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The housing rental market in this region is far away from a recovery, much like elsewhere in the country, with Bengaluru a prominent exception. Data from research entity CBRE shows the market in both Delhi and Gurgaon to be down for quite a while, in the mid and high-end segments. In South Delhi's Panchsheel Park, an upmarket locality, rents were 15-20 per cent down from 2012 to 2014. At Gurgaon's Golf Course Road, these declined 33 per cent; in DLF Phases 1-4, by about 10 per cent.
In contrast, the Bengaluru market has seen rental values up 30-66 per cent in the central areas and by 30-40 per cent in the north. Partly why the city has been home to most of the new start-ups in the past couple of years in real estate.
Chennai and Kolkata saw flat growth in rental values. These were marginally up in a few locations at Pune and Mumbai. Anshuman Magazine, managing director, CBRE South Asia, had earlier said Delhi was feeling pressure on its rental market due to supply in Noida and Gurgaon.
"Many prefer to rent out places near their offices. With Gurgaon and Noida becoming office hubs, Delhi is feeling the pinch, which is why there has been no improvement in rentals. And, in Gurgaon and Noida, due to oversupply, rents are largely stable."
The realty market is facing a slowdown nationally, with declining sales, though prices have not come down significantly. Prices have been mainly stable but there is scope for correction at many locations, say experts. "Highly overpriced markets like the National Capital Region and Mumbai Metropolitan Region are expected to witness some corrections. Prices in the south are expected to appreciate three to six per cent over the next six to eight quarters," said Samir Jasuja, chief executive (CEO) and founder of PropEquity.
Although sentiment turned positive after the new government too charge at the Centre last year, there's been little ground activity. There is huge and unsold inventory, a drop in new launches and delivery blues have shaken buyers and investor confidence.
Also, the government has drafted a Model Tenancy Act, expected to change the landscape of the rental market after decades. "The draft Act is an improvement on its obsolete predecessor, the Rent Control Act, 1948. That was applicable only to tenancy of more than 12 months, had put a cap on rent and made it extremely difficult to evict a tenant who did not pay the revised rents. The new Act, once implemented, will ensure landlords are able to charge market rates for their properties, while rents are revised periodically and eviction becomes easy," according Ashwinder Raj Singh, CEO, residential services, JLL India.
It is expected to fix the rent ceiling in consultation with state governments to avoid arbitrary increases. However, the extent of change would depend on whether states go along. If they do, this step is expected to bring more supply into the market.
