By Raghavendra Kamath
Nagendra Nayak, an employee in an IT firm, who was looking to take a house on rent, recently found that the residential rents in some of the parts of IT zone of Bengaluru — Electronic City, Sarjapur Road, Whitefield — which have been unaffected by recent floods have gone by 10 to 20%.Rains wreaked havoc in many parts of Bengaluru in August this year, flooding many residential complexes of the city, including those in the IT zone.
“The house owners are now saying that since some of these areas are unaffected by floods, they are safer than others and hence command more rent,” Nayak said, adding that rents had already gone up by up to 50% in the last one-and-a-half years in the IT areas of the city. Nayak finally took a house on the peripheral area of Electronic City which cost him a rent of `19,000 a month.
Ganesh Somayaji, another IT employee agrees that he too had a similar experience. “I have been told by a friend ,who is a local builder, not to come here for a year as rents have gone up sharply,” he said.“Today nothing is available in Electronic City for less than `22,000 per month, `30,000 a month in Sarjapur Road and Kaikondrahalli for `45,000 a month,” Somayaji said. He said now landlords are also asking for a deposit of 10 months against 3-4 months earlier.
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“Demand for rented properties in no-flooded areas have gone up, but rents have not moved up much,” said Sunil Pareek, executive director, Assetz Property Group in Bengaluru. He added that residents have realised that the recent floods were an exception, which occur once in every two or three decades and they can manage it.Demand-supply gap Amit Kumar Agarwal, CEO, Nobroker.com, said the reason for the phenomenal increase in rents is due to the vast demand and supply gap. “No supply has come up in the last two years because of Covid. Demand has risen in lumps because of new jobs being created. Students got jobs in Bengaluru and existing staffers got new jobs but both did not shift to the city physically as there was the work-from-home option,”said Agarwal of Nobroker.He said also with schools opening up a few months ago, there was a burst of demand for rented properties. Also, a huge demand for gated communities with amenities in IT hotspots, but with the short supply, the rents have moved up.According to him, residential rents have have gone up 15-40% post Covid while they used to go up by 5-7% every year before the pandemic.Somy Thomas,managing director valuations and advisory and co-head capital markets at property consultant Cushman & Wakefiled, agrees.
“Residential rentals are going up in most markets as more and more people are returning to main cities as companies want them to be back in offices. It could be weekly once or twice or even more frequent than that. But working from home town is not preferred by both the employers or employees. While employers are worried about moonlighting, employees are worried about losing out on visibility and networking,” Thomas said.
Indian rental housing demand (searches) grew 29.4% quarter-on-quarter and 84.4% year-on-year in Q2 of 2022, according to Magicbricks report. The report further said that the cumulative rental housing supply (listings) increased 3% q-o-q and 28.1% y-o-y across the 13 Indian cities mapped.Bappaditya Basu, chief business officer, Anarock Commercial, said: “Demand has not only breached the pre-pandemic levels but has gone much above it. So much so, the ground reality is that in many housing societies there are hardly any vacancies now and rentals have gone up by at least 15-20% against the pre-pandemic levels.”