Flooding in Bengaluru will be a ‘lesson learnt’ for the real estate sector, experts say

Bengaluru’s deficient urban infrastructure was exposed by the flooding.

Property prices in flood-prone neighbourhoods of Bengaluru will likely be hit by the havoc caused this week by torrential rainfall that inundated many low-lying areas across the city, realtors say.

Several luxury villas on the so-called Billionaire Street near Yemalur in east Bengaluru were submerged in waist-deep water after two days of incessant rain in India’s information technology (IT) and startup capital.

Residents of Epsilon and Divyasree 77, where corporate honchos like Rishad Premji, Byju Raveendran and Varun Berry live in villas, had to be evacuated by boats after they were flooded by waist-deep water.

Pradeep Joe, chairman of the Confederation of Real Estate Associates, says the havoc will definitely have an impact on the prospects of luxury housing in waterlogged areas.

"There could be a revision of price of about 20 percent in such areas," Joe said.

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According to real estate platform Zapkey.com, villas worth Rs 8 to Rs 15 crore have been sold to major start-up founders in the posh Epsilon Villas project. These have been sold to Kabir Lumba (Lifestyle); Umang Bedi (DailyHunt | Verse Innovation) and Abhinay Choudhari (BigBasket). Zapkey data shows that 11 sale transactions worth Rs 57 crore were transacted in these projects in 2022.

Leading startup CEOs/professionals and VCs own homes in Divyasree 77 Villas. These houses are in the range of Rs 3.5 to Rs 8 crore. Additionally, in other waterlogged places in Yemalur, property prices would be between Rs 5,000 and Rs 6,000 per sq ft, brokers said. And for places around Outer Ring Road, the would be Rs 5,500 to Rs 6,000 per sq ft.​

Bengaluru’s deficient urban infrastructure was exposed by the flooding that devastated areas close to Sarjapura, the city's IT hub, and the Outer Ring Road.

Construction to stay on schedule, prices to be hit

Normal life was brought to a standstill by the rain and flooding which realtors say is unlikely to delay the pace of construction although it may dent property prices.

Bhaskar T Nagendrappa, President of the Bengaluru chapter of the Confederation of Real Estate Developers Association (CREDAI), said the rain has affected only 15 percent of the city, especially east Bengaluru.

"People already living in apartments or completed projects face the brunt of the waterlogging," he added.

CREDAI said property prices may be hit for a short period of time, but demand will not be hurt.

"Though Mumbai and Chennai saw massive floods years ago, they neither dented the demand for property prices," Nagendrappa said,

Balaji Badrinath of the real estate firm Coldwell Banker said: "There will be an issue of inventories piling up. Buyers from the middle-income group may prolong their decision of buying because nobody wants uncertainty in their lives."

Sunil Singh, a real estate broker, said middle-income homebuyers prize affordability over concerns such as flooding or the environment.

Singh said: "There are chances people will migrate to luxurious villas in higher grounds, anything in the northern part of Bengaluru, like near the airport. Hence, we might see a rise in inventories of luxury housing in such areas. I believe, for the next six months, we will not see any transactions happening in the waterlogged places."

A lesson learnt

In the meantime, builders face the task of pumping water out of construction sites.

"Whenever water gets into the site, they have to pump it out. And that can add up to at least Rs 2 lakh per day though the number can be higher," Singh said.

The flood havoc has taught a lesson to builders and corporate entities.

"After this flooding, builders and corporates will research a proper study before they acquire more properties. They will collect rainfall patterns, and flood-level scenarios from the India Meteorological Department and plan the projects. They will know where to acquire the land and not," CREDAI said.

Joe said, "Today homebuyers have become aware of where they should buy their apartment. Recent Bengaluru flooding is a 'lesson learnt' for real estate sector that they should follow the guidelines set by National Green Tribunal and the government."

And homebuyers too would have drawn their lessons.

Singh says people will start questioning developers for the sanction plan with details of facilities like drainage.

"The more they start questioning the developers, the more the companies will become aware of how they are constructing the projects,” he said.

Experts say the flooding in areas like Bellandur and Outer Ring Road area took place predominantly because buildings had encroached into the stormwater drains.