Real estate stocks, particularly those with strong exposure to Bengaluru, came under pressure on February 12 as mounting concerns over artificial intelligence-led disruption in the information technology sector rattled investor sentiment. The Nifty Realty index declined 1.2 per cent to 844.50 by midday trade, ranking among the worst-performing sectoral indices, alongside a sharp 5 per cent drop in the Nifty IT index.
Market participants linked the selloff to fears that rapid advances in generative AI and automation tools could reshape workforce requirements across India’s technology industry. Bengaluru, often referred to as the country’s technology capital, hosts a large concentration of IT firms and global capability centres. Any slowdown in hiring or potential layoffs in the sector is seen as having downstream implications for residential absorption and office demand in the city. Shares of Anant Raj and DLF fell more than 2 per cent each during the session. Among Bengaluru-focused developers, Brigade Enterprises and Sobha declined over 1.5 per cent. Prestige Estates and Godrej Properties slipped more than 1 per cent, while Oberoi Realty and Macrotech Developers (Lodha) also traded lower. The logic driving investor caution is rooted in the close interdependence between the IT sector and urban housing markets in cities such as Bengaluru, Hyderabad and parts of Pune. High-income technology professionals form a significant share of homebuyers and premium tenants. A disruption in employment growth or compensation structures could temper incremental housing demand, particularly in mid-to-premium segments.
However, sector experts argue that while artificial intelligence may alter job roles, it does not necessarily translate into an immediate contraction in office space requirements or residential demand. Technology companies continue to expand global delivery capabilities, and AI adoption may, in some cases, spur new business lines and productivity-led growth. Real estate fundamentals in Bengaluru have remained relatively resilient over the past year, supported by infrastructure upgrades, metro expansion and sustained demand from both domestic and multinational firms. Developers have also maintained measured launch pipelines, limiting oversupply risks. The current stock market reaction appears more sentiment-driven than fundamentally anchored. Equity markets often price in forward-looking risks, especially when sectoral linkages are strong. With IT stocks touching multi-month lows, real estate counters with heavy exposure to technology hubs have moved in tandem. Going forward, investors are likely to track hiring data, quarterly earnings commentary from IT majors and guidance on workforce strategies.
While AI adoption represents a structural shift for the technology industry, its ultimate impact on urban housing demand will depend on whether automation leads to widespread job displacement or to role transformation and higher productivity. For now, volatility in real estate stocks reflects caution rather than confirmed demand erosion, underscoring the sensitivity of property markets to shifts in the broader economic narrative.
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Bengaluru developers hit amid IT uncertainty
