Industry experts reveal that the movement restrictions prompted affluent families to upgrade to bigger homes
As businesses shut down during the peak of the pandemic, most employees were required to work from home, whilst others were let go. The shift in economic earnings among city dwellers have directly affected the rental market in India.
In the major cities of Delhi, Mumbai, Bengaluru, Chennai and Pune, US-based Realty.com reported that a growing number of young professionals have either asked for rent relief or vacated their rental homes and paid guest accommodation instead.
Several of these tenants have moved back to their hometown or are planning to do so in the near future, particularly with the flexible work schemes offered by companies.
“When businesses shut down, some of these employees had no choice but to leave Delhi and go back to their home cities, hence driving up vacancies in the rental market and lowering rentals,” said Amit Khanna, the CEO of InterGlobe Real Estate Ventures and chairperson of the esteemed judges of the 1st Asia Property Awards (India).
“Those who continue to have a job and are asked to work from home are feeling the need for larger spaces and given their economic situation, they might be in a position to upgrade their homes in times to come. But at this stage, taking on higher fixed cost for rent is being avoided by such employees.”
The consumer sentiment during these trying times has unfortunately caused the middle layer of the residential rental market to collapse.
According to Amit, “the lower (affordable) end continues to do well and luxury is to a large end, unaffected. In the next few quarters though, we can expect further correction in rentals in residential, but it will still relatively continue to be the most stable asset class among office, retail, etc.”
As for Mumbai, most of the tenants have re-negotiated their rental agreements, which led to a 10 to 25 percent rent reduction. However, this highly depended on the property owner, location and type of property.
Despite all these challenges faced by the rental housing market, experts have witnessed a growing demand among affluent families who wanted to upgrade to a bigger home, with four to five bedrooms and an extra study room that can be converted into a home office.
Studio apartments and one-bedroom units also went through a gradual increase in demand as people who stayed in the same house decided to spread out and move into a smaller separate home.
“On a broad level, the demand went down for the first two months or so, due to the lockdown and inability of people to move out, but greatly increased as soon as the lockdown restrictions started getting reduced,” shared Ajai A Kapoor, the CEO of real estate services provider 360 degrees and central panel judge of the 1st Asia Property Awards (India).
He also communicated his optimism towards the future of Mumbai’s rental housing market, stating that it was just a “small ‘blip’ in demand, which will soon catch up and balance out.
If history is any indication, he said that the rental market in Mumbai has always been strong and robust since “it caters to migrants and residents from a number of other cities in India, as well as a number of foreigners and expats from all over the world.”
Even though many professionals have moved back to their hometowns, causing an increase in supply and decrease in demand, he predicts that most of them will want to move back to the city in the next few months or so.
“Hence, the residential rental market will eventually survive the loss of the professionals who are currently moving back to their homes.”
With confidence and optimism leading the future of India’s property market, we are positive that the country will soon get back on track. That is why for the first time in the history of our awards programme, we have decided to honour the exemplary developers at the 1st PropertyGuru Asia Property Awards (India) for their passion in building a better, more liveable tomorrow for India in terms of high quality developments.
Winners of the 1st PropertyGuru Asia Property Awards (India) will be announced at the exclusive gala dinner of the PropertyGuru Asia Property Awards Grand Final on 4 December 2020. To find out which developers or projects will receive our prestigious titles, visit asiapropertyawards.com/en/award/asia-property-awards-india/.
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