The residential property market in metros such as Bengaluru, Mumbai, Delhi, Pune and Chennai have witnessed an increasing number of young professionals vacating rented homes and paying-guest accommodation, or asking for rent relief.
Many such tenants have moved to their hometowns or are in the process of doing so, with companies also extending the work-from-home option as there is no let-up in the pandemic situation.
“In the past couple of months, many people who can pack their entire household stuff in a couple of suitcases, like young bachelors, have moved to their hometown. This is mainly because it is difficult to maintain social distancing in a PG,” said Amit Agarwal of real estate search portal NoBroker.
According to property brokers and broking firms, demand for rental accommodations has gone down at least 25% in the last five months.
“We are at one-third of the demand as compared to last year for the period April to June. April-June is the period when people move to newer cities for job or study. But that demand is not there this year,” said Ismail Khan, the chief business officer at Nestaway that provides rented accommodation facilities.
Brokers said working professionals were not coming to metro cities and this was leading to a loss of business for them.
This has started impacting rentals too.
“Due to the Covid-19 outbreak and the resultant economic fallout, we expect rental values to soften. We are also witnessing a drop in rents in expensive markets such as Mumbai in high-end properties,” realty portal MagicBricks’ chief executive, Sudhir Pai, said, adding: “Going forward, the increase in supply will make rentals more affordable across all major markets.”
Extended work from home, salary cut and job losses have also led to tenants asking for rental waivers or rent-free periods.
“Landlords have started understanding that and I see rentals to go done by 5-10%,” said Kshitij Nagpal, the president of the Association of Property Professionals, a body of realtors.
The demand for rental properties is mainly driven by the salaried population. A large percentage of tenants in cities like Bengaluru, Hyderabad, Pune and Mumbai are from the salaried segment and belong to industries such as BPO, IT/ITeS, BFSI, pharmaceutical and services.