Rentals on recovery path in Amritsar
The turnaround in the Amritsar realty market has set in, marked by stability in different realty segment, whether capital or rentals. The stability in the commercial rental segment is more profound, in contrast to the residential rental market, as it was most affected by slowdown in the realty sector.
“The commercial rentals are registering gradual return to normalcy. In the past couple of months, the demand in the sector has picked up. The result is the earlier trend of sharp decline in commercial rental is now being replaced by greater stability. The commercial rentals in areas like Mall Road and Ranjeet Avenue, which fell from their peak value of ₹200 per sq ft to ₹100 per sq ft in a period of three years, are now hovering around ₹120 per sq ft for the ground floor. For the rest of the floors, the rental value varies between ₹40 per sq ft to ₹60 per sq ft,” says Nitin Mehra, 31, a local real estate consultant.
The turnaround in the market is based on demand increase in the past few months. “The rental commercial market had fallen in the wake of economic slowdown. When the demand was strong, in some locations, the rentals were as high as 200 per sq ft. But, with the demand declining sharply, the commercial segment registered a fall. Now the demand for the commercial spaces is coming from retail, banking and hospitality sectors,” says Dalbir Singh, 45, a local realtor.
The commercial rentals in the developed areas like Mall Road and Ranjeet Avenue are doing better than the periphery. “The rentals for commercial spaces depend on location. So while areas around the Golden Temples didn’t register any decline in the last few years and more developed areas like Ranjeet Avenue areas have registered a comeback in terms of rental values in the last couple of months, the periphery is still struggling with low demand and subdued rentals. In the periphery, one can get commercial and storage spaces at rental values as low as ₹10 per sq ft,” says Singh.
While the commercial rentals witnessed sharp decline in the last three years, and now registering recovery, the residential rental segment didn’t see similar rise and fall. “The residential rentals, generally, have remained stable in the last few years. In fact, in some locations like Civil Lines, rentals for houses have increased. In these locations, an independent 250 sq yard house is available for a minimum monthly rental of ₹25,000, which can go as high as ₹50,000 per month. In the outskirts, the average monthly rental for 250 sq yard independent houses varies between ₹15,000 to ₹20,000. But depending up on the location and the quality of construction the rental in some of the newer projects is relatively higher. A villa in a project on the GT Road can fetch as much as ₹50,000 rental per month, while on the Manjitia Road, the rental varies between ₹15,000 to ₹20,000 per month for 250 sq yard house,” says Mehra.
The revival in commercial rentals has raised prospects for a turnaround in the capital values of commercial properties as well. “In the city, the slowdown impacted the commercial property prices the most. The sharp decline pulled down prices and pushed up vacancy rates in most areas of the city. But, with the rental staging a comeback, the prices of commercial properties can also be expected. At present, there is stability, as end-user demand is limited and can’t fuel price growth for commercial properties. But, increased rentals means an incentive for the investor to restart exploring the commercial segment,” says Mehra.