With the rise of work-from-home, prospective homebuyers are seeing the sense in shifting to city peripheries and are taking up larger homes at affordable prices and the 'walk-to-work' concept may lose some sheen
With most people continuing to work from home (WFH), many tenants working in offices located in central business districts (CBDs) and secondary business districts in Mumbai and Bengaluru are now taking up larger apartments on rent in peripheral areas.
In Delhi-NCR, people residing in Delhi and working in Gurugram and Noida are now moving to larger apartments in these two cities due to problems faced on account of borders being sealed during the lockdown.
Real estate consultants in Mumbai told Moneycontrol that they have been receiving requests from people currently residing in Kala Nagar and working in Bandra Kurla Complex to shift to residential developments in Matunga and Chembur which have better facilities and offer larger spaces as their current dwellings are surrounded by slums and are facing COVID-related challenges.
Also, with many of them now having to WFH temporarily, moving a few km away is not a problem.
“Several people have started disqualifying these properties due to health reasons. Several slums around their current place of residence are containment zones. This has impacted demand in Kala Nagar area and leasing activity has now shifted to Matunga and Chembur, which is about 3 to 4 km away,” the consultant said.
“The Chunabhatti Flyover has changed the contours of the city’s business district: BKC. It has decreased commute time to Matunga and Chembur. If it was 30 minutes earlier, it has now gone down eight to nine minutes. Due to the coming up of the flyover and the health hazard being faced by people on account of COVID-19, people are now considering Chembur and Matunga as an alternative destination to buy or rent a house compared to Kala Nagar near BKC,” he said.
Kala Nagar commands capital values of around Rs 50,000 per sq ft whereas prices in Chembur and Matunga are between Rs 35,000 and Rs 45,000 per sq ft. A 3 BHK in Kala Nagar rents for around Rs 2.2 lakh per month whereas a 4 BHK in Chembur and Matunga would set a tenant back by Rs 1.8 lakh a month.
The size of the units too would be bigger. A 3 BHK in Kala Nagar is generally of 1,000 to 1,300 sq ft, whereas a 4 BHK unit in Chembur and Matunga would be around 1,500-1,800 sq ft (carpet).
In Bengaluru, tenants are upgrading. Tech workers residing in a 2 BHK close to their workplace and paying a rent of around Rs 35,000 have moved into a 3 BHK for the same amount a few kms away after being informed that they would have to WFH, brokers said.
“These is especially true if the husband and wife are working from home and both require a larger space,” the property consultant said.
In Delhi-NCR, with several people have to face problems with their commute due to borders getting sealed during the lockdown, many corporates are now scouting for residential options for their staff (currently residing in Delhi) in Gurugram or in Noida.
“People have approached us with this requirement during the lockdown. Many of them currently reside in Delhi and are exploring opportunities in housing societies located in Gurugram’s Sohna Road or New Gurugram as they do not wish to face similar problems in case there is a lockdown and borders are sealed,” says a property consultant who did not wish to be named.
As for the rent differential – a 3 BHK in Delhi commands a rent of Rs 40,000, a bigger apartment in Gurguram’s periphery would cost around Rs 30,000 or less and would have more amenities thrown in.
In Noida too, a corporate recently rented four apartments for its employees at Rs 25,000 per month. “Several of their employees were facing problems due to the border being closed,” the property consultant said.
ANAROCK said in a recent report that with a rise in WFH, prospective homebuyers will see the sense in shifting to city peripheries and take up larger homes at affordable prices and the 'walk-to-work' concept may lose some sheen.
The previous 'gold standard' of Indian housing -- the walk-to-work/short drive to work, by definition only in and around central corporate workplace hubs -- may shed some its popularity for the middle class.
"Millennials' new-found preference for buying rather than renting homes are among the most prominent new residential real estate trends of the COVID-19 era. With the rise of the WFH culture, many may now prefer to live in more spacious and cost-effective homes in less central areas. Bigger homes, affordable prices and more generous open spaces in the peripheral areas will draw demand from tenants and buyers alike," said Anuj Puri, Chairman, ANAROCK Property Consultants.
Apart from changing real estate consumer preferences in a strengthening WFH environment, affordability is an enduring concern especially in the backdrop of a faltering economy and job loss/uncertainty.
The peripheral areas are more affordable both from a rental and purchase perspective. ANAROCK has analysed the cost difference for India's three largest economic dynamos - MMR, NCR and Bengaluru.
In MMR, the micro-markets within city limits include Andheri, Vile Parle, Goregaon, Malad, Kandivali, Chembur, Wadala, Ghatkopar, Vikhroli, Powai, and Mulund. Peripheral areas include Kalyan, Bhiwandi, Dombivli, Mira Road, Vasai, Virar, Thane beyond Kasarvadavali and Owale Panvel, Ulwe, and Taloja.
The average monthly rent for a standard 2BHK home in areas within city limits is approximately Rs 45,800 against Rs 12,500 in the peripheries.
In NCR, micro-markets within city limits include Vaishali, Vasundhara, Indirapuram, Noida, Golf Course Ext. Road, Sushant Lok, Dwarka Expressway, New Gurugram and Dwarka. Peripheral areas include Ghaziabad-Rajnagar Extension, Faridabad, Greater Noida, Sohna, Bhiwadi and Bahadurgarh.The average monthly rent for a standard 2 BHK home in areas within city limits is approximately Rs 22,000 against Rs 9,500 in the peripheries, the report added.