Rentals of residential spaces up by 20-25 percent in Delhi-NCR

After two waves of COVID-19 and subsequent lockdowns, Delhi-NCR is now returning to life with the hybrid work culture and in some cases companies have completely returned to work-from-office mode, forcing people to return from their hometowns.

Mayank Mishra, who works as a telecommunication engineer at a multinational in Gurugram, said that he had to defer his plan to buy a flat in the city because of a fluid job situation and opted to rent a house in Gurugram’s Sector 111 near the Dwarka Expressway.

“Interest rates are high so purchasing a fresh property is expensive. Additionally, the recession is kicking in so I am worried about job security and I do not want to spend all my savings in buying property. So I have decided to rent out a flat in the same location where I want to buy a house. This will help me save some money and also give me a living experience of the locality before I invest here permanently,” Mishra told Moneycontrol.

Also Read: Redevelopment projects trigger up to 15% rise in Mumbai rentals

Vinay Tomar, a real estate executive at New Door Properties, a Delhi-based real estate agency focused on the industrial sector, said that in the last one year demand for residential as well as commercial spaces on rent has increased by a good margin in Noida and Greater Noida.

He said that over a year back if the rent of a 3BHK flat was Rs 16,000-17,000 per month in Central Noida equal size units in the same localities are now being rented out at Rs 20,000-21,000 per month.

Similarly, the average rent of a 3BHK unit ranged between Rs 12,000 and 14,000 in Noida Extension, but is being rented currently at around Rs 16,000-18,000 per month.

“The increase in the rentals are mainly because of high demand. Now companies have started calling their employees back to offices so those who were working from home are now back here and hence the demand is going up,” Tomar said.

Rohit Chopra of Southdelhiprime.com, an online real estate firm, said rents in the capital, especially in prime areas, have soared. He explained that currently a 2,000 sq ft house in Defence Colony is getting rented out at between Rs 2.75 lakh and Rs 3 lakh per month whereas a year ago it was being leased out for Rs 2.25 lakh to Rs 2.5 lakh.

Similarly, in GK-2 earlier a 2,000 sq ft house used to be leased out at around Rs 1.25 lakh per month but is now being rented at Rs 1.5 lakh per month.
“It is mainly because of the demand and supply gap. Additionally, after the pandemic, people’s requirements have changed as they are now trying to lease out bigger spaces so that they can make their office in their residence too, if required,” Chopra told Moneycontrol.

Chopra highlighted that now people are also preferring to first live on rent in any locality they want to buy property in to get a feel of the place rather than directly purchase the property there.

Shauzab Kazmi, assistant director at Investors Clinic, a real estate company, said that there has been a jump in rentals, residential or commercial, in Gurugram and Noida.

Rentals for residential properties revolve around 2.5 to 3 percent of the total property cost which has increased by around 20 percent in the last one or one-and-a-half years whereas rentals of retail commercial properties hover around 7 percent of the value compared with 4-5 percent earlier.

The increase in rentals is high in luxury housing complexes located near areas such as Golf Course Road, Golf Course Extension Road, Ambience Island and Dwarka Expressway, among others. In housing complexes near Ambiance Island, the rent goes above Rs 1 lakh per month and more depending on the size of the property.

“There has been nearly 20 percent growth in the rentals of residential properties in the last one or one-and-a-half years. In upscale societies such as DLF Magnolias and others which are located on Golf Course Road, the rent goes up to Rs 3 lakh to Rs 4 lakh per month. This is all because of robust affordability and the gap between the demand and the supply,” he said.

Also Read: Bengaluru tenants witness up to 45% rent surge, even in areas once considered dormitory suburbs

Rentals in societies located around Dwarka Expressway have gone up because of the anticipation of the facility becoming operational in 2023. That’s why more people are choosing this area to live and hence rents have increased, say experts.

Similarly, in Noida, rents of residential units have generally gone up but it is steeper in upscale sectors located around the Noida-Greater Noida Expressway such as sector 150, 137, 93 and 142.

Archana Tiwari, who works in the IT sector and lives at Exotica Fresco Society in Sector 137, said that she has to shell out a hefty amount as rent every month.

"I was away at my home in Lucknow for around a year due to the pandemic but when I returned because of work requirements, the rents had shot up in the area. I prefer to live in Sector 137 because of its proximity to my office in Sector 142. So now I have to pay a rent of Rs 35,000 per month which was Rs 28,000 per month nearly a year back," Tiwari said.

In the case of Noida Extension, rents have risen by Rs 4,000-5,000.

Vishwas Dass, who lives in Mahagun Mywoods in Noida Extension, said that rent in his society has increased by nearly Rs 4,000-5,000 in the last 10 months.

“I have been living here for nearly four years but I can say the growth in rentals of residential properties have been good. Till last year a 3BHK flat used to cost around Rs 15,000 per month in Mahagun Mywoods but now the rent for the same unit ranges between Rs 18,000 and Rs 20,000. This is mainly because the companies located in the region have started calling their employees back to office,” Dass said.