Residential rentals are not growing in the City as fast as they were expected to and owners of house are reducing rentals even if marginally, to attract tenants.
This season a common sight which is seen is “To Let” boards with two- and three-bedroom independent houses and apartments on offer for rents.
According to real estate analysts the rate of growth of rent has not kept pace with capital value. If the capital value is around 15 per cent, rents are growing lower at about eight to 10 per cent.
Srinivas Reddy, a real estate researcher says: “People who have built houses as investment and source of income are losing out. With the availability of scores of independent houses with a floor and more, rentals have to be reduced to get people to stay. Some areas have two or more ‘To Let’ boards on the same street. The fairly high stock of apartments in the City has not allowed owners to fix higher rents.”
Rents are linked to job rates in Bangalore, much like in most metros. Rents were very well during 2006-07 when employment generation in the IT/ITeS sector touched nearly a lakh.
The situation went out of kilter in mid-2008, as the economic downturn walloped the world. After a gap, there was some recovery around 2012-13 when approximately 60,000 jobs were created. Still, the recovery of rentals was not at 2006 levels.
Rajeev R, a software engineer and resident of an apartment cluster at Ramamurthynagar, said he did not want to lose chance to own a house when the apartment project came up.
“Instead of paying Rs 10,000 or more as rent, I thought that by paying a little more I might as well own a property. I pay a higher EMI, but I have the satisfaction of owning the apartment.” So, when the demand for ownership goes up, rents have to be cut, else the houses would remain vacant.
The rents for two-bedroom houses in popular localities float around Rs 10,000 to Rs 14,000, while three-bedroom houses are available for Rs 16,000 to Rs 20,000. In case where owners have not been able to get renters, they reduce rents by a little over Rs 1,000. In case if apartments are far away, it would have to be much lower, by at least Rs 2,000.
There are instances of people waiting for as long as three to six months for occupant to come. There is also the anxiety of renting out the property to the right people. Next, in an apartment complex, if there are two or four apartments available for rent, owners can’t quote diverse rents.