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India's software and services hubs are expected to witness a 10-20 per cent reduction in housing rents over the next three quarters beginning July, as the IT sector experiences subdued sentiment, says a report.
Industry body Assocham said owing to the pressure on hiring and annual pay rise for employees, house owners in Bengaluru, often called India's Silicon Valley, seem to have done a reality check and are accordingly slashing the rentals.
"Even in the existing rental deeds, the tenants are seeking better options and no hike in the monthly outgo, quoting the adverse industry outlook. With better options, the market is tilting in favour of the tenants, especially those paying rent above Rs 50,000 per month," Assocham noted.
Going forward, the rentals may ease at least by 10-15 per cent in Bengaluru, Chennai and Hyderabad, while the decline may be steeper, up to 20 per cent in Pune, in the next three quarters, the chamber said in its report.
Besides, it said information technology hubs based in the national capital region, including Gurugram and Noida, are also likely to see 10-15 per cent correction in rentals.
While the IT sector continues to employ over four million people, mostly in the four to five big cities, the hiring growth has subdued, Assocham pointed out.
"The IT and other services like financials are among the sectors which pay well. Besides, the age profile of these employees is quite tempting for the marketers. They are good spenders and want good life.
These factors kept the markets for rentals pushing up, especially in gated and well-equipped housing complexes and societies in Bengaluru, Gurgaon, and Hyderabad. There is certainly a pause visible," said Assocham Secretary General D S Rawat.