Bengaluru Sees Surge in 1BHK Demand Amid High Rentals and Strong ROI

Bengaluru’s real estate market is witnessing a surge in demand for 1BHK apartments, driven by soaring rental rates and attractive returns on investment. With rental yields exceeding 5%, these compact units have become a preferred choice for both tenants and investors in the city’s IT corridors and central locations.

A decade ago, 1BHK apartments were relatively rare in Bengaluru. However, with rising property prices, developers have significantly reduced unit sizes to maintain affordability. According to SquareYards, the average carpet area of newly launched 1BHK apartments has shrunk by 8%, from 380 sq ft in 2023 to 350 sq ft in 2024. Despite the downsizing, rental prices continue to climb, making these units an appealing investment option.

Sunil Singh, Director of Realty Corp, noted, “Earlier, 1BHKs were larger and available only in limited numbers. Now, developers are optimizing layouts to cater to the increasing demand from young professionals and students.”

The high rental potential of 1BHK apartments has also led to redevelopment trends. Kiran Kumar, Vice President of Hanu Reddy Realty, highlighted that landlords are now converting larger 2BHK apartments into two smaller 1BHKs to maximize rental income. “A 2BHK typically rents for ₹25,000-30,000 per month. By splitting it into two 1BHKs, landlords can charge at least ₹20,000 per unit, effectively doubling their income,” he said.

The growing preference for compact living spaces is reshaping Bengaluru’s residential landscape. Grade A builders are now launching 1BHK units ranging from 550 to 650 sq ft, while standalone builder floors offer even smaller units between 350 and 400 sq ft. Rising land prices further influence this trend, with developers keeping unit sizes within affordable price brackets of ₹50-60 lakh.

With increasing demand, 1BHK apartments now account for 10-15% of the total inventory in Bengaluru’s gated communities. Experts believe this trend will continue as affordability remains a key concern in the city’s competitive real estate market.