Sunday, April 24, 2011

Rents hit the roof in Mumbai, up by 11%

This was bound to happen sooner or later. Now Manmohan has to take notice of yet another piece of inflation hitting the common man. First you get priced out due to black money and next you get pushed to the outer suburbs as rents escalate. If prices don't fall soon, landlords will raise rents another 10% over the current 11% as demand for housing is ever increasing.  Maintenance cost borne by owners has jumped as well. I know where a 3k monthly maintenance  has jumped to 5k in just over 1 year. This phenomenon is across cities so renters will be forced to cough up more or leave their current residences. This is another way for the rental yield to catch up with sky high prices.

DNA India reports. 

Rising realty rates may have resulted in a sharp decline in property sales, but it has led to a growth in rental value in Mumbai and other metropolitan cities in the country. Mumbai and the outskirts of the city has seen an 11% growth in rental value in the past year, according to a study conducted by private real estate portal,

The figure for Bangalore, Pune and Delhi has shot up by 13%, 11% and 9% respectively.

Surprisingly, rental value in South Mumbai, one of the most preferred locations to stay in the city, has seen a dip. The Worli residential market saw a 21.31% dip last year, while the figure for Prabhadevi, Parel and Bandra (West) fell by 18%, 12% and 11.57%.

“The rent in South Mumbai had gone through the roof. It is still unaffordable. So, people are shifting towards the suburbs and outskirt of the city,” a real estate expert told DNA.

However, the rental value in the suburbs too has shot up drastically. Borivli (West) witnessed a record 42.25% growth, while the rates have shot up by 35.04% in Powai, 28.32% in Malad and 20.40% in Kandivli (East). The Mumbai metropolitan region too has seen a ruse in rental value.

The figure for Mira Road and Seawoods shot up by 39.28% and 36.36% respectively in the past year.

A real estate expert attributed the rise in rental value to exorbitant property rates in Mumbai.

“People prefer to stay in rented homes instead of buying a house. Also, there is a huge influx of people in the city. As a result, there is a huge demand for rented homes,” he said. Government data compiled by the stamp duty department also shows that there is a 35% rise in the number of lease agreements being signed in the city.

Business head at Vineet Singh said: “People are relocating or moving in better homes, which in turn, will affect the rental values of properties. Also, the state of real estate is not in trend with the moving economy because availability of fresh inventory is less in the Mumbai region. Therefore, rental values escalate on an annual basis.”

arshal Shelkar, who has been staying at Seawoods for the past three years, is finding it difficult to cope up with the rising rentals. He used to pay Rs7,000 as rent for a 3BHK house. The owner demanded Rs12,000 last year. “Now he is asking for Rs20,000. I am staying in Navi Mumbai, not South Mumbai. Each day, I have spend one hour on travel. If I continue to stay in houses with such high rents, my monthly budget will go haywire. I have other liabilities like EMIs and daily expenses. There should be control over the rise in rent rates,” he said.