State Of The Rental Home Market
June 27, 2013 12 Comments
Demand for rented homes has halved and rents are down by 25% in several popular residential localities in Mumbai, Delhi and Bangalore, as India Inc tightens housing budgets in its battle against economic slowdown. In Mumbai, rentals in marquee buildings like the sea-facing Haveli on Malabar Hill, NCPA Apartments at Nariman Point and Maker Towers at Cuffe Parade, where rentals range between 5.5 lakh and 12 lakh a month, are down by up to 30%. In Delhi’s Vasant Vihar, West End, Chanakyapuri, Shanti Niketan and farmhouses in Chattarpur and West End Greens,rentals have dropped 25% in the last one year. Rentals in apartment buildings in Bangalore neighbourhoods like Epsilon in Yemlur and Prestige Exotica on Cunningham Road are also down by 35% this year.Rents in Epsilon range between 7 lakh and 10 lakh. Corporate earnings have been subdued and no new expansions have been announced in the recent past. Companies are hiring less and also cutting down on perks such as rentals. Inventories in South Delhi alone have increased by three times in the last three years.There aren’t enough premium clients, expats, and top execs to fill these homes like before.With GDP growth slowing down to a decade low of around 5% in 2012-13 from a peak of 9.6% in 2006-07, companies are paring costs on all counts, including hiring at all levels.Companies are preferring a Mumbai person for Mumbai and Delhi person for Delhi. Rentals constitute nearly 15-20% of cost to company (CTC). But not just companies, those being hired too are looking for cheaper accommodations, even when they are entitled to company-rented homes, as rising inflation cuts deep into their pockets. The sagging sentiment has added to the woes of the property market where home buying has almost come to a naught. Especially in Mumbai, where property brokers are struggling to rent out apartments even in areas like Cuffe Parade, Colaba and Marine Drive, which, traditionally, are the most sought after by senior company executives.With a number of businesses relocating from the old central business districts of Nariman Point and Cuffe Parade to Lower Parel and Bandra Kurla Complex, the charm of living in some of south Mumbai’s posh localities is also fading. In Bangalore, rentals for single homes are down by 40%, while rents in gated communities have fallen by 20%. Queries for rental accommodation have almost halved in just the last three months. Relocation budgets of companies have dropped by at least 20%.Companies are also shortening the tenure of leases and asking landlords to lower security deposits and increase flexibility. India-related queries at international relocation firms have dropped 10%. Brokers assert that business in Delhi and Gurgaon has come down by 50% in the last 3-4 months.