Impact of US Tariffs on Bengaluru and Pune Real Estate
The recent implementation of a substantial 26% tariff on Indian imports by the US administration during President Donald Trump’s tenure has led to unexpected repercussions beyond mere trade statistics. Analysts have raised alarms about a potential recession in the US, which poses a significant threat to India. This concern extends beyond broader economic implications; it encompasses vital employment, real estate, and the dynamics of tech-driven cities like Bengaluru and Pune. With American businesses tightening their budgets, Indian IT companies are likely to face longer project cycles and dwindling revenues. Consequently, when the IT sector experiences a downturn, cities reliant on technology-driven growth, particularly Bengaluru and Pune, begin to sense the effects.
In light of these developments, a chartered accountant highlighted the potential consequences stemming from US President Donald Trump’s recent tariff wars. The accountant cautioned that a recession in the US could lead to a ripple effect within the real estate sector in prominent IT cities such as Bengaluru and Pune.
In a post on X (formerly Twitter), CA Paaras Gangwal noted, “Bengaluru and Pune’s real estate market is intrinsically linked to the IT sector. The current market is thriving due to the IT sector’s boom over the past 3-4 years. However, a recession in the USA may adversely affect the real estate market in these IT-centric cities.”
Bengaluru and Pune’s real estate market is closely tied to the IT sector, which has seen vibrant growth in recent years, due to economic expansion and an influx of professionals. Areas such as Indiranagar, Koramangala, and Whitefield in Bengaluru have experienced notable price surges driven by high demand combined with limited land availability. Nonetheless, there are growing concerns that this rapid price increase may not be sustainable in the long term.
Real estate markets in Bengaluru and Pune, which have typically thrived on strong demand from IT professionals, are now witnessing a slowdown due to an increase in layoffs and reduced hiring within the technology industry. In year 2024, Bengaluru recorded over 50,000 job losses among IT workers, leading to a marked decline in housing demand. The situation is made more challenging due to the advent of artificial intelligence and automation, which are altering job landscapes and increasing uncertainties regarding employment.
Similarly, the real estate landscape in Pune is experiencing a slowdown, with prospective homebuyers from the IT sector taking a more cautious stance in light of job security and economic stability concerns. This shift has led to a decline in property transactions in both cities, illustrating the broader challenges faced by the IT sector and its impact on housing markets.
India’s housing market has continued to face hardships in the early months of 2025, with a notable 23% decrease in sales alongside a 34% reduction in new housing supply, as per a report by PropEquity, a data analytics firm listed on the NSE. The report indicated that housing sales across India’s top nine cities totaled 105,791 units in Q1 2025, a sharp decline from the 136,702 units sold during the same period in 2024. While Bengaluru and Delhi-NCR stand out as exceptions to this downward trend, other cities have experienced significant drops in both sales and inventory.
Bengaluru emerged as a leading market performer, achieving a 10% increase in housing sales, with 18,508 units sold in Q1 2025 compared to 16,768 units in the previous year. This city accounted for 17% of total sales in Q1 2025, a rise from 12% in the same quarter of 2024.
In contrast, Hyderabad faced the steepest sales decline, plummeting by 47%, followed by Mumbai with a 36% drop, Pune at 33%, Kolkata at 28%, Thane at 27%, and Navi Mumbai at 7%. Chennai experienced a minor decrease of 2%.