By Raghavendra Kamath
At property portal Nobroker.com’s HSR Layout office in Bengaluru, new joinees are told that they need not wait till weekend to search apartments on rent online for their stay; they can browse and select properties they liked even on weekdays.
”In our own office, people are finding it difficult to get properties on rent. So, we are telling them not to wait for the weekend to find properties,” Amit Kumar Agarwal, co-founder and chief executive at Nobroker.com, said.
Agarwal says Adarsh Farm Retreat, a plush residential complex in Bengaluru’s Bellandur area, had many properties available on rent two years ago. Now, it is difficult to get anything despite the fact that the complex has 1,000 properties.
At Wadhwa Address, a posh apartment complex in Mumbai’s Ghatkopar area, Vinit Mathlani, a real estate consultant who stays in the same complex, says that there are over 50 people wanting to take apartments on rent but hardly any flat is available. “There is a sudden jump in demand for rental homes but not much inventory is available,” Mathlani says.
Call it schools reopening, offices opening to work from home in some cases, or a boom in IT jobs, demand for rental homes is shooting up while inventory of such properties is low in big cities such as Bengaluru, Mumbai, Delhi and so on, say real estate consultants. “Schools reopening is one of the primary reasons for increased demand for rental houses. Schools are mostly offline now and parents are coming back to stay in cities,” Nobroker.com’s Agarwal said.
Agarwal says even IT offices opening up, mostly twice a week, spurred the demand for rental homes.”One-and-a-half-years ago, owners were struggling to rent out their properties, now tables have turned,” Agarwal said, adding that today properties are being listed and rented out on the same day due to demand.
Though the Reserve Bank of India increasing repo rates does not have a direct bearing on the rental market, it is unlikely to have any significant impact on sale of houses in cities such as Bengaluru, Pune and so on due to job-hopping by IT professionals, says Mayank Saksena, chief executive (land services) of Anarock Property Consultants.
“Income levels have shot up drastically among IT professionals and all that money is coming into real estate. Even a 100 basis point increase in rates won’t have much impact,” Saksena said.
Jump in rents
The demand for rental houses has led to a steep jump in rentals of plush properties in ciites such as Mumbai and Bengaluru. For instance, in properties such as Lodha Park and World Towers in Mumbai’s Lower Parel area, rents have shot up by 30-70% in last one year, say brokers who deal in such properties.
In the Lodha Park property, rents have gone up from Rs 75,000 for a two-bed apartment a year ago to Rs 1.25-1.30 lakh now, says Himanshu Parikh, who deals in Worli-Lower Parel-Prabhadevi area.
Parikh says rents in Lodha World Towers, rents for three-bedroom apartments have gone up to Rs 3 lakh from Rs 2-Rs 2.25 lakh last year. Before the pandemic it was Rs 2.40.lakh.
He says in places such as south Mumbai, people would like to stay close to the office but take houses which they can afford, hence renting has shot up.
On an average, residential rents in Bengaluru have gone up 10%, 9% and 6% in Chennai and Mumbai, respectively, according to Nobroker.com.(see table). In contrast, selling prices have gone up between 2% and 4% in big cities such as Mumbai, Bengaluru and Delhi, according to Anarock Property Consultants.
Parikh says people want to put money in stock markets where yields are high than buying houses. “Concept of house ownership is changing. Millenialls want to stay in affordable places,” he said. “We are seeing huge demand for gated communities, homes with balconies, a safe environment and so on,” Parikh said.
Suru Kamani, an independent consultant in Mumbai, says the demand for larger apartments has gone up after the pandemic set in. “People want separate rooms for work, for their children, and good amenities. Joint families are splitting, that’s why there is demand for independent places,” he said.
He further says earlier, people would like to rent out apartments for corporations and now they look at the person and rent them.
In Delhi too, demand for good rental properties has gone up sharply, says Shishir Ganguly who deals in properties in CR Park, Greater Kailash and so on. “Rents have gone up and even older flats are in good demand,” Ganguly says. He adds that rents of apartments have gone up from Rs 50,000 to Rs 55,000 six months ago to Rs 60,000 now.
Developers such as Niranjan Hiranandani say people want choice and choices are not available in cities such as Mumbai.
“People want location specific properties but spaces are jot available at prices they can afford. That also makes them go for rental properties.,” Hiranandani says. He adds that rents have gone up 10 to 15 % in the last one year for good properties in cities such as Mumbai.