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Bringing cheer to home tenants in Bengaluru, the city’s rental housing market saw an average price correction of 5-10% during the April-June quarter of the ongoing calendar year, local brokers told HT.com. This is primarily due to several tenants shifting to the outskirts of the city where new housing stock is available at rents lower than prime areas and mushrooming of multiple co-living options, giving more bang for the buck.
It should be noted that typically the second quarter of a calendar year registers higher rental activity on account of fresh influx of professionals into the city, families switching accommodations before the start of a new academic calendar in schools and so on.
This said price correction comes on account of multiple factors. “Given a more certain hybrid work culture in place, many tenants are shifting to the outskirts of the city where rents are lower compared to the prime areas surrounding IT corridors,” said Manoj Agarwal, founder of Agarwal Estates.
Vacancy level in his portfolio of rental properties across the city, which earlier stood at an average of 2-3% has now risen to 5%, he added.
The trend was most prominent in localities surrounding the IT corridors such as Sarjapur Road and Whitefield in East Bengaluru, recording a dip of over 10% in rental rates. A 1 BHK unit available for ₹28,000 per month in the first quarter of the year is now being rented out at ₹25,000, a local brokerage firm said.
On the other hand, a 750-1,175 square feet 2 BHK which was earlier available in the range of ₹28,900 – 45,200 per month, is now pegged at a rental fee of anywhere between ₹33,600- 40,300, showed data sourced from proptech firm Square Yards.
However, this changing trend has not reflected in the central business district areas to the same degree, property consultants pointed out. Furthermore, rents in Grade A projects developed by well-known brands have fallen by a smaller margin, compared to standalone Grade B buildings, they added.
More than one rationale
Kiran Kumar, vice president of Hanu Reddy Realty, highlighted that the said correction also comes in response to the rising inventory levels in Bengaluru as developers counter the demand rally seen for real estate in the city.
Also Read: Bengaluru’s housing sales register 4% growth in H1 2024; homes priced at ₹1 crore and above witness 76% annual growth
According to a Knight Frank India report, a total of 12,432 residential units were launched in Bengaluru during the June quarter of 2024, marking an 8% annual increase. Meanwhile, 14,271 units were sold during the period, up 11% year-on-year. Many homebuyers who had booked their properties during the Covid-19 pandemic are receiving possession now, brokers said.
“Bengaluru’s rental market is returning to normalcy this year,” Saurabh Garg, co-founder and chief business officer of proptech unicorn NoBroker, remarked.
Other stakeholders pointed out that the emergence of multiple co-living offerings in the city has also eaten into the rental housing market’s share. Kumar anticipates a further drop in rents this quarter, of up to 10%, particularly on the outskirts of the city.
Trends in Q2 2024
According to a report by property consultancy Anarock, Bengaluru recorded the highest rental yield amongst the top-7 cities in India during the first quarter of 2024 at 4.45%.
Rental yield refers to the percentage of a property’s overall value, received over a year through rental earnings.
Also Read: Bengaluru tops list of cities with highest rental yield of 4.45% in Q1 2024; Mumbai second with 4.15%
Following the Covid-19 pandemic, rents in the city have risen by over 40% in some of the prime localities as employees returned to offices and landlords attempted to recover the annual price increases missed during the pandemic period.
How are landlords responding?
Bengaluru is often called a landlords’ market. In fact, several unconventional demands of landlords have often earned them infamy in recent times. However, they finally seem to be taking note of the changing tide.
“Landlords in Bengaluru have begun acknowledging the disinclination of tenants to pay high rents. We’re advising them to slightly lower the rent rather than keeping the property vacant for months while waiting for the ideal tenant,” a local broker said.
In a recent case, a landlord who was initially hoping to fetch ₹1.20 lakh/ per month for his 4 BHK apartment in East Bengaluru’s Indiranagar locality, revised the rental fee to ₹1 lakh, the individual cited.
Have rents remained stable?
While local brokers attested to an increase in queries for properties on the outskirts, and a dip in rentals overall, some stakeholders maintained that prices have remained stable.
Data sourced from integrated proptech platform Square Yards showed that a 950-1,200 square feet 2BHK available for ₹32,500- 40,800 per month in Electronic City during the first quarter of 2024 is currently available at ₹32,600-41,400. Meanwhile, a 1 BHK available at a rental fee of ₹21,000 – 22,100/month earlier now comes at a monthly charge of ₹21,900 – 23,000.
Also Read: Relocating from Noida to Bengaluru? Here are 5 things you should know before renting an apartment in the city
