Landlords in Bengaluru are riding the boom of their lifetimes as tenants trip over each other to book scarce apartments in the city witnessing a large-scale reverse migration.
About a week back, Shashank Paul, a prospective tenant, found a 2BHK apartment on Haralur Road, near Sarjapura in the southern parts of the IT corridor in Bengaluru for a rent of Rs 40,000. About 15 people came between 10 am till 3 pm to see the apartment. Paul and one more person decided to take the apartment on the spot. "We started our bid from Rs 40,000 and went up by Rs 1,000. Finally, after my last bid of Rs 43,000, the other person backed out."
In another case, Sunil Singh, a realtor at Realty Corps, said he had shortlisted a house at Bellandur in the northern parts of the city for Rs 45,000. "The tenant decided to pay the token money by evening. However, by afternoon to my surprise I got to know that the landlord had given it out to another person for the same rental but probably with a higher deposit," he added.
Amid soaring rentals and crunching demand, the real estate sector in Bengaluru has become an epicentre for auctions of a different kind with prospective tenants bidding hard to get the apartments they zeroed in.
While the rentals have increased by 20-30 percent in some areas, in many places they have gone up by a whopping 40 percent.
In another case, Pranav who goes by a single name, said, "I have concluded that finding a good house for rent in Bengaluru is like finding a unicorn or a Bengaluru street without traffic. As someone who's currently browsing online listings, let me tell you, it's been quite an experience."
With work from office slowly getting normalised across several companies, Bengaluru has already started witnessing relocations with several employees wanting to move closer to their workplaces. This has spiked rentals across the IT corridors in the east and south. Also, rental supply has not caught up with increasing demand.
Maahir Panchal, a prospective tenant, said that he’s been told that the cost of renting out an apartment in Bengaluru has almost touched the cost of buying it.
Why the rush?
Experts said that reverse migration or people returning to offices from other cities has worsened the situation, even though the hiring rates in Bengaluru have come down.
Prasadh M S, Workforce Research & Communication Specialist at Xpheno, a specialist staffing firm, said over the last year, Bengaluru absorbed 1.4 lakh professionals from other cities and towns. However, during the same period, the city also lost 95,000 professionals to other locations.
While the net additions over a year are small and manageable, it is the collective volume of back-and-forth movement of professionals that adds transaction load in the real estate market," he added.
This comes at a time when global headwinds and layoffs continue to batter the IT and startup sectors across the city. Mass layoffs by tech companies have made landlords in Bengaluru jittery about taking on tenants from the IT and startup sectors. Employees of such companies are struggling to cope with the ever-changing demands of the landlords, who are even looking at the prospective tenants’ LinkedIn profiles. Some tenants cheekily say that cracking such interviews is tougher than cracking a Google interview.
According to Xpheno data, the tech sector’s collective volume of active jobs registered a 13 percent month-on-month drop in March 2023. The BFSI sector active talent demand volume fell by 25 percent over February 2023. Non-tech sectors continued to be the major contributor to active jobs for the sixth month in a row.
Divya Krishna, National Director at IndiaAssetz, said most of the people are coming back to their physical work in the city. She said the supply unlocked in the last few quarters has already been taken up with little inventories left.
"This can be the core reason for such spiking rentals across Bengaluru. Additionally, the non-tech sectors, especially startups, are adding to the demand. Several startup employees are moving back to Bengaluru today," she added.
According to Ashish Sharma, City Head – Bengaluru, ANAROCK Group, the ground reality is that in many housing societies, there are hardly any vacancies now and rentals have gone up by at least 15-20 percent against pre-pandemic levels. In a few societies, there has been more than a 30 percent rise in residential rentals compared to the pre-pandemic levels, he added.
For example, software engineer Khushboo Verma took to Twitter to narrate her plight when the landlord asked her to vacate the house if she could not pay the hike in the rental.
Verma told Moneycontrol, "My rent hasn’t been doubled. But the rent in my entire area has doubled because of which even my rent got increased more than what the agreement stated."
She claimed the rentals in her area have increased by a whopping 100 percent in Bellandur.
The rent of a 2 BHK apartment in Bellandur starts at Rs 40,000 - Rs 45,000, up from Rs 30,000 to Rs 35,000 last year.
Singh added that the demand and supply mismatch is so much inside the city that he had to accommodate at least 15-20 tenants in a co-living temporarily until he found an apartment for them. "In the last four days, I have accommodated at least four people," he said.
Even the co-living rents have gone up
Ahona Ghosh, who stays in a co-living in Koramangala, said the company has increased her rent by 15-20 percent by doubling the electricity bill.
Supriya Mehta, an advocate who lives in another co-living apartment, narrated a similar ordeal.
Currently, both Ghosh and Mehta are paying Rs 10,000 for a double-sharing room with a security deposit of Rs 15,000.
Kiran Kumar, a realtor at Hannu Reddy Realty, said the maximum demand is coming from eastern parts of the city like Whitefield and Mahadevpura. Several other prime locations like Indiranagar, Koramangala, HBR Layout and Kalyan Nagar are witnessing excessive demand with little inventories available.
In Whitefield, a 2 BHK with a rent of Rs 30,000 earlier comes at about Rs 40,000-Rs 50,000 today. Kumar said the 2BHK rents in HBR Layout close to Indiranagar have spiked to Rs 45,000 from Rs 25,000 last year.
While in Hebbal, a 2BHK is priced at Rs 30,000 from Rs 25,000 last year. And in growing suburbs like Hennur, a 2BHK has touched a monthly rent of Rs 28,000 in a gated society.
So much so that the demand has spilt over to southern parts like Jayanagar and JP Nagar, which were once considered the sleepy old parts of the city.
Govind Raju, a realtor at Coldwell Banker, added that a 2BHK here is priced at Rs 35,000- 50,000. "Especially rents are increasing here due to the new metro line that improves connectivity towards eastern parts like Whitefield," he added.
While bidding for apartments in Bengaluru is likely to continue for some months, Krishna hopes that rentals will slowly ease in about six months from today. "After six-eight months, some of the projects launched post-Covid will be unlocked and we may see new supply in the city," she added.