Home REALESTATE Job losses hit residential property in IT cities

Job losses hit residential property in IT cities

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With job losses looming large for those employed in the IT industry, demand for residential realty across Indian IT hubs of Bangalore, Hyderabad, Pune, as also Navi Mumbai in Mumbai and Noida in NCR could be impacted. Among cities, Bangalore and Pune both rely heavily on IT companies for not only job creation but also to drive office and residential real estate demand. Resultantly, these real estate markets face the maximum risk from an IT meltdown.

According to industry body estimates, the Indian IT and BPO sectors employ close to four million people in over 16,000 companies and the middle management is at maximum risk of job loss in these times of disruption, increased automation and artificial intelligence. Professionals aged 30-40 years and above, typically earn anywhere between 20-60 lakh per annum, and form an average of 17% of the population across leading economic centers of Bangalore, Mumbai, Delhi, Hyderabad, Pune and Chennai.

According to Indicus data, this share of population for Bangalore is around 19%, or over two lakh people, in absolute terms. For real estate developers here, these mid-level managers are an important set. Over the years, they have not only set aside huge savings to make down-payments for a house purchase, but their choice of homes would incline more towards mid-premium housing projects, a category that is both lucrative and in demand at the moment.

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With this bracket of consumers coming under serious risk of a job loss, there is a possibility that recovery of residential sector in the mid-premium category will be delayed. JLL India’s REIS data on project launches over the last five years confirms this linkage here. The price category that middle management employees typically target are apartments in the price range of INR 4,000-10,000 per sft, which contributed close to 45% of the total project launches on an average in the five-year period until 1Q2017.

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Shubhranshu Pani
Shubhranshu Pani
Shubhranshu Pani serves as Managing Director - Retail Services in JLL Mumbai

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