Besides the labours who have moved back to their villages resulting in the halt of several real estate project constructions, the outbreak of Covid-19 has also caused other individuals living in prime Indian cities to vacate their rental apartments and return to their home towns.
Cities like Chennai, Bengaluru, Pune, Mumbai, Kolkata, and Delhi have been affected the most due to a decline in residential rental income business. Since March this year, the demand for rental accommodations has been observed to have gone down at least 25% in these cities. Let's understand the contribution of this significant segment of individuals towards the rental housing market in Chennai, Bengaluru, Delhi, Mumbai, Delhi, and a few more.
Contribution of young people in the rental housing market of Indian prime cities
Young people in India who migrate to various prime cities are majorly students and working professionals. They prefer living either in rental apartments or paying guest accommodations. Every year, a fresh lot of youngsters migrate and raise the rental business of the cities.
Reasons for them to migrate are primarily for a better quality of education, more opportunities, higher salaried jobs, and improvement in the standard of living.
However, a rare kind of outbreak known as Covid-19 disrupted this ecosystem and led the situation to go haywire.
What is the change caused by Covid-19 in the demand for rental accommodation?
• The pandemic has hit the economy hard and created a lot of insecurities around the jobs. The crisis has altered the way we live our lives. Hence, in the first opportunity, youngsters who were stuck in the cities went back to their respective hometowns.
• Pandemic resulted in the loss of jobs, unpaid leaves, salary cut, and work-from-home options. All of these options led working professionals to vacate the rented accommodations as early as possible. Students were the first ones who right after the announcement of colleges being shut down left their PGs and rented apartments, and went back to their homes.
How are landlords trying to cope up with the crisis?
• Landlords in prime cities understand that their rental properties are mainly driven by the salaried population who work in industries such as BPO, IT/ITeS, pharmaceutical, hospitality, and other sectors.
• The demand has gone low, and so is the value of rented spaces. Landlords who solely depend on rental income for their livelihood are having a hard time and hence have reduced the rental costs, rather than keeping the accommodations vacant.
• In certain cases where tenants are still willing to occupy the apartments, landlords have temporarily reduced their rental costs as well as put a rent relief by not charging for a couple of months.