Bengaluru faces potential home loan defaults and price drops

Bengaluru’s property market is facing challenges as the city’s tech sector enters a new phase. A Reddit user has raised concerns that rising layoffs in technology could lead to more home loan defaults. This situation might lower property prices and affect investors. Historically, property demand in Bengaluru has increased alongside the growth of its IT industry. However, the rise of generative AI is changing that link. Companies are shifting focus, which could impact job security in the tech sector. One user noted that layoffs could be coming, as AI tools are capable of performing tasks that used to require many workers. This unease is already visible in the real estate market. Rents in neighborhoods like Koramangala and Indiranagar have dropped by ₹5,000 to ₹10,000 per month after a period of significant increases. In contrast, areas like Whitefield still see strong demand with rents rising by 20 to 25 percent. Home sales are slowing down, as seen in East Bengaluru, where sales declined by 18 percent in the last quarter of 2024. Despite the downturn, some areas, like Gunjur, are thriving, with prices climbing by up to 69 percent over recent years. Investor sentiment is shifting, and some are stepping back from the market due to rising prices and uncertainties. Many Reddit users believe a market correction is needed. One comment summarized that the demand for properties was no longer endless. However, not all users agree that AI is the main cause of these changes. An AI professional pointed out that the impact of AI on jobs is overstated and that many current layoffs are due to broader economic shifts. They believe Bengaluru will adapt to these changes, as it has done in the past.