Rental Trends in India
Recent trends of rental properties in India are conspicuous by the immense potential that is being realized today. Rentals values in cities like Delhi and outskirts are witnessing an increase of 20-25%. Real estate agents are devoting themselves to negotiations for rented homes more than ever. Though the interest rates on home loans, continued tax exemptions on such prompts people to buy property, those with the ability to buy a flat among the middle-class are thinking twice.
In the residential segment, the capital value or cost of flats has almost doubled in cities like Gurgaon where prices went up to Rs 45 lakhs from Rs 15 lakhs a couple of years back.
The demand for more capital appreciation in the wake of the rising property prices coupled with home loan rate hike has dampened the buying spirit. This has in ways propelled the demand for rental property in India.
Residential rental trends
Residential rentals for flat/apartment, independent house and PG accommodation are more popular in Tier I and II cities. These cities have far greater avenues for those who are on transferable job or looking for job opportunities. This has created a good market for those seeking to invest in Investment property i.e. investing in a property for rental purposes; as they ensure good rentals on a regular basis.
In the high-end rental apartment segment, the terrace flats, luxury apartments and home, bungalows, villas, penthouses and condominiums are gaining ground as a popular choice. The segment is also considered a safe investment option as the leased property is kept under the e inspection of the respective housing society. Increased demand of independent houses or paying guests occur mainly in the metros like Delhi, Gurgaon, Mumbai etc. where the corporate sectors rent independent houses for their senior executives.
A paying guest or PG accommodation in India is a convenient accommodation arrangement where the owner provides meal as a part of the rent agreement, apart from several desirable amenities like laundry. Even PG hostels and working women’s hostel, are considered safe and can be availed of on an individual or sharing basis mean big business.
Commercial rental trends
The real estate rental trends in the commercial sector are momentous as the key tendency among the investors is to rent a commercial space instead of buying. It will facilitate low risk and less worry on maintenance. Commercial Rentals including corporate office space, BPO spaces, mall space, shops and Showrooms are an integral part of the commercial rentals in India.
Commercial lease agreements with respect to malls are long-term ranging from three to nine years. Buying good space in high-quality development and leasing it to a good brand is a wise investment decision. Usually, commercial lease agreements specify a 15 per cent escalation in real estate rental every three years which is a good enough yield.
For those considering regular rental returns rather than capital appreciation, mall space has the distinction to be an excellent option. It gives returns higher than that achieved with office space and much higher than the rental return from residential space.
Showroom rentals also enable retailers to know the scope of the returns in business without investing much. Real estate developers are in favor of leasing out commercial property. Departmental stores which can boast of strong electronic surveillance have gone down well the public. Thus shop rentals have been categorized as a safe and growth-oriented performer in the real estate rental business with a more confident market.
Service apartments which come in the form of furnished apartments geared to short and long term accommodation of corporate houses and MNCs are competitively priced than hotels. Serviced apartments are also increasingly been seen by multinationals operating in India as the most cost effective option.
Moreover, commercial rental market is witnessing the rising trend of mixed use developments. The product mix will have malls and office spaces with service apartments. Some of the companies are setting a trend of leasing out service apartments when they have to move their employees for a short period of time.
A constant watch on the prevailing rental developments in India will provide serious opportunities as it has for companies in the IT, ITES and the BPO sector that have been the key drivers in the commercial rental space for Call centers/BPO offices. Their massive recruitment drive necessitates large office complexes. This has spelt success of the real estate rental business.
Leased out industrial properties/ plots of land for industrial projects have the advantage of long term agreements between the owners and the tenants. The scene on the residential apartment rentals is looking up. The new concepts being developed are, in fact, redefining the traditional ideas that were synonymous with rental market in India.