Bengaluru’s rental housing market saw an average price correction of 5-10% during the April-June quarter of the current calendar year, according to local brokers who spoke with HT.com. This news should cheer up tenants in the city. The primary reasons for this are the large number of tenants who have relocated to the city’s outskirts, where new housing stock is available at lower rental prices than in desirable neighborhoods, and the growth of co-living options, which provide better value for the money.
The second quarter of the year usually sees an increase in rental activity due to several factors, including families moving before the start of the new school year, a new wave of professionals moving into the city, and so forth.
The price correction is the result of several factors. According to Manoj Agarwal, founder of Agarwal Estates, “many tenants are shifting to the outskirts of the city where rents are lower compared to the prime areas surrounding IT corridors given a more specific hybrid work culture in place.”
He continued, “The average vacancy rate in his portfolio of rental properties throughout the city has increased to 5% from the previous 2-3%.
With a decline in rental rates of more than 10%, the trend was most noticeable in areas bordering the IT corridors, such as Whitefield in East Bengaluru and Sarjapur Road. According to a local brokerage firm, a 1 BHK apartment rented out for Rs28,000 per month in the first quarter of the year is currently rented for Rs 25,000.
However, data from prop-tech company Square Yards revealed that a 750-1,175 square foot, 2BHK that was previously available for between Rs 28,900 and 45,200 per month is now listed for a rental cost between Rs 33,600 and 40,300.
Property consultants saw less evidence of this trend shift in the areas surrounding the central business districts. They added that contrary to standalone Grade B buildings, rents in Grade A projects built by well-known brands have decreased less.
Multiple justifications
Vice president of Hanu Reddy Realty Kiran Kumar noted that the previous modification also addresses Bengaluru’s growing inventory levels as developers counter the city’s real estate demand surge.
In Bengaluru, 12,432 residential units were introduced in the June quarter of 2024, an 8% yearly increase, according to a Knight Frank India report. 14,271 units were sold then, an 11% increase from the previous year. According to brokers, many purchasers who reserved their homes during the COVID-19 pandemic are now getting their possession.
According to Saurabh Garg, co-founder and chief business officer of proptech unicorn NoBroker, “Bengaluru’s rental market is returning to normalcy this year.”
Other participants noted that the number of co-living options in the city has also reduced the share of the rental housing market. This quarter, Kumar predicts a further 10% decline in rent, especially in the city’s periphery.
Trends in Q2 2024
Bengaluru had the highest rental yield (4.5%) in the first quarter of 2024 out of the top 7 Indian cities, according to a report from a real estate consulting firm.
A property’s rental yield is the proportion of its total value that is rented out earned in rental over a year.
Rents have risen by over 40% in some prime areas of the city after the COVID-19 pandemic as workers returned to work and landlords attempted to recover annual price increases lost.
How are the landlords reacting?
It is common to refer to Bengaluru as a landlord’s market. They have recently gained notoriety due to a number of their unusual demands. Nevertheless, they appear to take note of the changing tide.
“In Bengaluru, landlords are starting to recognize that tenants do not want to pay exorbitant rent.
A local broker said, “Instead of keeping the property empty for months while searching for the perfect tenant, we suggest they reduce the rent slightly.”
In a recent instance, a landlord in East Bengaluru’s Indiranagar locality, who had originally hoped to receive Rs1.20 lakh/ month for his 4 BHK apartment, revised the rental amount to Rs 1 lakh, the person cited.
Do rents still stay the same?
While local brokers reported a drop in overall rentals and rising for properties on the outskirts, some stakeholders insisted that prices have stayed steady.
According to data from Square Yards, and the integrated prop-tech platform, a 950-1,200 square feet 2BHK in Electronic City is currently available for Rs 32,600-41,400 per month during the first quarter of 2024. The original price was Rs 32,500 – 40,800. In the meantime, the monthly rental cost of a one-bedroom apartment that was previously available for Rs 21,000 -22,100 is now Rs 21,900– 23,000.