No highs here
Rentals are stagnant, thanks to global market cues and late deliveries, says Vandana Ramnani
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
Lower capital outflows: If you’re renting you have a lot to smile about