Bengaluru’s water crisis might make it an expensive real estate market

  • Karnataka state government is working on a proposal to ban construction activity in Bengaluru for next five years to deal with water crisis problem.
  • Bengaluru has emerged as a hotbed for real estate construction activity in recent years, with consumer demand reaching new levels, and home sales reaching 80% high as compared to 2017.
  • The proposal will lead to massive job crisis and inflation in real estate market and is also not sure of helping with water scarcity as there is no water storage facility.
The state of Karnataka has come up with its own plan to fight the problem of water crisis. It is contemplating a ban on apartment construction in Bengaluru, for the next five years.

The city was once known for its beautiful gardens, many lakes and ample groundwater resources. However, tech and BPO boom which brought in population and scramble for space, has pushed builders to take over lakes, fill them up and construction over them.

Added to that, the government is also worried that new apartments might not have basic amenities like water.

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Unclear ban

This move could place a spoke in the wheel for the real estate market in Bengaluru which has just started to recover.

After being stranded with unsold homes for the last four years, the market has started showing signs of growth. In the first quarter of 2019, its homes sales went up by 80%, from 2017, according to ANAROCK Property Consultants.

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Lack of clarity regarding the ban is also worrying investors and home buyers alike. The proposal does not specify if it will include new construction activity or will also be applicable to projects under construction projects as well.

Eitherways, the effects will not bode well for the sector.

“Builders sitting on ready inventory will immediately increase the property prices of these homes by at least 10-15%. This will keep inflating over the years of the ban. However, homebuyers with new ready properties whose prices remained stagnant over the last 2-3 years may have a reason to cheer this move, as finally the values of their property will rise,” says Anuj Puri, Chairman, ANAROCK Property Consultants.

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The step will be a big blow to the millions of labourers working in the city’s real estate market. Labour from various states like Uttar Pradesh, Bihar and West Bengal work in the city.

“This will further contribute to ever increasing job crisis in the country,” Puri says.


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