News: Rental prices in luxury housing segment show slow momentum-01-03-2021
The average rentals in the luxury segment in seven residential markets across the country rose between 17 percent and 26 percent during the period of 2014 to 2020, found a report by a private real estate consultancy, called Anarock
The average rentals in the luxury segment in seven residential markets across the country rose between 17 percent and 26 percent during the period of 2014 to 2020, found a report by a private real estate consultancy, called Anarock. The seven residential markets considered in the report include Delhi-NCR, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and Pune. As per real estate experts, this is a less-than-impressive figure and points towards a slowing down of the momentum in premium residential housing.
Golf Course Road in Gurugram saw an increase of 17 percent in rentals while the neighbouring Golf Course Extension Road saw a rise of 18 percent in rentals in the last seven years, the report stated. Surprisingly, the capital prices on Golf Course Road witnessed no appreciation during this period, while Golf Course Extension Road saw rise of seven percent, the report found.
City-based experts said that the rental and capital asset figures depict the slow momentum in premium and residential housing in the last five years in the city. The return on investment on luxury housing has remained very low and this has been manifested by the low rise in housing rentals, said Vinod Behl, a city-based real estate expert.
“The luxury and premium housing categories on Golf Course and Golf Course Extension Road have not appreciated as expected and this is the reason why the rental figures are also not impressive . Things will improve in the next one-and-a-half years as non-residential Indians, high net-worth individuals and senior company executives are looking for bigger homes and second homes due to work from home culture,” said Behl.
As per the details shared in the report, housing rentals in key luxury markets saw better year-on-year growth between 2014-2020 than average capital prices in the same localities. It further said that reforms introduced by the government in the real estate sector such as the introduction of Real Estate Regulatory Authority(Rera), GST rules, and other supporting measures helped in improving the capital prices of assets from one to three percent while rentals market saw a sustained growth.
Experts based in Gurugram said that while growth was seen in rentals between 2017 to 2019, in 2020, the city witnessed either no growth and even a little decline as people refrained from investing or upgrading their homes due to uncertainty caused by Covid-19 pandemic. “There is some relief now as the market is witnessing some traction, and the demand for premium category housing in both rental segment as well as from end users has revived. We are getting more enquiries now,” said Sanjay Sharma, a city-based real estate consultant.
The report said that average rental for a 2,000 square feet apartment at Golf Course Road, which was around ₹60,000 in 2014 rose to ₹70,000 in 2020. Likewise, the rental for an apartment of same size on Golf Course extension road in 2014 was ₹42,500 and it rose to ₹50,000 in 2020. As far as capital appreciation is concerned, the property prices rose by seven percent on Golf Course Extension Road in this period while there was no rise in the property prices on Golf Course Road, the report said.
Golf Course Extension Road is poised to emerge as one of the most important micro markets in the city as it has great access to major roads, good infrastructure and a good mix of properties suited to the demand, said Pankaj Bansal, director, M3M. “The proposed Metro connectivity and upgrade of Golf Course Extension Road will add great value. The area has a good mix of high-end residential and commercial properties, which will definitely help in boosting demand, “ he said.
