 1BHKs stood at 22%, in 2023 it decreased to 16% and further to 14% in H1 2024.
However, developers who spoke to HT.com said that they plan to give the segment due attention, going forward.
Also Read: Should you buy or rent a house? Here’s why 42% people in Bengaluru prefer buying property over renting
Concorde, which usually reserves a 3% share for 1 BHK units in the brand's projects, has allocated 5-6% to units in this configuration in two upcoming projects, Nesara BS said.
Earlier in July, Brigade Group launched a residential project comprising 948 one-bedroom apartments in its township Brigade El Dorado, located in KIADB Aerospace Park.