Endroneel Bhattacharya has been looking for an apartment for rent in Bengaluru for almost two weeks now. This follows his landlord's decision to sell the apartment he is currently staying in.
"My agreement for rental expires in March 2024. However, the landlord gave me one month until December 5 to find a new house," he added.
However, finding an apartment within one month in Bengaluru, especially with a pet dog, has been a herculean task for Bhattacharya.
Currently, he is paying Rs 25,000 a month for a 2BHK in Begur, close to the southern IT corridor of Electronic City. However, the new apartments he located do not come for less than Rs 30,000 in the suburbs and Rs 40,000-50,000 in prime locations like HSR Layout.
Another techie in the city, who did not wish to be named, faces the same fate. "I had to take leaves from office work just to hunt for apartments," he added.
Amid soaring rents in Bengaluru, tenants are in a spot, with landlords asking them to vacate to sell the apartments. And most of them are within the ongoing rental agreement period.
Local brokers say that with capital prices in Bengaluru at a five-year high, landlords are scrambling to sell their apartments, looking for high returns.
Sellers' market
Kiran Kumar, Vice President of Bengaluru-based Hanu Reddy Realty, said a couple of days ago that one landlord approached him to sell his apartment close to the eastern IT corridor of Whitefield.
"While a tenant, who pays Rs 40,000 for a 3BHK, already stays there, the owner still wants to sell it due to the current market condition. Today, the apartment would fetch at least Rs 1.5 crore, at least 20 percent more than what he would have gotten last year. In the process, he will get 10-15 percent more return than renting out the same asset," he added.
Experts say real estate prices have jumped at least 10-20 percent in most major micro-markets across the city in the last year.
In the prime Defence Colony, close to Indiranagar, apartments are being sold at Rs 40,000 per sq ft, up from Rs 28,000 per sq ft last year.
And in upscale Sadashivnagar, close to the CBD, brokers sold a 3,000-square-foot apartment for Rs 50,000 per sq ft, or about Rs 15 crore. In the same area, in 2018, a similar apartment was being sold for Rs 30,000 per sq ft.
"The real estate market is at its peak in Bengaluru, with prices at a five-year high. This has become a sellers' market, with buyers having no choice but to agree to the prices," Kumar added.
Demand-supply mismatch
Currently, the severe mismatch between demand for apartments and supply has worsened.
According to data from Knight Frank, Bengaluru saw 43,420 new residential launches in H1 of 2022. However, in the first half of 2023, it saw only 23,542 new launches.
However, demand was robust, with Bengaluru selling the highest number of apartments in India at 64,547 units in the second quarter of this year, another report by JLL said.
Thus, local brokers say that while landlords scramble to sell their apartments at all-time-high prices, buyers are left with little scope for negotiations. This came especially after the work-from-home was scrapped, leading to an influx of floating population back to the city.
The real estate market in Bengaluru, largely driven by the IT sector, saw a boost in demand after major IT companies like Infosys and TCS announced the work-from-office policy.
"This has boosted the landlords' confidence that their assets will be sold, even at absurd market prices, while tenants now look for apartments in a market where rentals have already jumped by 20-30 percent, even 40 percent in prime areas," brokers add.
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