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Sivaram S. is struggling with a continuous decline in tenants at his multi-storey apartment complex in Bengaluru’s Electronic City, roughly 2km from Infosys Ltd’s sprawling campus and close to the offices of many other IT companies.

Nearly 80% of the inmates, largely young, single professionals, went back to their home towns during the first wave of the pandemic last year to save on rentals, with some returning only earlier this year. The deadly second wave again led to a rise in vacancies in his building.

“I haven’t been able to increase rent in nearly 1.5 years. The second wave has had a severe impact, with some tenants and their families back home getting infected. Most IT companies have allowed work from home indefinitely and people are not in a hurry to return to Bengaluru," he said.

If the situation does not improve in the next 2-3 months, Sivaram plans to partner a branded co-living firm on a revenue-share basis.

India’s rental housing market, particularly in IT-driven cities such as Bengaluru and Pune, is seeing increased vacancies at apartment complexes and decline in rents as companies extended the work-from-anywhere option after the second wave. While rents have plateaued in most cities, Bengaluru has seen the sharpest drop of 10-20% in the past year.

Landlords have also been forced to skip the annual rent escalation practice, of around 5-10%, due to the ongoing pandemic.

Saurabh Garg, co-founder and chief business officer, Nobroker.in, said the second wave has impacted the rental market, which had made some recovery during January and February.

“Single professionals-led accommodation in Bengaluru and Pune has been more impacted compared to Delhi-NCR and Mumbai, which have been relatively stable. The demand collapse and rise in vacancies in co-living and paying guest facilities and one-bedroom apartments, largely meant for singles, has been huge. The drop in demand in the family segment occupying 2-3 BHKs has been much less this time around," Garg said.

The woes of the rental residential market interestingly coincided with a sharp demand for buying homes in the past year, until the second wave. Fence-sitters, with job security, took advantage of low home loan rates, builder discounts and stamp duty waivers in some states.

“The extended work-from-home option due to the second wave has once again put pressure on the residential rental market. Just when we thought the situation was improving and tenants were looking to return, the signs of the second wave deterred them. Vacancies in housing societies have also risen significantly—even in those which remained fully-occupied during the pre-covid period," said Anuj Puri, chairman, Anarock Property Consultants.

A recent report by 99acres.com said the rental landscape received a significant blow yet again as the resurgence of covid-19 delayed opening of offices and colleges by at least two quarters.

“Any growth in the segment is unlikely until these open up," it said.

Nobroker’s Garg said that demand has started coming back but it will take another quarter.

“We are also seeing a lot of owners, who didnt use online platforms earlier, listing their properties and coming online to use tools like virtual toors to bring in tenants," he said.

Puri said rentals dipped by at least 10-20% across several micro-markets in Bengaluru or even up to 40% in others depending on the property, facilities on offer etc.

“The rental market may remain somewhat subdued for another quarter or more, depending on how soon companies begin to open office for their employees. As of now, especially in Bengaluru, most IT companies are still pursuing the WFH option and may maintain status quo till the end of the year. The anticipation of the third wave in the coming months is also deterring several tenants from returning to their city of work as of now. Only once we see offices resume – hopefully by early next year – we may see the rental market pick some momentum," Puri added.

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