Rental yields in Bangalore localities

The demand for residential rental accommodations seems to have shrunk in the core city areas of Bangalore due to the changes and disruptions caused by the ongoing COVID-19 mayhem. As more and more people prefer spacious homes in the outskirts, rental yield in the popular residential hubs of the city is likely to suffer in the ensuing quarters.

Remote work arrangements and online classes, which do not require professionals to live near their workplaces or the educational institutes have triggered reverse migration in the core areas of Bangalore. Coupled with it, factors such as large-scale migration of professionals due to salary cuts and affordability have led to the rise in demand for residential spaces in the outskirts of Bangalore. Moreover, with rising concerns around safety and the need to practice social distancing norms, the city has reported a  units, which again is a significant factor that has contributed to the increased demand for larger yet separate accommodations, especially towards the outskirts. Resultantly, areas such as Sarjapur Road, Dodaballapur Road, and Old Madras Road have garnered decent traction from tenants in the month of Apr-Jun 2020.

Due to decreased occupancy near workplaces, falling rentals, and enhanced negotiations around rent relief, the erstwhile popular residential hubs of Whitefield, Marathahalli, and Hebbal have witnessed a noticeable decline in rentals. As per  for the quarter ending June 2020, the areas have reported the rental prices falling to the tune of five percent, two percent, and nine percent, YoY, respectively. The falling rates, as opined by experts, will further have a negative impact on the residential yield in these areas in the coming quarters. As per Vishal Parwani, Owner, SSB Properties, Bangalore, “The city is witnessing heightened demand for residential accommodations in the outskirts of the city, away from the usual residential hubs. For example, from Yelahanka, the demand is moving towards Dodaballapur Road; from Marathahalli, the demand is shifting more towards Varthur and Sarjapur Road. Similarly, instead of Whitefiled, people are enquiring more for an apartment along Old Madras Road. In fact, with the shift in the demand, the popular residential hubs of Whitefield, Hebbal, and Marathahalli have witnessed a decline of 10-20 percent in rentals, on a monthly basis amid COVID-19. The rental rates of premium properties in these areas have also gone down by up to 30 percent.  As a result, the rental yield in these areas is expected to decline by 15-18 percent, YoY, in the time to come.”
Similar to Whitefield, Hebbal and Marathahalli, the residential hubs of Malleshwaram, Frazer Town, and Koramangala have also reported weakened demand and declining rentals during Apr-Jun 2020, Vishal affirms further. Speaking about the impact of the outbreak on co-living and the resultant impact on the residential hubs, wherein the industry was thriving during the pre-COVID-19 times, he says, “The industry has taken a massive hit amid the global pandemic. Popular areas such as Hebbal, Whitefield, and Marathahalli, which were earlier known for flourishing co-living accommodations have reported a setback in average rentals, more so due to the decreased demand for shared spaces. The migrants who were earlier residing in these areas due to proximity to their workplaces have either moved to smaller apartments or have shifted to their hometowns in Hosur, Tumkur, Mysore, and Nelamangala. All these have impacted rentals and are further expected to impact rental yield in the popular residential hubs of Bangalore.”

Echoing similar sentiments, Madani Peer Khan, Owner, Propheadlines.com, Bangalore, avers, “Residential areas which were earlier thriving due to their propinquity to popular commercial hubs, such as Global Village Tech Park, Bagmane, and Manyata Tech Park, have witnessed a decline of 10-30 percent in residential rentals in Apr-Jun 2020. The reason for the same can be attributed to large-scale migration of working professionals, especially from North India. While work-from-home has become the new norm, there are around 10-20 vacant accommodations in each lane of the erstwhile popular residential hubs. High-scale negotiations around rental prices and the uncertainty around employment have further marred the existing rates in the localities. The majority of the offices located nearby the residential areas have sacked their employees. This is the reason why the localities that were earlier the most sought-after by the tenant community are lying vacant as of now. If the condition persists, it would indeed have an impact on the rental yields of these localities.”