Landlords in Bangalore, often referred to as India’s Silicon Valley, now charge the highest proportion of their property’s value as rent, edging out financial center Mumbai, according to data from market researchers. — Unsplash
Rents in India’s technology hub of Bangalore have nearly doubled since the start of last year, making it the country’s hottest residential market.
Landlords in the city, often referred to as India’s Silicon Valley, now charge the highest proportion of their property’s value as rent, edging out financial center Mumbai, according to data from market researchers.
The capital of Karnataka state is home to over 1.5 million workers including those for global firms like Alphabet Inc’s Google, Amazon.com Inc, Goldman Sachs Group Inc and Accenture Inc. That population was displaced during the pandemic, with staff moving to remote work or departing the city, pushing rents down. With Bangalore’s economy and private sector stirring back to life, landlords are looking to recoup lost revenue and find themselves in a seller’s market.
“Rental market is too hot right now,” said Prashant Thakur, head of research at property consultancy firm Anarock. “Apartments had to be rented out at very low rates during Covid as many went back to their hometowns. Now that people are getting back to the office, landlords are making up for their losses with higher rents.”
Anarock’s data shows rents in various Bangalore neighbourhoods have jumped by double digits since 2019, echoing a wider surge across India’s major cities. But Bangalore’s more recent cost increase is larger because it took a bigger hit from the pandemic, market observers say.
The experience of securing a home is also turning into a highly competitive race.
Ripu Daman Bhadoria, who moved last year from Amazon in Seattle to Google in Bangalore likened his house hunt to clearing a job interview at the Mountain View, California-based search giant. “Engineers think Google interviews are tough but this is another level,” said the 36-year-old engineering manager who has multiple people on his team facing the rent challenge. “The stress impacts health, it impacts work, everything.”
The shortage of supply has led estate agents and ultra-picky home owners to demand LinkedIn profiles and resumes from prospective renters, said Arpan Batra, the owner of real estate consultancy Anzen Spaces. She and Waquar Ahmed of Ahmed Realty – who has 35 clients looking for a home and no inventory to offer – both observed a doubling of rent prices over the past year. Multiple interview rounds, including on Zoom, are now commonplace.
Part of the problem is an artificial constraint on supply, Batra said, brought on by construction grinding to a halt during the pandemic. Bangalore only added roughly 13,560 residential units in the first quarter of this year, an increase of just 3% compared with a 55% jump in Mumbai, according to Anarock. Bangalore is now the top Indian city for rent yield with 3.9%.
Nowhere is the problem as acute as the neighbourhoods in central Bangalore, Whitefield and the Outer Ring Road (ORR) area. There are about 350 companies in the 17-kilometer ORR stretch and they together employ one million workers, said Krishna Kumar Gowda, general manager of the Outer Ring Road Companies’ Association.
The concentration is high and impacts availability of rental homes within a reasonable distance, he said. Intel Corp, Microsoft Corp, KPMG, Goldman Sachs and Morgan Stanley Inc have their offices along the length of the road and a new Google campus with a capacity for housing 10,000 workers is coming up fast, said Gowda.
Ramyakh Jain, who moved to Bangalore for a new job, found a two-bedroom rental home for 50,000 rupees ($600) per month in February. It’s one-and-a-half times the rent and only half the size of the apartment he had in New Delhi’s Gurgaon district previously. It took him weeks of scouring the market with the help of as many as 25 estate agents. Even so, he considers it an accomplishment.
“I’ve found a roof over my head,” Jain said. “I’m among the lucky ones.” – Bloomberg
