'We could see more defaults on home loans...': Reddit user flags Bengaluru property risks

Bengaluru’s real estate market, long seen as a reliable investment backed by the city’s tech boom, may be on the brink of a course correction. A Reddit user recently warned that rising layoffs among tech workers could soon result in more home loan defaults, pushing down property prices. 

“Those who have invested heavily in real estate might face a rude shock soon,” the user wrote, adding, “With the rapid rise of AI, will the city’s skyline look different in the next 5 years?”

Much of the anxiety stems from the evolving role of AI in the workplace. Bengaluru’s property demand has traditionally mirrored the growth of its IT sector. But with companies now leaning heavily into Gen AI, that link is weakening. 

“Bangalore has always been the IT capital of India, with its real estate booming alongside the tech sector. But with the rise of Gen AI, the golden years for real estate may be over sooner than we think,” a user observed.

Several users pointed to a hiring slowdown across core tech functions. One Redditor noted, “We have stopped hiring frontend, backend, and data analysts. We are going heavy on AI. So yes, we do not need more people, and in some time, we will downsize as well.” Others described how advanced agentic tools are now capable of performing tasks that once required entire teams. “Just watched someone prompt Claude into using Blender to create 3D figures from an image. Just text. Claude used Blender directly all by itself. The output was immediately usable,” one user wrote, calling it a sign that the white-collar job market is primed for collapse.

These concerns are already being reflected in real estate trends across the city. Rents in prime neighbourhoods like Koramangala and Indiranagar have seen a correction, dropping by ₹5,000 to ₹10,000 a month in some cases due to rising inventory. This comes after sharp rental hikes of 20 to 40 percent during the 2022–2023 period. In contrast, areas like Whitefield and North Bengaluru are still seeing strong demand, with rents rising by 20 to 25 percent over the past two years, largely due to better affordability and proximity to tech hubs.

On the sales front, momentum appears to be slowing. East Bengaluru recorded an 18 percent decline in residential sales in Q3 2024, while North Bengaluru saw a 6 percent dip. Meanwhile, new housing launches have increased by 7 percent year-on-year, leading to higher inventory and contributing to price stabilisation in several pockets. 

Despite this, peripheral areas such as Gunjur have continued to outperform, witnessing up to 69 percent price appreciation over the past six years, driven by improved connectivity and the launch of larger residential projects.

Investor sentiment is also shifting. Slowing demand from NRIs, rising property prices, and economic uncertainties are causing some investors to pull back. Among Reddit users, there's a growing view that a correction is overdue. “The market is behaving as if there’s endless demand. That’s no longer true,” one user commented, reflecting fears of speculative overbuying in recent years.

Still, not everyone is convinced that AI is the primary factor driving the shift. One Redditor, identifying as an AI professional with over a decade of experience, argued that the impact of AI is being overstated. “AI can impact only 10 percent or less of the workforce in 24 months at a max. If the employees reskill themselves then not even 10 percent layoff will be there. These layoffs are happening because of many other reasons, one is a mega shift in a bigger economic cycle.” 

He added that while a correction is underway, Bengaluru itself is adapting—as it has many times before. “The tech talent here will refine and take on more sophisticated tasks. Bengaluru is restructuring as a city.”