It is boom time for people who want to take houses on rent in the top two metros of the country.
While there has been a 40-50 per cent drop in rentals for residential property in New Delhi since peak-time prices in November 1997, rentals for houses in posh localities have dropped around 25 per cent since 2001, according to real estate consultants. The decline in south Mumbai rentals has been 25-28 per cent since 2001.
Sanjay Verma, executive director (India), Cushman & Wakefield, feels that the drop is due to over-supply of accommodations in these metros. However, high quality buildings in some micro markets tend to get snapped up as soon as they were released in the market, he added. This is true for the posh areas in both metros.
Verma said though the rentals seemed to have bottomed out and were currently stagnant in most locations across the metros, an upswing was likely in areas with a limited supply for a steady demand like high-end apartments. Some suburban developments might also see an upswing because of the initial low capital value, Verma added.
According to CB Richard Ellis, the golden triangle of Malabar Hill, Breach Candy and Carmichael Road continued to be the most expensive residential property micro-market in the country and witnessed increased activity.
CB Richard Ellis said in Mumbai, there was a remarkable increase in demand on account of increased transparency among developers, a more educated buyer and easy availability of home loans.
Since the availability of housing loans at a lower interest rate had fuelled demand and the commercial property market was at an all-time low, residential development seemed to be the most viable option for the mill lands that were being freed, it added.
"We expect volumes and values to remain soft," CB Richard Ellis said. Areas like Lower Parel and Byculla were becoming alternative addresses for those who could not afford the high rates of south Mumbai, but wanted to stay close by, it said.
It said the market was expected to remain stagnant with no further price reductions for good quality buildings in the near future. It also added that the residential property in the suburban areas of Mumbai and the prime residential micro markets of south Mumbai were unlikely to experience the exponential growth they saw during 1993-1995.
The consultant said there was a sudden appreciation in demand for quality bungalows in New Delhi at rents which were earlier not acceptable.
This was due to an increase in demand from diplomatic circles and foreign missions, it said. It added that the rents for such establishments had increased marginally by 5-7 per cent.
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