IT Job losses to impact residential real estate

27/05/2017

PUNE: With job losses looming large for those employed in the IT industry, demand for residential realty across Indian IT hubs of Bengaluru, Hyderabad, Pune, Navi Mumbai and Noida could be impacted, a recent study said.

According to a study by property consultant Jones Lang LaSalle, since Bengaluru and Pune both rely heavily on IT companies for not only job creation but also to drive office and residential real estate demand, these markets face the maximum risk from an IT meltdown.

As per industry body estimates, 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 per cent of the population across leading economic centers of Bengaluru, Mumbai, Delhi, Hyderabad, Pune and Chennai, it said.

According to Indicus data, this share of population for Bengaluru is around 19 per cent, or over two lakh people, in absolute terms."For real estate developers in Bengaluru, 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," said JLL India Managing Director - Strategic Consulting Shubhranshu Pani.

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, it said. Due to the slowdown witnessed over last few years luxury sales have been affected to a great extent, while the mid-segment homes continued to witness momentum, especially in projects of reputed developers.

"If the current job market scenario continues for a long time, it could quite possibly have a negative impact on residential demand, especially in the mid-premium segment. Affordable and mid-segment homes, however, could see momentum due to a strong push by the government, low interest rates and the current slackening of prices," JLL noted.