Tech Layoffs Hit Bengaluru's PG and Real Estate Market Hard

Bengaluru's Real Estate Struggles Amid Tech Layoffs

Bengaluru, a city known for its booming IT and tech industry, is witnessing an alarming downturn in its real estate sector. The demand for paying guest (PG) accommodations has dropped significantly, and house sales have slowed down. This decline is attributed to the wave of layoffs in IT and BT companies, leaving thousands of employees struggling to sustain themselves in the city. Many have no choice but to vacate their PGs, rented apartments, and even abandon dreams of homeownership, leading to a slump in the real estate market.

HIGHLIGHTS

Bengaluru sees a sharp decline in demand for PG accommodations.

Real estate market, including house sales and rentals, faces a downturn.

Widespread layoffs in tech companies force employees to leave the city.

Impact on Rental Market

The ongoing tech job crisis has led to a surge in vacant rental properties, particularly in prime tech hubs such as the Outer Ring Road (ORR). Property prices are witnessing a decline, and PG accommodations, once bustling with junior IT employees, are now struggling to find tenants. This situation has placed PG owners and real estate investors under financial strain.

Mass Layoffs by Tech Giants

A key contributor to this downturn is Amazon’s recent decision to lay off approximately 14,000 employees. This follows a previous round of job cuts in November 2024, where 18,000 employees were let go. These layoffs, aimed at cost-cutting, have significantly impacted Bengaluru's rental market, as a large portion of tech employees depend on affordable PG accommodations and rented apartments.

Industry-Wide Job Cuts

Amazon is not the only company reducing its workforce. In 2024 alone, 87 tech firms have laid off 23,054 employees, while a staggering 549 tech companies have dismissed a total of 1,52,472 employees. The previous year saw even higher numbers, with 1,193 companies laying off 2,64,220 workers. The widespread adoption of AI-driven automation has further reduced the demand for human resources, exacerbating the crisis.

Future Outlook

As the wave of job cuts continues, the demand for affordable housing in Bengaluru is expected to decline further. The city's real estate market, which thrived on the influx of IT professionals, now faces an uncertain future. Unless the tech industry stabilizes, the effects of these layoffs will continue to ripple across Bengaluru’s economy, impacting not just housing but also various other sectors dependent on IT professionals.