Last month, Gourab Patra, the founder of an ad-tech (advertisement technology) startup in Bengaluru, had planned to relocate from HSR Layout to a gated apartment in JP Nagar in the southern part of the city.
“We got to know that the landlord has several questions lined up for us, including the number of employees and our income. However, the landlord decided to reject me for my job profile,” he said.
After building an AI-based startup with crores of turnover, Patra said he had failed to clear the third round of his tenant interview.
“Turns out, building a company feels way less stressful than finding a home on rent that accepts people representing new age career and life choices,” he laments. “Several friends of mine have faced such an issue in the last six months.”
In another incident, four IT professionals, who did not wish to be named, decided to rent a 3,000-square-foot luxury 3BHK apartment in Defence Colony, with a monthly rental of Rs 1.75 lakh.
However, the apartment owner changed his mind about renting it to the IT professionals and settled for B or C-level executives, they said.
In the wave of massive layoffs at major tech companies such as Google and Microsoft, about 2 lakh IT employees have lost their jobs globally over the last three months. Recently, Amazon announced plans to lay off at least 9000 more employees.
“The environment in our workplace is currently tense, with a majority of employees pushing their deadlines. House hunting will be a terrible idea today,” said Anshul Azad (name changed), who works for a tech giant that recently laid off several employees,
In Bengaluru, a majority of the floating population comes from the city’s IT corridors or startup hubs. Tenants who work for such companies are struggling to cope with the ever-changing demands of landlords in the city. Local brokers say the layoffs have started affecting the preferences of apartment owners, who want stable tenants, and longer tenures, especially after the three waves of Covid.
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Shifting preferences
Rahul Arora (name changed), an apartment owner in Koramangala, said painting the entire apartment costs more than the one-month rent he charges.
"After a layoff, one of my tenants had to leave last November. I got a new tenant only after three months. As investors, we need continuous cashflows and cannot afford to keep apartments vacant,” he said. Therefore, to avoid such abrupt vacancies, we tend to look for a longer stay duration, he added.
Prachi Kumari was laid off from Unacademy in Bengaluru last November. “Our previous landlord had asked us a series of questions. However, we got the apartment as my partner, and he were in the same profession as cloud engineers. With the job market stumbling today, such isolated incidents are slowly coming to the surface,” she added.
Annetta Joby, a fintech professional, said she had come across several apartment owners who only look for tenants from reputed multinational companies, with a lukewarm attitude towards startups and the IT sector.
“Paying capacity and sustenance are two things they are very particular about, especially at a time when demand continues to be high,” she added. Joby, joked that most of her pay cheque goes towards paying the rent of Rs 25,000 for a standalone 1 BHK.
Kiran Kumar, a realtor at Hanu Reddy Realty, said that already, several apartment owners have asked him for banking or senior-level professionals over IT tenants. “Banking professionals will have a more stable career and will be able to stay for longer periods," he added.
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But demand is rising
Kumar added that in IT corridors such as Whitefield, most of the demand is from the IT crowd, so apartment owners are left with no choices.
Endroneel Bhattacharya, who lives in an apartment in a gated community near Begur on Hosur Road, pays Rs 21,000 as rent for a 2BHK in addition to Rs 2,000 maintenance and a security deposit of Rs 80,000.
The cost of a 3BHK flat in prime areas such as Indiranagar, Koramangala and HSR Layout starts at Rs 70,000- 80,000 per month. Most of the prices have jumped 20-30 percent from last year.
Sunil Singh from Realty Corp said that prime locations in Bengaluru continue to see a 20-30 percent hike in rentals due to a mismatch in demand and supply. “We keep getting calls, even from IT professionals looking forward to rent apartments close to their workplaces. This is especially with most companies starting hybrid work or complete work from the office. At the same time, the property prices have increased,” he added.
In growing suburbs such as Bannerghatta Road and Old Airport Road, a 2 BHK apartment today has a rental of Rs 20,000-25000. Such real estate pockets in the city’s outskirts, according to local brokers, are growing at the rate of 100 percent since last year.
However, the ongoing global headwinds, coupled with more supply, have flattened rentals across IT corridors such as Sarjapura and Whitefield, with a majority of apartment owners doling out 5-10 percent discounts.
In places such as Whitefield, Sarjapura, Outer Ring Road, Manyata Tech Park and Hebbal, brokers say the rent for a 2BHK has dropped from Rs 40,000 to about Rs 25,000.
Investors add that the economic slowdown is only partly responsible for the sudden flattening of rental demand in the city. In Bengaluru, the conversion ratio for rent-seekers has fallen from 8 percent to 6 percent, while in Mumbai it continues to be at 8-9 percent. The conversion ratio is the number of potential tenants who became lessors as a percentage of the total number of people who visited an apartment put up on rent.
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