Bengaluru Water Crisis: Expected Decline in Apartment Rentals as Investors Exercise Caution

The Bengaluru water crisis is causing potential property buyers and investors to rethink their decisions. This issue is particularly concerning near the city's IT corridors, where water scarcity is becoming a major problem.

Rajath, one of the potential investors looking to invest in rental housing, has decided to delay his Bengaluru property investment due to skyrocketing prices post-pandemic and the current water shortages. Similarly, another investor interested in Whitefield, a key IT area, is pausing to consider the risks related to water scarcity.

Unplanned development has led to water shortages in Bengaluru's eastern IT corridor and central areas. Lakes have been overtaken by construction, raising concerns about future water availability. Rajath is hesitant to invest in the Bengaluru housing market under these conditions, fearing the impact on potential tenants.

Rents have risen sharply in the past two years, particularly in areas favoured by tech workers, with a 2BHK apartment now costing significantly more than last year. However, due to the water crisis, investors and tenants are now looking at other areas like north Bengaluru and Indiranagar, which still have reliable water supply.

The shift away from large gated communities is noticeable, with a preference for smaller projects that require less water. This shift is impacting Bengaluru rental prices and the overall housing landscape. The cost of securing water has jumped by 20%, impacting maintenance charges and pushing for more strategic long-term planning among investors and buyers.

If the water crisis continues, a significant drop in rental prices is expected, particularly in the most affected areas. The city had already seen Apartment rentals fall during Covid, and the Bangalore water crisis 2024 situation might lead to a similar adjustment.

Bengaluru's real estate market is at a critical point, with the impact of the water crisis on real estate becoming a significant factor in buying decisions. This influence could potentially trigger a downturn in prices, particularly as the city heads into the hotter months.