Bengaluru tenants witness up to 45% rent surge, even in areas once considered dormitory suburbs

After two waves of COVID-19, Tech Town is now returning to life with the hybrid work culture luring people back from their hometowns. However, the returnees have to face a new problem: soaring rents. Moreover, the recent and recurring floods in Bengaluru have started to carve a new real estate map in the city.

Skyrocketing rents

Kiran Kumar, vice-president of Hanu Reddy Realty, a Chennai-based real estate firm that is also present in Bengaluru, Hyderabad and Pune among other places, said that in prime locations like Koramangala Block 3 or Block 4, rentals have increased by 20 percent.

“There is hardly any supply in this part of Bengaluru. We have a listed property, a six-bedroom bungalow, in the area with a rental of Rs 3 lakh. A 2BHK apartment there will cost Rs 30,000-Rs 40,000 that previously was around Rs 25,000,” he added.

Balaji Badrinath, managing partner of the local office of American real estate consultants Coldwell Banker, agreed that rents in Koramangala’s prime locations have increased by 20 percent, and even up to 30 percent. “A furnished 2BHK will definitely be Rs 30,000 to Rs 40,000. In other places like Indiranagar, the rent will be 10 percent higher than in Koramangala,” he added.

Badrinath said the central business district (CBD) is gradually expanding to the Indiranagar area, putting more focus on the region. “In the outskirts like BTM Stage 4, HSR Layout, Bellandur and Sarjapura, several micro-markets are emerging as real estate pockets. They are growing at a rate of 100 percent compared to previous years,” he noted.

In areas relatively far from the CBD too, like Jayanagar, JP Nagar and Banashankari, rentals have shot up. “We recently sold a property in Jayanagar for around Rs 7.5 crore for 2,460 square feet. For 2BHK flats, the rents in that side of Bengaluru are capped at Rs 20,000 to Rs 25,000,” Kumar said, owing to the fact that they are less prime localities and far from business hubs, adding, however, that rentals here too are rising, albeit at a slower rate than in other areas, adding that these areas, which are fully residential and are distant from .

Realtors say it is the unrelenting demand that is driving up the rates, adding, however, that by next April, the rental graph will flatten.

Floods have started to show an impact

In September, after the most recent flooding wreaked havoc in some parts of Bengaluru, the real estate sector did not see an immediate impact. However, a month later, realtors say, homebuyers have started becoming more conscious.

Interestingly, Kumar said, till last month at least 10 percent of people living in flood-affected areas have called him for buying or renting new properties in areas less prone to waterlogging.

“Flood-affected regions like Outer Ring Road Sarjapura—which is also a tech hub in Bengaluru—see a slower rental hike compared to other areas, probably around 5 percent or 8 percent. However, the apartments are completely occupied in the area,” Badrinath said.

Though the flood did not dent the image of the real estate sector in the city, rents in several apartments have gone down, especially the luxury villas.

The supply-demand frenzy

Saurabh Garg, co-founder and chief business officer, NoBroker, a Bengaluru-headquartered online real estate consultancy with a pan-India presence, said that over the last two years, supply of new apartments has been stagnant.

New apartments did not get delivered because construction was halted and deliveries delayed owing to the pandemic. “In Bangalore, rentals have jumped by 18 percent. A good property coming out on our platform is being rented out in a few hours whereas earlier, it used to take weeks,” he said.

Ashish Sharma, city head, Bengaluru, ANAROCK Group, added that some housing complexes have seen a steeper rise in rent, of more than 30 percent compared to the pre-pandemic levels. “Post-COVID, many are trying to purchase or rent homes in societies that are packed with all amenities and are as such self-sustained. Hence, demand in these societies has gone up, invariably increasing the rentals,” he added.

Is co-living filling the gaps?

People facing high rentals for unfurnished flats, many like Bindal are opting for co-living spaces that provide furnished apartments with amenities like Wi-Fi, cleaning services and networking opportunities with weekly events and gatherings for networking opportunities.

A Federation of Indian Chambers of Commerce and Industry study indicates that out of the 4.1 million working millennials staying in rented accommodation, more than 2.6 million stays in a shared space.

Abhishek Tripathi, co-founder of Settl., a co-living startup, said that since the pandemic, the company has been operating with upwards of 90 percent occupancy. “With rentals going up by 20 percent and especially with the comfort, flexibility and community offered, more and more people are moving towards co-living spaces. In the last fiscal we grew about 600 percent. This fiscal we intend to grow by at least 500 percent,” he said.