Concerns Over AI’s Impact on Software Jobs Stoke Bengaluru Real Estate Debate
As apprehensions mount regarding the potential disruption of software employment by artificial intelligence, a discussion on Reddit has reignited a longstanding inquiry within Bengaluru’s property sector: what ramifications would a slowdown in the city’s IT activities have on real estate?
The conversation was catalyzed by comments made by Anthropic CEO Dario Amodei, who posited that software engineers might become “largely obsolete” in a matter of months.
Fears of AI disrupting software jobs have sparked a Reddit debate on whether Bengaluru’s real estate market could be hit if the city’s IT-driven growth slows.
A number of Reddit users expressed concerns that such a paradigm shift might adversely affect housing demand. One participant commented, “Much of the real estate financing is reliant upon individuals earning foreign currency.”
They noted that fewer international job opportunities and the imperative for engineers to acquire new skills could create a cascading effect on property acquisitions. Conversely, they argued that this scenario might render housing more accessible for local buyers who do not depend on dollar earnings.
Others expect that the market will not undergo a collapse but rather transition towards a more tempered, stable growth trajectory.
During a discussion at the World Economic Forum, Dario Amodei cautioned against the repercussions of artificial intelligence on labor markets.
He indicated that AI could accomplish tasks currently performed by software engineers within six to twelve months, stating, “I have engineers at Anthropic who no longer write code; I simply allow the model to generate it, and I make necessary edits.”
Participants in the Reddit discourse highlighted that the real estate cycles in both Bengaluru and Hyderabad have historically been intertwined with IT hiring patterns, wage increases, and a steady influx of overseas investments.
A Redditor remarked, “Future growth in the city hinges on the establishment of IT parks and the accompanying gated communities,” raising questions about whether a slowdown in hiring or layoffs could disrupt this model.
Nevertheless, some users urged against excessively pessimistic forecasts. Drawing on historical tech disruptions, one asserted, Prior to the dotcom bubble, there were claims that local stores would vanish.
During the pandemic, the belief was that online education and streaming services would replace traditional classrooms and cinemas. Old paradigms may evolve, but new opportunities and adaptations invariably arise.
Economic Factors: Dollar Earnings, AI Automation, and Housing Demand
Many Redditors underscored potential threats to housing demand, with one stating, “A significant portion of the real estate market is financed by expatriates earning in dollars.
With diminished overseas opportunities and a necessity for software engineers to adapt, the consequences will be palpable.” However, they noted that this situation could lead to increased affordability for local buyers without foreign income.
Emergence of a K-Shaped Property Market
Some contributors posited that a slowdown would not precipitate a collapse in Bengaluru’s housing market but rather transform it.
“Real estate sales here are predominantly driven by commodity factors; buyers exhibit keen sensitivity to price per square foot,” one remarked, emphasizing that, unlike in Mumbai or the National Capital Region, ultra-luxury properties seldom command exorbitant price premiums.
However, this trend may be subject to change. Currently, most transactions occur within the ₹3–5 crore range. I foresee a pivot towards housing priced between ₹1–2 crore, alongside a narrow segment of properties exceeding ₹7 crore in the ultra-luxury bracket,” the user noted.
They predicted that affordable housing might appreciate only in alignment with core inflation rates of 4–5%, while luxury real estate could yield higher returns but also present pronounced risks regarding downside and liquidity.
A Redditor characterized the emerging scenario as a potential K-shaped outcome for both the software industry and the housing sector, indicating that the repercussions would not be uniform.
Factors such as skill proficiency, income stability, access to dollar-linked earnings, and buyers’ appetite for risk could result in distinct disparities in demand and pricing, delineating clear victors and victims within Bengaluru’s real estate arena.
Anticipated Impacts on Bengaluru Real Estate
Bengaluru’s substantial post-pandemic surge in home prices was not solely the result of speculative endeavors but was attributable to a protracted adjustment following nearly six years of subdued growth, as articulated by Sunil Pareek, executive director at Assetz.
Between 2014 and 2020, residential prices in the city increased at a modest annual rate of 3–3.5%, even as household incomes rose and buyer expectations evolved.
According to Pareek, the pandemic expedited long-delayed purchasing decisions, resulting in a sharp realignment of property values. “The 60–70% increase we witnessed post-Covid should be viewed as a correction rather than an anomaly,” he asserted.
Although the technology sector has experienced layoffs and cautious hiring practices, Pareek does not foresee a downturn in property values. Instead, he anticipates a shift towards a more gradual, stable growth pattern.
“The rate of appreciation observed over the past three to four years is unlikely to persist; however, I do not predict a freeze or a correction,” he concluded.
Source link: Hindustantimes.com.
