How AI and Layoffs Are Impacting Bengaluru's Real Estate Market

engaluru, India’s tech capital, has long been a beacon for IT professionals and a cornerstone of the country’s real estate boom. The city’s skyline, dotted with gleaming tech parks and modern apartments, reflects the wealth and ambition of its IT-driven economy.

However, the rise of artificial intelligence (AI) and a wave of layoffs in the tech sector are casting a shadow over Bengaluru’s real estate market. For tech professionals, the dream of homeownership is now tempered by job insecurity and economic uncertainty.

Is it still a good time to invest in Bengaluru’s property market, or should caution prevail? Let’s explore the dynamics shaping this critical decision.

The AI Revolution and Its Impact on Bengaluru’s Job Market

Bengaluru’s real estate market has historically been fueled by the IT sector, with software engineers and tech workers driving demand for both rentals and home purchases.

However, the rapid adoption of AI and automation is reshaping the job landscape. Reports indicate that over 50,000 IT employees were laid off in Bengaluru in 2024 alone, with lower-wage roles like entry-level programmers and software testers being the most vulnerable.

AI tools are increasingly handling tasks such as coding and debugging, reducing the need for human labor in these areas. Major companies like Amazon have announced significant job cuts, with 14,000 layoffs reported in 2025 as part of cost-saving measures.

This job crisis is creating a ripple effect. With hiring freezes and stagnant salaries, many tech professionals are rethinking long-term financial commitments like home loans.

A Reddit user, a 30-year-old developer, captured this sentiment: “There is always a risk involved if I take a home loan for 25 years... There is a constant threat of AI, there is no guarantee that the job will remain.”

This fear of job displacement is not unfounded—experts predict that AI-driven automation will continue to disrupt traditional IT roles, potentially leading to further layoffs in the coming years.

Real Estate Slowdown: A Market Under Strain

The IT sector’s struggles are directly impacting Bengaluru’s housing market. Paying guest (PG) accommodations, a staple for junior IT employees, have seen a reported 30% drop in occupancy rates.

Landlords and property investors, particularly those near tech hubs like the Outer Ring Road (ORR), are facing financial strain as rental demand plummets.

Property values in these areas could depreciate by 15-20%, threatening investors who banked on steady rental income from tech professionals.

The broader residential market is also feeling the pinch. A NoBroker report noted a 29% drop in mid-end housing launches (properties priced between ₹40 lakh and ₹80 lakh) in 2024, reflecting shrinking affordability for middle-income buyers.

High property prices, coupled with job uncertainty, are making homeownership increasingly out of reach for many.

Social media discussions on platforms like Reddit and X highlight growing caution among buyers, with some predicting a market correction within the next five years due to AI-driven job losses and infrastructure challenges like water shortages and traffic congestion.

Despite these concerns, Bengaluru’s real estate market has shown some resilience. In Q1 2025, home sales rose by 10% (18,508 units), and new project launches increased by 17%, bucking the trend of declining sales in other major Indian cities.

To Buy or Not to Buy: The Tech Professional’s Dilemma

For Bengaluru’s tech professionals, the decision to buy a home is fraught with complexity. On one hand, real estate has long been viewed as a stable, appreciating asset in India, akin to gold due to its finite supply.

On the other hand, the immediate risks are hard to ignore. Job insecurity, driven by AI and automation, is making tech workers hesitant to commit to long-term home loans.

A Reddit user warned, “Hiring freezes, layoffs, no hikes—people are playing it safe. Some might even default on home loans.” Rising interest rates and the potential for loan defaults add further uncertainty, with some predicting price reductions or liquidations if highly leveraged builders face financial distress.

Infrastructure woes, including water shortages and traffic congestion, also raise concerns about the sustainability of Bengaluru’s property boom.

With rental prices expected to grow moderately (5-10%) in 2025 and potentially stagnate in 2026, renting may provide the mobility needed in an uncertain job market.

The Road Ahead for Bengaluru’s Real Estate

While Bengaluru’s real estate market faces challenges, it’s not on the verge of a collapse. The city’s status as India’s Silicon Valley, bolstered by major tech employers like Microsoft, Amazon, and Google, ensures a baseline of demand. AI, while disruptive, is also creating new opportunities in real estate through tools like predictive analytics and virtual property tours, which could streamline the market in the long run.

However, the immediate outlook suggests caution. The combination of AI-driven job losses, declining NRI investments, and infrastructure strain is dampening demand, particularly in the affordable and mid-end segments.

Tech professionals must weigh the emotional and financial appeal of homeownership against the flexibility of renting in a rapidly evolving job market. As one X user put it, “Bengaluru real estate needs to be ‘under watch’ in coming months/years.”

‍