Fortunately this has been a season where experts in the property sector are upbeat about the city's rental market and its improved prospective. The property sector as a whole, that was lying low from 2007 to 2009, is slowly on a revival mode now. Observers also feel “this correction period” was absolutely necessary for a market that was slipping into an unreal and expanded bubble that was a near-disturbing factor.
But when we take into account the rental scene, we actually have to look into factors that influence this market as value of the land, city and outskirt cost factors, construction costs and material costs play a major role in determining rental factors. If the cost of construction has gone up by 25-30 per cent this quarter, it shows a picture where one square demands Rs. 2 lakh as against last year's price that was Rs. 1.25 lakh. With cost of cement, sand, steel and wood on the increase, naturally people who want to rent their houses would demand better rentals, say industry professionals.
PropertyPlus spoke to R.Y.N. Rao , who heads Sattva Real Estate Solutions (the real estate market research wing of the Sattva Group) to bring in a perspective to the prevailing rental scenario in the city right now.
With the kind of growth that Bangalore is witnessing, both with the census report and with newer buildings emerging, how do you rate the rental trends for this year?
Rental values in the city have already stabilised. Commercial as well as residential property will continue to command a good price in the days to come. There are two main criteria for a property fetching good rental value: one is the location and second, the amenities. A property located in the CBD and which is well-connected will always fetch high rentals. Gated communities and high-end apartments with all amenities are also fetching high rentals irrespective of the location. Rental values of high-end apartments in the city today are anywhere between Rs. 35,000-Rs. 40,000 per month and rentals for villaments are even going up to Rs. 1 to 2 lakh per month.
Would the guideline value hike next month have an impact on the rental scene too?
Guideline values announced by the government are typically always 10 to 12 per cent lower than the market value. Rentals depend upon the demand for the property. So, revision in guideline value may not really have an impact on rentals.
What are the reasons for the increase/decrease in certain areas?
Rentals in CBD and extended CBD areas like Indiranagar, Koramangala, Malleswaram etc have gone up. The reason is demand for property in these areas. Retail spaces are also in big demand in these areas.
Gated communities on the outskirts such as Whitefield, Sarjapur Road, Outer Ring Road etc where amenities are good are also fetching very high rentals. The reason is upgradation in the standard of living.
Do you think the areas running alongside Namma Metro lines will fetch better rents?
Once the Metro is operational, rentals will definitely go up along the stretch as there will be increased demand for property along the corridor due to connectivity.
Is Bangalore the highest in rentals after Mumbai? What do you think are the main drivers in the increase, although road infrastructure and garbage disposal is far from satisfactory?
Yes. Next to Mumbai, Bangalore and Noida are at par when it comes to the number 2 slot for high rentals. The two main drivers for people still preferring to work and live in Bangalore despite laxity in infrastructure are Bangalore's cosmopolitan nature and the fact that the city is relatively safer to live in.
