No highs here

Rentals are stag­nant, thanks to global mar­ket cues and late de­liv­er­ies, says Van­dana Ram­nani

HT Estates - - Front Page -

Nitin Sharma shifted to a 3BHK apart­ment in Vaishali in Jan­uary this year at a rent of R15,000. To­day, a sim­i­lar apart­ment in the same lo­cal­ity is go­ing for R17,000.

The CEO of a Ja­panese multinational moved into a four-bed­room apart­ment in Gur­gaon in Jan­uary this year, pay­ing a rent of R1.5 lakh. There has, since then, been no change in the rent.

The rental mar­ket has put in a dis­mal per­for­mance re­cently, re­main­ing more or less sta­ble and even reg­is­ter­ing a dip in some pock­ets. Some NCR ar­eas have, how­ever, seen an in­crease of 10-20% be­cause of in­fu­sion of new in­fra­struc­ture, such as the Metro and lim­ited new sup­ply.

In­ter­est­ingly, the trend is linked to the em­ploy­ment sce­nario and is ex­pected to per­sist if hir­ing ac­tiv­ity slows down in the next quar­ter, say real es­tate ex­perts. Ar­eas such as Mayur Vihar Phase-1 have seen rents go­ing down from R21,170 in the first quar­ter this year to R20,965 in the sec­ond quar­ter. In an­other ex­am­ple of rents fall­ing, in the Golf Course Road area these have de­creased from R87,248 in the first quar­ter to R66,975 in the sec­ond quar­ter. These fig­ures are in­dica­tive of mar­kets sta­bil­is­ing in some pock­ets.

“This is the first fresh im­pact of the slow­down sink­ing in. At the mid-se­nior level, hir­ing has slowed down in the last three­four months. Per­for­mance this quar­ter has also been sub­dued. This in­di­cates that the mar­ket will not sus­tain a rental rate hike, which means that there are not many tenants will­ing to pay a higher rate be­cause of uncer­tainty in the job mar­ket,” points out Vi­neet K Singh, head, 99acres.com, a real es­tate por­tal.

What’s the rea­son then for the rental jump in Vaishali and Indi­ra­pu­ram? This is be­cause con­nec­tiv­ity has im­proved in these ar­eas and not a lot of new stock has been added, Singh adds.

A pe­riod of slug­gish­ness in the rental mar­ket is fore­cast be­cause of a lack of fresh jobs in the mid seg­ment. There will also be a lower num­ber of peo­ple re­lo­cat­ing from other cities and ex­pa­tri­ate ac­tiv­ity is also ex­pected to slow down, he says.

Rents have in­creased in the Pat­par­ganj area, too, mainly be­cause no fresh stock has been added, says S K Verma of Sri Sai Es­tate, which op­er­ates in east Delhi. Many new projects that were ex­pected to be com­pleted in Noida and Ghazi­abad area have also not been de­liv­ered, lead­ing to a de­mand-sup­ply mis­match. The area has seen a rental rate rise of al­most 25% in the last few months, he says.

Ac­cord­ing to data pro­vided by PropE­quity, 71,388 units were sched­uled to be com­pleted in Delhi NCR in 2011 but only 32,050 have been de­liv­ered, so far. Out of 180 projects, only 83 have been com­pleted.

While the im­pact of jit­tery global mar­kets and the im­pend­ing slow­down may be felt

THINKSTOCK

Lower cap­i­tal out­flows: If you’re rent­ing you have a lot to smile about

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