Heavy rainfall hammered India's IT capital over the past week, inundating parts of Bengaluru. Visuals of submerged luxury villas and apartments have gone viral on social media, especially images from areas close to Sarjapura, Bengaluru’s IT hub, and the Outer Ring Road (ORR).
Moneycontrol spoke to Bhaskar T Nagendrappa, President, Confederation of Real Estate Developers Association (CREDAI), Bengaluru, to understand how the flooding may impact the real estate sector in the city.
Will waterlogging impact the construction sector in Bengaluru?
Nagendrappa said the waterlogging had impacted only 15 percent of the city, especially pockets in the south-east. "We do not have any projects under-construction in those areas. It is unlikely that the flooding will impact the city’s construction sector," he added.
He said there was no question of delay in upcoming projects due to the waterlogging. "Rainfall is a natural phenomenon. Last week, the city saw unprecedented rainfall after a long time. It was a one-off and will not cause projects to be delayed," he added.
Nagendrappa said that since the waterlogging had not impacted the construction sector as such, we will not see any major losses in the sector.
With changing rainfall patterns, and more floods, will we see a shift in property prices?
Nagendrappa said, "This is routine, especially with climate change. Over the past 30 years, real estate prices have gone up in the city. Real estate is an appreciating asset and last week's flood is unlikely to affect property prices.
He said that people have a short memory. "The Chennai and Mumbai floods a few years back are a classic example. Compared to Bengaluru, those were more devastating. Prices will definitely be affected for a short period. However, after some months it will be business as usual," Nagendrappa said.
Especially in the luxury housing segment, Nagendrappa said, people have holding capacity and are unlikely to transact if prices are low.
"For the mid-level housing segment, people will go through this pain, still remain in the same place. They do not have the bandwidth to move out of the flood-prone areas to safer places," he said.
He said that Bengaluru is an end-user-driven market, unlike NCR and Hyderabad, which are investor-driven markets. "In an end-user-driven market, we will not see any dip in the economy. There will not be any supply-demand mismatch. In real estate, Bengaluru will remain the most sought-after city," he added.
Nagendrappa added that real estate rates have been conservative since 2016. "Even after demonetisation and GST, prices have not shot up. Only post-Covid, we see a preference for spacious houses. Today, with increasing sales velocity, property prices have also picked up pace. Rates have increased at least 10 percent compared to pre-Covid times," he added.
What can the real estate sector learn from the floods?
Nagendrappa said that developers and builders will become more aware . "They will start factoring the rainfall pattern and flood-prone lands while planning upcoming projects. They might also do a proper study to understand how it might impact real estate. The larger players will know where to buy land to avoid any flooding in the apartments," Nagendrappa explained.
He said that now developers and corporates will understand the mayhem caused by encroachment on our environment.
Nagendrappa added that the government has to ensure proper drainage systems and prevent encroachment to avoid flooding in the future. "In Bengaluru, major infrastructure is sitting on (erstwhile) lakes. All of us need to be more sensible today," he added.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
