Realty Blues: Home Rentals Stagnate on Excess Supply : The Economic Times Bengaluru | Mumbai | New Delhi:

People now ready to move to farther places due to improved transport infrastructure

Vinay Kumar, an employee with a multinational IT company in Bengaluru, recently shifted to a two-bedroom apartment from a single bedroom flat at the same rent as he was paying earlier.

“I got a bigger house of 900 sqft for . 17,000 per month rental,“ said Kumar ` who had earlier planned to buy a house but decided to put it off due to a slowdown in the residential market.

One would have thought that stagnating home sales would have led to boom in the home rental market across Indian cities, but rentals have remained more or less flat across major cities over the past one year or so because of excess supply in many markets where people are moving to farther places than before on the back of improved transport infrastructure.

As per CommonFloor data, rentals across major residential hubs in Bengaluru like Marathahalli went up slightly . 19 per sqft from ` to ` . 17 per sqft over the past one year, while Bannerghatta remain stable as ` . 15 per sqft.

In Mumbai, Metropolitan Region rent in Andheri East went up from`. 42.39 to` per sqft while rentals at Goregaon East inched up from ` . 40 to `. 41 per sqft.

In Delhi-NCR, East of Kailash rent rose. 27 per sqft from `to`. 25, while in Gurgaon the rentals have remained stable, according to CommonFloor data.

“The rental yield in Gurgaon today is between 1.5%-2%. Only a few locations which have high end lifestyle products, a segment where supply is low, have seen rentals rising, but that too marginally,“ said Abhay Khemka of Gurgaon-based real estate brokerage firm Khemka Investments and Properties. CommonFloor data also suggests that affordable destinations are seeing a spurt in rental demand in most cities. For instance, in Bengaluru, Kundalahalli, KR Puram and Sarjapur Road are seeing spillover demand from Whitefield and Outer Ring Road markets while Hosur Road and HSR Layout have spillover demand from Electronic City.

“Earlier, lack of proper physical infrastructure compelled people to rent at places closer to workplace even if the rentals are high. But with improving connectivity in major cities via metro, monorail, flyovers, expressways or likewise, it is no longer a challenge to travel to affordable destinations,“ said Vikas Malpani, cofounder and head at CommonFloor Groups.

Meanwhile, sales in real estate market have been considerably slow due to stillhigh property prices, delay by builders and non-buoyant economic environment, increasing unsold home inventory.

In the June quarter, home sales in the top eight cities of India dropped 4% while unsold inventory rose a massive 18% during the quarter to 1,017 million sqft, according to data from property research firm Liases Foras.