Today marks the Karnataka Formation Day, a day that sees a grand celebration across Karnataka among people, government offices, institutions and associations marking the importance of the state’s establishment, its culture, heritage and overall development.
PM Narendra Modi extends wishes to Karnataka on Kannada Rajyotsava, celebrating the state's rich culture and traditions. He acknowledges the outstanding people driving growth and innovation, wishing them continuous happiness and success.
As celebrations unfold in the state in many ways, one can also not forget the remarkable real estate journey since 1956, a key factor in shaping its growth, development and prosperity. Karnataka has come a long way till now in the sector and it is also expected to be growing in the years to come.
Shaping The State's Future
Karnataka's real estate landscape has undergone significant transformations since its formation in 1956. Initially, the state faced numerous challenges, including limited infrastructure, sluggish economic growth and regulatory hurdles. Bangalore, the capital city, was a quaint pensioner's paradise with modest housing demands. Real estate development was largely confined to government-sponsored projects and small-scale builders during those times.
The IT revolution in the 1990s catapulted Bangalore to global prominence, sparking unprecedented real estate growth. Today, Karnataka boasts world-class infrastructure, thriving metros (Bangalore, Mysore, Mangalore), luxury residences, and commercial hubs.
Karnataka's real estate market has seen growth in recent years, with Bengaluru and Mysuru as the main drivers: In the first half of 2024, Bengaluru's housing sales increased by 4% and average residential prices rose by 32% to Rs 7,800 per sq ft. The city also had the highest residential sales volume in India in the first quarter of 2024, with 16,995 units sold.
The IT, ITeS, and startup sectors are driving real estate growth in Karnataka. New concepts like co-living, coworking spaces, and senior living are also contributing to the growth of the real estate industry.
The Woes Ahead
However, the real estate industry in Karnataka faces some challenges, including a shortage of construction labour. Around 80% of construction workers in the state come from outside Karnataka, primarily from Jharkhand, Odisha, and Bihar.
Affordability, project delays, legal issues and lack of effective RERA enforcement are some of the challenges which need to be addressed. As per reports, Karnataka Struggles to Recover Rs 627 Crore from delayed real estate projects and has only recovered 12% so far. These challenges can prove to be a hindrance for the growth path of the state in the years to come.
Meanwhile the recent Karnataka’s government proposed bill on job reservation, if implemented, could severely impede the growth of the state’s real estate ecosystem, industry experts.
The Growth Catalyst
Industry reports states, Karnataka, a thriving state at the forefront of India's growth trajectory, plays a pivotal role in the nation's economic and social development. Ranked the fourth-largest state in FY 2022-23, Karnataka contributed 8.2% to the national GDP, steadily increasing to 8.4% in FY 2023-24.
As Karnataka's growth story unfolds showing strong growth amid the challenges, the future of the state looks bright. The state’s growth all these years shows its potential to grow as a top state in the country in terms of economy and also contributing to the nation’s growth in the years to come.
