With Bengaluru on brink of its worst job layoffs, real estate takes the real hit

Bengaluru is known as India’s renowned tech hub that has long been the go-to destination for IT professionals. It has been home to thousands of workers, with many residing in cost-effective accommodations such as paying guest (PG) facilities or budget rental apartments.

However, according to a report in Inshorts, driven by mass layoffs in the IT sector as a result of the rapid rise of artificial intelligence (AI) and automation, the city is now on the brink of one of its worst job crises. 

But this crisis extends beyond tech professionals, and it is now threatening to disrupt Bengaluru’s housing market, real estate investments, and local businesses. This is supposedly posing a serious challenge to the city’s economic stability.

The report added that in the coming weeks and months, Bengaluru is expected to witness widespread layoffs in the IT industry, with lower-wage employees being the most vulnerable. These workers, who often live in the most affordable housing, are typically the first to lose their jobs when companies implement cost-cutting measures or shift to AI-driven automation. 

Businesses are looking to streamline expenses, with entry-level programmers and software testers now being replaced by AI systems that can code, debug, and optimize software with greater efficiency at a fraction of the cost.

Real estate market takes a hit

These resulting layoffs will have an immediate effect on the PG accommodations and rental market in Bengaluru. PG facilities, often the most affordable option for junior IT employees, will see a sharp decline in demand. This will resultantly lead to financial strain on landlords and operators. Many property owners who invested heavily in rental real estate on a steady influx of IT professionals, may likely face falling occupancy rates and diminishing property values.

For real estate investors, especially those near the Outer Ring Road (ORR), a hotspot for tech parks and corporate offices, the situation is even more alarming. Many have poured crores of rupees into properties, expecting long-term rental returns from Bengaluru’s tech-driven economy. 

However, with the growing wave of layoffs, the demand for affordable housing is likely to plummet, leaving investors with vacant properties and declining asset values.

Also Read: Tech Layoffs Surge: 8,000 Jobs Cut by Indian Firms in 2024