Bengaluru landlords start compromising on apartment rents as techies move away from IT corridors

In the April-June 2024, experts say they do see a bit of price correction in the rental market as inventories continue to be added,

After a mad rush for rentals in the last two years, Bengaluru techies are moving away from the IT corridors to the city outskirts where rentals are affordable.

Brokers say rentals in IT suburbs like Whitefield have come down by at least 15-20 percent year on year (YoY).

Recenlty, a couple, both working in the IT field, in south-east Bengaluru's Sarjapura, decided to move from the prime Sarjapura area into the outskirts, about 5 km away.

"We found a 3BHK for about Rs 38,000 rent in the outskirts while rent for 2BHKs in Sarjapura area starts from Rs 35,000-40,000," they said.

The eastern IT corridor includes areas like  Whitefield, Hoodi, Outer Ring Road, and Sarjapur Road among others. However, its outskirts include places like Varthur, Kundalahalli and Channasandra --- which have come up on the radar for its more affordable rentals.

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Experts add that with more inventories available, prospective tenants have more options available today, compared to a year ago. During mid-2023, the real-estate sector in Bengaluru had become a hot seat for auctions, with prospective tenants bidding hard to get the apartments they zeroed in, Moneycontrol had reported.

That time, the city saw a rental hike of about 20-40 percent in prime IT corridors.

In April-June 2024, we saw a bit of price correction in the rental market as inventories continue to be added, Sunil Singh, Vice President of Realty Corp,  said.

A report by property consultant Cushman and Wakefield, on July 3, said nearly 8,850 units of total inventories were launched in Bengaluru in Q1 2024 -- a 14 percent YoY growth, with Whitefield accounting for almost 35 percent .

Bengaluru will see about 51,685 units being delivered in 2024, against approximately 52,565 units in 2023, a report by ANAROCK, another real-estate consultant, pointed out.

"Today, we see a major cooldown in rental prices in the outskirts of IT corridors like Whitefield. A 2BHK rental in suburbs like Kadugodi, Hoodi, and Channasandra has come down to Rs 30,000-35,000 from Rs 40,000 a year ago. Similarly, we see a major shift in the perspective of the renters who are ready to move away from prime areas due to the hybrid work culture today and also cheaper rents. Also, people who wanted an apartment in Indiranagar now are looking at options in Old Madras Road and KR Puram due to metro connectivity," Singh added.

Landlords start reducing rents

A year ago, landlords in Bengaluru were riding the boom of their lifetimes as tenants tripped over each other to book scarce apartments in the city.

Today, with the mismatch between demand and supply of rental inventories tapering, several landlords have started decreasing rentals by Rs 10,000-15,000, even in prime locations like Koramangala.

For example, a 3BHK apartment in Koramangala that was being put on rent for Rs 75,000 a month did not get a tenant for over a month. Thus the landlord decided to drop the rent to Rs 65,000 and rented it out this month, sources aware of the transaction said.

In Budigere, an outskirt of Whitefield, the owner recently dropped the monthly rent from Rs 45,000 for a 2BHK to Rs 35,000.

"On July 9, we closed a 2BHK rental deal at Mysore Road for Rs 30,000 per month from Rs 40,000 that the owner was quoting. We believe that, over the next quarter, Bengaluru will see a major correction in the rental market. We anticipate as much as Rs 20,000," one of the real-estate brokers in the city said.