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Bengaluru Real Estate Rising Challenge for Startup Founders

Bengaluru Real Estate Rising Challenge for Startup Founders

Bengaluru, the IT capital of India, is home to a thriving startup ecosystem. Yet, for many entrepreneurs, the city’s real estate market presents a challenge that is as formidable as building a successful business. Despite the allure of Bengaluru’s vibrant tech scene, the hurdles in securing rental or ownership property in prime locations like Koramangala, Indiranagar, and HSR Layout are proving to be significant obstacles for startup founders. The irony is stark: while these entrepreneurs venture into building businesses with innovative ideas, finding an affordable home or office in the heart of the city is turning into a major struggle.

Many startup founders, much like tech entrepreneur Patra, have found themselves navigating a series of challenges when trying to rent a home. Even with decent company turnover, some landlords are reportedly reviewing not just an applicant’s credit score, but their LinkedIn profile and company revenue reports before agreeing to rent out their properties. This trend, where entrepreneurs are judged on their professional profiles rather than their financial standing, highlights the shifting dynamics of the Bengaluru real estate market. For founders, the competition to rent or buy property in prime localities often results in disheartening rejections, leaving them to seek options in areas far from the city centre or to make compromises that stretch their budgets.

Prime areas like Koramangala, Indiranagar, and HSR Layout, which are preferred by many startup owners for their proximity to business hubs, are witnessing skyrocketing rents. A 3BHK apartment in these areas now typically costs ₹1.5 lakh per month in rent, with properties for sale priced at ₹3-4 crore. Real estate agents report closing deals for startup founders who can afford these steep prices, but for many, the financial strain is simply not feasible. For instance, Sunil Singh, a real estate director, shares that one startup founder purchased a 3BHK in Koramangala for ₹2.5 crore, while another opted for a ₹5 crore apartment in north Bengaluru, an area increasingly popular among those willing to invest significant sums into real estate.

Amidst this scenario, many startup founders are looking beyond traditional apartments and toward independent houses, particularly in high-demand areas. These houses, priced from ₹2 crore upwards, provide both residential and workspace solutions, as many landlords in Bengaluru do not allow startups to operate from apartments. However, the rent for independent houses is also rising, with some startup founders stretching their budgets beyond the ideal ₹1.5 lakh per month threshold to secure a suitable space. Kiran Kumar, vice president of Hanu Reddy Realty, notes that such landlords often require reference checks and profiles to verify potential tenants, adding another layer of complexity to the already competitive rental market.

In response to the rising costs and the inability of many founders to secure office space, co-working spaces are becoming an attractive option. These flexible, cost-effective workspaces are designed to support early-stage startups and entrepreneurs with lower operational costs. Legal entrepreneur Priyanka Kwatra, who opted for a co-working space in her early days, highlights how small commercial spaces, often no larger than 400-600 sq ft, are increasingly unaffordable, with rents soaring by 10-20% in the past year alone. With rental prices for commercial properties near Bengaluru’s high streets ranging from ₹1 lakh to ₹5 lakh per month, many entrepreneurs are left with no choice but to seek affordable, yet suitable, spaces away from the bustling city centre.

From a sustainability angle, this growing affordability gap in Bengaluru’s real estate market underscores the need for smarter urban development. The city’s infrastructure must evolve to meet the demands of both its growing tech sector and its diverse population. Encouraging sustainable housing development and creating affordable, flexible commercial spaces would reduce the carbon footprint associated with commuting and promote efficient urban growth. By reimagining the real estate market to be more inclusive, Bengaluru could ensure that its startup ecosystem thrives not just in business success, but in creating a more accessible and sustainable urban environment for all.

 

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