The number of properties available for rent post the lockdown is witnessing a sudden rise in certain segments, prompted by the financial impact of the COVID-19 pandemic.
However, real estate agents say the surge in the number of vacant properties cannot be attributed solely to the fact that people are moving out of the city. Rather, it is a combination of factors that coincides with lifting of the lockdown, travel restrictions, and the economic impact of the pandemic.
Haseeb Noor, member of the Confederation of Real Estate Associates (CREA), said, “There are multiple factors. People who had gone to their hometowns in March – a time when many usually take a break – haven’t been able to return due to travel restrictions. Though in the commercial sector there have been waivers with mutual consent as government regulations didn’t allow for tenants to use the property, in the residential sector, there have been cases of tenants trying to take undue advantage of the situation and seek waivers,” he said, adding that in such cases, there can be relaxation in mode of payment, but they cannot refuse to pay rent.
N.A. Afzal, secretary, Bangalore Realtors Association India (BRAI), said it was in the low-income group (LIG) housing segment that a lot of vacancies are seen as people have moved out of the city, but the higher and middle income group segments have not seen many changes. “Of course, there is a segment which is making changes due to the salary factor too,” he added.
With job loss and pay cuts being reported across sectors, people are relocating according to their finances.
“Salaries have been affected,” said Mr. Noor. “There is a certain relaxation in mode of payment, justified more so in retail. Properties are getting empty because people are restructuring in proportion to pay cuts. For example, if they were residing in a house costing ₹30,000 per month, with pay cut, they may be looking to move to a cheaper place,” he added.
The third scenario is of properties that were ready to be let out around March, but could not find takers due to the lockdown. Though some real estate agents tried virtual tours, it hasn’t worked for everyone, agents said.
Rent rates too could see some changes. Real estate agents estimate that at present, they are seeing just about 20% of their usual business. The rental rates could see a 30% to 50% dip in retail segment, 5% to 10% correction in commercial, and a ‘marginal’ change in residential rentals, according to many agents.
Wasim Taher, a member of BRAI, said changes due to COVID-19 were inevitable, but this is the best time to buy property as developers are offering incentives. Interest rates are low.
“Though rentals have always been in demand, the momentum has slowed down. Eventually, real estate is an asset. Today is the best time to buy. We’ve had transactions for purchase of properties at the rate of three enquiries to three sales as opposed to 10 enquiries and six sales. There is a growing sentiment of people wanting to invest in property rather than pay rent, and we expect this to go up in the coming months as there is clarity on job security,” he said.