Is Bengaluru’s Rental Demand in Trouble? The Shocking Impact of IT Layoffs and Hiring Freeze

Synopsis- Bengaluru’s rental market is showing signs of saturation, due to IT sector layoffs, hiring freezes, and AI disruption which has reduced demand in tech-driven localities. While not a crash, the shift is expected to be more of a market correction, giving renters more power and pushing landlords to adapt to new realities.

Bengaluru, long known as the Indian Silicon Valley, has built its rapid real estate boom on a strong IT sector foundation. However, 2024 and 2025 have brought notable volatility to it. Large-scale layoffs, wavering hiring by technology giants, and the rise of artificial intelligence (AI) has got us question- Is the city’s rental demand finally cooling off? Let’s break down on this topic and try to understand if Bengaluru’s rental demand is actually slowing down due to the IT sector uncertainties.

IT Layoffs being the trigger

Between January 2024 and mid-2025, Bengaluru witnessed a lot of layoffs in the IT space, with estimates suggesting over 50,000 jobs lost in tech and IT-enabled services due to automation, AI adoption, and cost-cutting measures by global and Indian IT majors. Global names like Google, Microsoft, Amazon, and domestic heavyweights such as TCS announced significant local workforce reductions, targeting entry-level programmers, support staff, testers and lately even in the senior managerial roles as well. These developments have generated anxiety across the city’s rental and housing ecosystem.

Rental Trends

• 2022 – Early 2024:
  • Rents in Bengaluru’s prime tech corridors which includes Whitefield, Sarjapur, Koramangala, and Bellandur have soared by 15-35%, driven by the post pandemic return-to-office wave and a severe mismatch between supply and demand. Some areas saw 8-10% quarterly rent spikes as well.
• Mid-2024 – Early 2025:
  • The explosive upward trend has begun to moderate. In the first quarter of  2024, Bengaluru boasted the country’s highest rental yields at 4.45%, which rose from 3.6% in pre-COVID 2019, reflecting upon the robust investor returns and high demand.
  • By mid or late 2024, the saturation started to begin. Increased housing supply, along with more rental inventory in market, led to a 5-10% price correction in major neighbourhoods such as Whitefield, HSR Layout, and Koramangala.
  • Vacancy rates have ticked up, with landlords now more willing to negotiate rents which is something not seen in the previous two years. Many tenants are managing to strike deals as low as 10-15% below the listed rents, especially in the premium societies.

Also read: Adani Plans to Invest ₹20,000 Cr in Diversifying Airport Business; Will it Boost the Commercial Real Estate?

Reduction in Rental Demand

1. IT Sector Layoffs and Hiring Freeze:

• A direct impact of job losses in the tech industry, is that many are moving back to their hometowns, while others shifting to more affordable localities, and some have started sharing accommodations to cut costs.
• The steady influx of well-paid IT professionals as renters has declined significantly in the recent times.

2. Uncertainty in Fresh Hiring:

• With tech hiring on cautious pause, the pipeline of new renters has dried up. Even those who retain jobs are hesitant to upgrade housing or enter long-term leases due to possibilities of future layoffs.
• The market for PG accommodations and budget apartments is especially hit, with reports of up to 40% of PGs in tech hubs ceasing operations.

3. Increased Rental Inventory:

• Rapid construction completions and new launches in the last 18 months have created more options for renters. With supply finally catching up, the pressure on rents is easing.

4. Shift in Landlord Behavior:

After a period where landlords dictated terms, which sometimes includes providing linkedin profiles and salary slips. Now, the power is slowly shifting back towards renters, who now have more of the negotiating strength.

Most Affected Areas

• Tech Hubs like Whitefield, Sarjapur Road, Marathahalli, Electronic City, and parts of Northern Bengaluru are facing the blow, with rents for 2BHK flats dropping from Rs. 35,000 to as low as Rs. 28,000-30,000 in some locations. Time taken to find tenants is longer, and many flats remain vacant for weeks.
• Premium Societies: Even the city’s priciest gated communities are seeing actual deal values fall below their headline rents, especially for 2BHK and 3BHK units.

What About the Long-Term Outlook?

The recent developments are more of a correction in the market rather than a complete crash. Rental markets are finding a new balance as supply increases and demand falls. While the IT sector’s hiring and layoff cycle might remain, Bengaluru’s overall rental yields and property fundamentals remain solid with optimism on a rebound in tech job creation or for a broader economic growth.

Conclusion

Bengaluru’s rental demand is definitely slowing down due to mass layoffs, hiring freezes, and AI-driven disruption shake the city’s tech economy. After record rent hikes, a cooling trend is now clear, with drops of 5-20% reported in several hot spots, especially those dependent on IT workforce. Even though a markt correction in underway, Bengaluru’s real estate industry will remain as dynamic as it is, with the long-term trajectory linked closely to the fortunes of the India’s technology sector.

Written by Adithya Menon