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Business News/ News / India/  Home rentals spike as people return to office
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Home rentals spike as people return to office

Rents across cities had hit rock bottom during the covid-19 years
  • Following the reopening of offices and schools, rental inflation in major cities is up 12-18%
  • Cities with a significant concentration of information technology, and banking, financial services and insurance workforce saw higher escalation in rentals. Premium
    Cities with a significant concentration of information technology, and banking, financial services and insurance workforce saw higher escalation in rentals.

    Bengaluru: Pooja Dhar, and her flatmates at Sindhu Amazon Apartments, got a rude shock when the landlord told them in January that the monthly rent for the three-bedroom apartment will be increased from 45,000 to 60,000. Dhar lives in Bengaluru’s Bellandur-Outer Ring Road area, home to many businesses and information technology (IT) parks.

    “There was no room for any negotiation or discussion. Either we had to pay more rent or find another place. We looked at similar apartments in the neighbourhood, but everywhere the rents have shot up. So, we stayed," said Dhar, who works at an IT services company in RMZ Ecospace, a tech park just across the road.

    Over the past year, when employees started returning to office, gated residential complexes in and around the area have seen a steep rise in rentals. At Adarsh Palm Retreat, a high-end housing conclave in the area, for instance, rents went up from 60,000 to 85,000-90,000 for an apartment.

    During the covid-19 years, home rentals across cities hit rock bottom, with landlords giving discounts to tenants. Following the reopening of offices and schools, rental inflation in major cities is up 12-18%, and apartments closer to business parks saw a 25-30% rise, proptech platform NoBroker’s estimates.

    “There was hardly any new housing supply during covid due to stalled constructions. When people started coming back to big cities to return to offices, even for hybrid work, demand shot up because ready rental homes were limited. Apartments in gated communities got rented within hours in 2022," said co-founder and chief business officer Saurabh Garg, NoBroker’s. Cities with a significant concentration of information technology, and banking, financial services and insurance workforce such as Bengaluru, Gurugram, Pune, Mumbai and even Noida, saw higher escalation in rentals due to rising demand.

    The remarkable recovery in the home rental market has happened at a time the overall residential market is witnessing a rebound in sale and prices after a multi-year slowdown. India’s commercial office sector, on the other hand, saw a recovery in leasing momentum but rentals stayed stable, as supply was at par with demand.

    Outside the IT-dependent micro-market within the metros, prime locations in cities such as Delhi also saw rents moving north. Independent homes in GK-2 and Defence Colony have seen a rise in home rents due to a demand-supply mismatch.

    With the rental market for apartments seeing a frenzy, shared living facilities have emerged as a better value proposition for working professionals, said Nikhil Sikri, co-founder and chief executive, Zolo Stays.

    “In the branded, organized co-living space, monthly rents are back to pre-covid-19 levels. Demand is good but we don’t want to push the customer too much, in terms of rents," Sikri said. Zolo takes up buildings to create the co-living spaces and operates around 25,000 beds across eight cities. It will double its portfolio this year.

    “While double-digit growth in rentals happened in major employment hubs, a few cities such as Kolkata and Chennai did not witness the same kind of growth. Prime locations will still see strong rental growth," said Siddhart Goel, head of research and editorial, Magicbricks.

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    Published: 12 Feb 2023, 10:04 PM IST
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