House Hunting As You Return To Big City Work Life? Bad Timing!

Tushar, working for an online retail market place, was scheduled to move back to Bangalore early last year. Then the second wave of the pandemic hit. In January, the company was once again in discussions to resume work-from-office but then came the third wave, leaving employers wary of calling employees back.

Tushar, now married, has finally had to move back to Bangalore, only to realise that he now has to now shell out a lot more than he once did. "Rents have gone up by as much as 20-30% in societies in some areas, while public infrastructure has gone the other direction," he complained on a call while stuck in traffic. Tushar preferred not to disclose his full name.

More than two years after work-from-home, employees—old and new, are making their way back to India's metro cities, pushing up rentals.

According to data by property site NoBroker.com, rentals across the six metropolitans it tracks, rose by 12-16% in April and May this year, compared to about six months ago.

Rentals in Bangalore shot up by 16.7%, the highest across the metros, while Delhi NCR saw the lowest rise at 12.4%.

Rentals had not moved up ever since the start of the pandemic, until about September or October last year, Saurabh Garg, co-founder and chief business officer at NoBroker, explained. Ever since, there has a fairly unprecedented jump in rentals across the six cities, especially in the last two months, he said.

Properties are renting out fast and commanding a premium with high demand from tenants moving back, Garg said. As such, rental yields have also gone up, though not by as much since they are anyway low in India, he added.

Prashant Thakur, senior director and head of research at Anarock also said that said that the rise in rentals has been more than usual. They estimate the rise has been 25-30% compared to during the pandemic in cities such as Bangalore, Chennai, Hyderabad and Pune. Pre-pandemic, the rate of increase was in the range of 15-20%, he said.

Rentals in these cities fell during the pandemic when offices shut. Now, reopening of offices and resumption of physical classes in schools have driven up rentals, he said.

Bangalore and Hyderabad have led the surge, owing to a dense population of employees in IT and ITES sectors, he said.

To be sure, assessing he rental markets can be very subjective, with a wide difference between the rate demanded and the rate settled at, Thakur said.

Vivek Rathi, director for research at Knight Frank India, however, pegged the rise in rentals lower at about 5-10% across metros.

Data from the Ministry of Statistics and Programme Implementation also suggests that broader inflation in house rentals is in check at 3.4% in April. This data covers the entire country, indicating that apart from metros, other cities have not seen a surge in rents.

Since the pandemic, some of the rental inflation is driven by an increase in preference for gated societies with better amenities, Garg said. According to a survey carried out by the property site in December last year, nearly 61% of the respondents said that they now prefer a gated community over standalone buildings.

Another change in preferences is the need to look for homes in proximity to schools and offices — a reversal of the trend in the pandemic, when tenants prefered the suburbs, Garg said.

Thakur does not see a sustained rise in rentals. They should stabilise in another quarter as the current frenzy to relocate abates, he said.