Anyone who has house-hunted in Mumbai will tell you that finding a place on rent that one can afford, is probably the second-hardest achievement in the city — buying a home in India’s financial capital ranks as the first. However, if recent rental trends are anything to go by, tables have turned. A noticeable and sustained drop in residential rental demand has turned the Mumbai market into a tenant-friendly one, even if only for the moment.
From paying full brokerage, to offering discounts of up to 30 percent on rent, home-owners in South Mumbai are going the extra mile to ensure that their vacant homes find takers. The metropolis finds itself in the midst of an unprecedented shortfall in demand for homes on rent, with several executives heading back to their native towns and villages to work-from-home, amid the COVID-19 pandemic.
Rental demand in Mumbai is at a staggering low
“It’s a trend that we have begun witnessing in all big cities, and especially Mumbai,” says Kunal Moktan, Co-Founder and CEO of Propshare Capital. “People do not see the need to pay 50,000 to 60,000 rupees in rent when they can go back home for six or 12 months and work from there. As a result residential rents in Mumbai are not going up in a hurry,” he adds.
With several offices extending work-from-home plans until December, this understandable decision to save on rent has meant that suburbs and prime localities have witnessed significant under-cutting on rental prices by home-owners.
“We were looking to move to a home in Bandra and were surprised to hear a prospective landlord quote just about Rs 60,000 rupees per month for a new home,” shares Shreya Singh, Mumbai-based analyst who just moved homes from Sion to Bandra, “The same homes were not less than Rs 80,000 a year ago.”
Worli: 2BHK apartments on rent for Rs 65,000
Shreya isn’t alone. Most tenants looking to move are being met with unbelievably attractive rental expectations. “Supply is now available in abundance as opposed to earlier when it was in shortage. There are plenty of vacant houses that are available, and we are easily seeing a 30 percent drop in rental prices across suburbs,” says Satish Sonawale, Senior Director and City Head (Mumbai, Navi Mumbai & Thane), Nestaway Technologies, “Earlier, it was unheard of owners giving brokerage, now owners are readily parting with money to brokers to get houses rented. The trend has reversed.”
What this trend means is that a 2BHK in Worli where rents would normally start from Rs 90,000 per month now has home-owners quoting just Rs 65,000 per month, due to non-existent to tepid demand. In Powai, a swanky Hiranandani apartment where rent lay in the range of Rs 50,000 pre-COVID, is now all of Rs 40,000. But there’s a catch.
‘Cheap rent only for the time-being’
“Owners are clear that they will sub-let these apartments at these discounts only for shorter durations like four or five months,” says Sonawale, “Once demand is back in full force, home-owners are clear that they will be looking for a re-set. When demand is fully back, they expect to have the upper hand in negotiation.”
This means that up until December — until the time that WFH could continue being in effect — Mumbai’s rental prices could remain surreally attractive, especially in South Mumbai where expats make for the prominent tenant audience. “Landlords are trying to make whatever income they can for the next four months,” Sonawale says and adds, “Expect older rentals to be back by December.”