Demand for rented accommodation by expats, or ‘dollar homes’, in Gurugram, Delhi and Mumbai is witnessing a surge and rents have gone up by 40-50 percent, post COVID-19, largely on account of increased demand chasing fewer homes with modern amenities.
Brokers say that the market is as competitive as London’s Mayfair, where a house listed today is off the block within 24 hours. There is also a trend of prospective tenants outbidding each other. Rents start at Rs 3 lakh and can go as high as Rs 14 lakh per month.
It should be noted that soon after the outbreak of the pandemic in 2020, these ‘dollar’ homes that guaranteed dollar income to the landlords had lost their sheen.
Expats back in town
COVID-19 altered the equation with most expats heading home, with no indication about when they will return, or if at all. But with work-from-home almost coming to an end, expats are now back in town.
In Delhi, the preferred areas include Malcha Marg, Shanti Niketan, Jor Bagh, West End, and Vasant Vihar -- all located within close proximity to consulates and embassy schools.
Brokers say that rentals have gone up by more than 40 percent over the last few months for properties that are newly redeveloped and offer all modern amenities, fittings and appliances.
Sush Clays, Founding Partner, Welcome Home Luxury Real Estate Services, who has been helping expats set up homes in India, told Moneycontrol that there is a shortage of modern redeveloped apartments.
“Expats generally demand modern apartments that come with high-end kitchen fittings, appliances, bathrooms with branded accessories and standardised interiors, located close to embassy schools and as far as possible close to the diplomatic zones,” she said.
Rents of apartments depend on these requirements being met, she adds.
Shortage of independent bungalows
There is a shortage of independent bungalows located close to the diplomatic areas for ambassadorial level personnel as most of these bungalows have gradually given way to apartments.
“With more international companies setting up shop in the country, an increasing number of global business tie-ups and increase in embassy staff, the demand for luxury rental housing has been hit by supply shortage,” she explains.
“There is a rush to find the best apartment. Scouting for the right apartment that offers all modern amenities has become as competitive as London’s Mayfair. You have a listing today and it is gone tomorrow. Tenants are trying to outbid each other, with higher rentals and units flying off the shelf within 24 hours,” she said.
“The sign-and-go syndrome has caught on, with too many people chasing fewer apartments. There is also a new trend of younger expats who demand smaller apartments of 1,600-2,000 sq ft but with state-of-art appliances. These cost upwards of Rs 2 lakh per month in rent,” she said. A security deposit of 2-3 months is also mandatory.
In Chanakyapuri’s Malcha Marg area, a builder floor can put you back by Rs 3.5 lakh per month. Larger plot sizes, which is rare, command rentals ranging from Rs 6 lakh to Rs 14 lakh per month (in case of 1,200 sq yard plots on Kautilya Marg).
In the West End area, brand new redeveloped flats can cost Rs 5 lakh per month in rental, and old apartments offering modern facilities, if maintained well, can cost the same.
In Vasant Vihar, brand new flats command a rent of Rs 3-4 lakh per month. In Shanti Niketan, rents start at Rs 3 lakh per month, depending on the quality of property.
The maintenance for these units can start from Rs 20,000 to Rs 30,000, depending on the facilities on offer.
The Gurugram rental story
The Golf Course Road has also witnessed growth in rentals by more than 40 percent. Several Japanese, Chinese, American and British nationals reside in posh condos located in these areas.
Luxury housing units in DLF Golf Links today command rentals starting from Rs 5 lakh per month to Rs 14 lakh per month.
Rentals for apartments in The Aralias, DLF Golf Links, start from Rs 6 lakh per month, compared to Rs 2.6 - 2.7 lakh during pre- pandemic times. Rents at The Camellias start from Rs 7.5 lakh per month to more than Rs 12 lakh more month. Rentals for The Crest at DLF5, Golf Course Road, starts around Rs 3 lakh, say local brokers.
Mudassir Zaidi, Executive Director, North, Knight Frank India, explains that rental values first increased, soon after the pandemic by 40-50 percent as leasing picked up, and capital values also shot up.
“With the senior management -- both domestic and expats -- returning to work after the pandemic, the luxury rental market has seen an exponential increase,” he said.
The rent in an area is dependent on how far the apartment block is located from the place of work, he said.
Rishu Chopra, a broker active in Gurugram, points out that transaction values have also doubled. In Magnolias, an apartment worth Rs 16 crore is today being sold at Rs 32 crore. Monthly rentals have shot up from Rs 4 lakh to Rs 6.5 lakh. In The Crest, rentals of Rs 1.25 lakh per month for a 2,700 sq ft unit is now Rs 2.75 lakh per month.
“There are fewer high-end properties being chased by a large number of tenants. A few expats who would earlier prefer South Delhi have also moved to Gurugram, considering the services available,” he added.
Akarsh Gujral, Domus Prime Properties, points out that some ambassadors and top global corporate honchos prefer to rent out farmhouses. A 2.5-acre farmhouse comes with five rooms, a swimming pool, tennis court and all modern facilities. Most of them are located close to the airport and to Gurugram.
Trends in Mumbai
In Mumbai, rents of luxury units had plummeted by almost 40 percent during COVID-19, after the expats went back home.
Today, the same apartments in the BKC area command a rent of Rs 6.5 lakh per month. Rentals had touched up to Rs 4.5 lakh during the pandemic. Other units located about 2-3 km from BKC were priced at Rs 1.7 lakh per month, pre-COVID, for a 1,100 sq ft apartment (carpet). They had gone down to Rs 1.4 lakh per month during the pandemic. These rentals have touched Rs 2.25 lakh to Rs 2.3 lakh per month.
“In Mumbai, the choice for rental accommodation has reduced considerably on account of redevelopment. It is, therefore, an owner-driven market today. This is one of the reasons that is driving rentals for luxury homes upwards,” said Ritesh Mehta, Senior Director and Head, West and North, Residential Services & Developer Initiatives, JLL.
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