The salaried middle class is relooking its household budgets after the sharp surge in housing rentals throughout major NCR (National Capital Region) cities. Some of the measures that they are taking include switching more to metro transportation rather than cabs, carpooling to the workplace, giving weekend outings a break, and limiting impulse purchases. This swift increase has been majorly driven by the gradual return of employees to offices and lower lease inventory. The latter scenario has been prompted by the fast filling-up of housing units that were previously lying empty before the pandemic and are now occupied by their original owners.
Rentals throughout the NCR have gone up by 50-60% in some areas in comparison to 2019. With more companies getting employees to return to office, there has been a boom in the rental market. Several landlords and brokers are also asking their tenants for rent corrections. They have adopted a take-it-or-leave-it policy which has left several tenants in the lurch, since they cannot always find suitable properties near their offices within their budgets.
Many feel that salaries have not increased at the same pace as housing rentals over the last couple of years. They state that a hike of 10% annually is still manageable although the current prices are exceedingly steep from all perspectives. The RapidX stretch and the Delhi-Meerut Expressway have boosted several townships in Ghaziabad which were previously more affordable options than East Delhi. Vasundhara, Vaishali, and Indirapuram have already witnessed a hike of 25-30% in rentals.
Flat owners who earlier asked for Rs. 14-16,000 around three or four years earlier are now seeking Rs. 18,000-25,000 as per several tenants. The Hindon Elevated Road and RapidX corridor, along with better access to Delhi have also pushed up rentals in Raj Nagar Extension, one of the biggest housing destinations in Ghaziabad. 2 BHK units, which were previously offered at Rs. 10,000-12,000 in the pre-pandemic period are now coming for at least Rs. 15,000 approximately, based on the amenities and the housing society.
Golf Course Road Extension has seen the highest rental hikes of close to 40% in Gurgaon. The average rental was around Rs. 35,000 for a 3 BHK apartment here in 2020 while it has now gone up to Rs. 50,000. Golf Course Road comes next with average rentals for similar apartments increasing to Rs. 90,000 from Rs. 70,000 in a period of just three years.
Average rentals have also increased by 11-34% over the last three years in Noida. Sector 93 had the highest hike of 34% while Sector 128 follows with rental hikes of 31%. Experts state that average rentals begin from Rs. 20,000 for 2 BHK apartments and may vary, based on the available amenities and the neighbourhood. Those choosing study rooms are paying an extra Rs. 3,000-5,000. Those looking for 3 BHK units will have to pay Rs. 27,000 or even higher, while 4 BHK units will come for Rs. 45,000 or even higher.
Many experts feel that the higher rentals are driven by skyrocketing demand after most offices are setting up in-office work as the current practice. Demand is expected to keep increasing as per the recent trends, according to them. Several hubs for residential rentals have witnessed significant hikes in comparison to 2019. Jubilee Hills in Hyderabad has seen rentals increasing by 17% to Rs. 63,000 per month from Rs. 54,000 per month in 2022. Worli in Mumbai has seen rentals going up by 16% to Rs. 2.4 lakh per month from Rs. 2.05 lakh per month earlier. Rajaji Nagar in Bengaluru has also seen rates going up by 16% to Rs. 65,000 per month in 2022 from Rs. 56,000 per month in 2019.
Several industry watchers feel that full office hours and new recruitment trends have led to higher rental housing demand in the NCR. With an increase in home loan interest rates and property prices, acquisition costs have also gone up steadily. Hence, this has led many to push back their purchase plans and led to higher demand for rental units. Some others also feel that the increase in housing rentals throughout Noida and Gurgaon may also be attributed to the lower supply of new housing units.
The National Sales Head at Square Yards, Rahul Purohit, states that landlords are tapping the mismatch between demand and supply. He adds that they are looking to make up for their losses during the pandemic by asking for 30-40% more.
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Published Date: Sep 3, 2023
