Residential property deals and rentals skid in metros on Covid-19, WFH

The situation is worst in Mumbai, Delhi while Gurugram and Bengaluru are not affected as badly

Anup Motwani (60), who is into residential broking in west and south Mumbai, says he has not done any deal in the last six months. 

For a seasoned broker — who did 150 such deals in the last two years — it is one of the worst periods in his career spanning 40 years. “I am managing with God’s grace. Otherwise, there was no business,” said Motwani. He said rents in most key areas of Mumbai such as Bandra, Worli, Prabhadevi and Santacruz, among others, have dropped by 20-25 per cent.

In a newly developed residential property in Worli, rents have come down to Rs 1.1 lakh-Rs 1.2 lakh per month from Rs 1.4 lakh-Rs 1.5 lakh within a period of four months, said a local broker.

Residential rental transactions have dried up in metros such as Mumbai, Delhi, the National Capital Region (NCR) and Bengaluru with rents falling in varying degrees. The reason: Prolonged lockdown and work from home norm which has reduced demand for apartments in big cities. Vineet Matlani, owner of Rudram Realty in Mumbai, says large corporates have significantly cut down on renting property as executive travel from abroad has stopped. Also, companies have stopped taking apartments for senior executives due to the work from home norm. “There are no guarantee on jobs, and many executives went back to their home towns. Only Mumbaikars are preferring to rent in places such as Thane and the Central suburbs where rents are lower,” said Matlani.

Work from home played a major role in the buying behaviour and preferences of people, he said.

Even landlords are desperately scouting for tenants. “There are hardly any tenants in the market. They have many options. That’s why whoever is looking to rent an apartment is asking for hefty discounts,” said Ritesh Singh, a landlord in the Powai area of Mumbai.

In the NCR, even though rents have not fallen much compared to Mumbai, deals have dried up.

Going downhill

• Rents have dropped 20-25% in Bandra, Worli, Santacruz and some other areas of Mumbai
• In Delhi, rents have dropped 10% in CR Park and Greater Kailash in South Delhi
• In Gurugram, rents have remained stable or have gone down by 5-6%
• In Bengaluru’s plush areas, rents have remained stagnant 
• Landlords not asking escalation, not getting tenants

Somnath Mondol (50) deals in residential properties in South Delhi’s posh localities such as Chittaranjan Park (CR Park) and Greater Kailash (GK). 

He has only managed to convert two rental agreements in August, compared to six to 10 every month before the pandemic. And not a single home was sold by him since April. Earlier, he used to sell at least two homes every month.

“There are simply no buyers, even though sellers are ready to mark down their prices. Further, falling rents have made things worse. Since February, home rents have fallen by 10 per cent that further lowers our commission,” he said. At the highrises in Gurugram, the impact is less severe. According to Nalin Chadha, who is in the Gurugram property market since 2009, rents at highrise apartment complexes are either stagnant or down by five to seven per cent. 

While earlier, rent for two bedroom apartments used to be in the range of Rs 25,000-Rs 40,000, they have come down to Rs 23,000-Rs 38,000.

At premium apartments, however, rents have not been affected at all. 

According to a real estate agent, in some of the luxury apartments like the ones built by DLF, rent has actually gone up by two to four per cent in recent months. However, in the country’s best performing residential market of Bengaluru, rental fluctuations have been minor in key locations — areas such as Indiranagar, Sadashiva Nagar and Koramangala.

“People are now looking for bigger places and upgrading from 2 BHK to 3 BHK in most cases as they’re going to be at home for a longer duration,” said Farook Mahmood, chairman of Silverline Realty, a Bengaluru-based real estate broking firm. Here, landlords have become more flexible in their negotiations.