The Influence of NRIs in Fueling the Hike in Bengaluru’s Real Estate Prices

Bengaluru has always made headlines for its booming IT sector, its pleasant weather and its never-ending traffic. But now Bengaluru has taken the spotlight for another reason – Its skyrocketing real estate prices. Homeownership has become out of reach for many due to the scorching real estate market.

Why Are Bengaluru Real Estate Prices So High and what does it mean for an average buyer or a middle-class buyer to own a house in Bengaluru? Let’s have a look at what’s Fueling the Hike in Bengaluru’s Real Estate Prices.

The Reason for the Rising Property Cost in Bengaluru

There has been a sudden growth in Bengaluru’s real estate market and there are several reasons for this rise. This rise can be linked to various factors like urban expansion, the influx of tech professionals, and a growing demand for quality housing. Areas like Whitefield, Sarjapur Road, and North Bengaluru have become hotspots for residential developments, particularly for 2BHK and 3BHK apartments.

Another reason that not many are aware of is the growing interest of NRIs (Non-Resident Indians) in Indian properties which has led to a noticeable impact on Bengaluru real estate prices. Many NRIs view India as a safe and emotional investment, especially post-pandemic. With a stronger dollar and remote work options, they find property investment in India more attractive than ever. Bengaluru, with its cosmopolitan appeal, tech-driven economy, and high rental yields, tops the list along with Mumbai, Hyderabad, Pune and other cities.

Today owning a 3BHK in Bengaluru would cost somewhere around INR 90 Lakh to INR 2 crores depending on the area. This is a huge jump compared to just five years ago.

Role of NRIs in Bengaluru’s Real Estate Market

Most NRIs wish to invest in Indian properties. But over the past decade, the number of NRIs interested in investing in their motherland has increased suddenly. The favourable exchange rate, digital property management platforms, and a desire to stay connected to their roots are some of the reasons that NRIs are investing in Indian real estate.

But if you look at it differently, these investments are not just emotional for them, it’s a smart and strategic move. Real estate remains a safe and tangible asset in the long run. NRIs often choose high-end apartments or villas in Bengaluru as second homes or rental investments.

So, this brings us to a bigger picture – The role of NRIs in Bengaluru’s rising real estate market. This can be explained in 3 ways:

1. High-End Demand – NRIs prefer premium apartments or villas and are ready to pay premium prices for them. Due to this, developers aim at building luxury housing, sometimes neglecting affordable housing segments. While NRI money boosts the economy, it also plays a part in driving up real estate prices, making it tougher for local buyers to compete.

2. Investing with ready cash – NRIs often pay the full amount upfront unlike the common people here who highly depend on home loans. This drives sellers to increase property rates.

3. Just an investment – For NRIs, buying a home in India is just for an investment purpose. They either keep it as their holiday home or give it as a rental home. This increases demand and puts more pressure on the available supply.

Due to these reasons, the prices of properties in Bengaluru have become overpriced. This has made the dream of owning a house in Bengaluru a far-fetched dream for the common man.

There’s no denying the NRI role in India’s real estate market has played a part in the price surge. So, does that mean you should not invest in Bengaluru? Not necessarily. Despite the soaring prices of properties in India, especially in Bengaluru, it is still a promising city which continues to be a tech hub with strong infrastructure growth and job opportunities. So, the smart choice is to invest wisely. Instead of rushing into high-priced zones, buyers should explore emerging areas, stay updated with housing market analysis in Bengaluru, and make informed decisions.