Rents in India’s technology hub Bangalore have almost doubled since the beginning of last year, making it the hottest residential market in the country.
Landlords in the city, often referred to as India’s Silicon Valley, now charge the highest proportion of their property value as rent, according to data from market researchers, moving out of financial hub Mumbai.
The Karnataka state capital is home to more than 1.5 million workers, including employees of global firms such as Alphabet Inc’s Google, Amazon.com Inc, Goldman Sachs Group Inc and Accenture Inc. This population was displaced during the pandemic along with the employees. Moving to remote work or moving out of town, reducing rent. With Bangalore’s economy and private sector coming back to life, landlords looking to recoup lost revenue find themselves in a seller’s market.
“The rental market is very hot right now,” said Prashant Thakur, head of research at property consultancy firm Anarock. For the office, landlords are offsetting their losses with higher rents.”
Data from Anarock shows that since 2019, there has been a double-digit increase in rents across various localities in Bangalore, mirroring a broader boom across major cities in India. But Bangalore’s recent cost hike is huge as it has been hit hard by the pandemic, say market observers.
The experience of securing a home is also turning into a highly competitive race.
Ripu Daman Bhadauria, who moved from Amazon in Seattle to Google in Bangalore last year, compared his home search to clearing a job interview at the Mountain View, California-based search giant.
“Engineers think Google interviews are tough, but this is another level,” said the 36-year-old engineering manager, whose team has several people facing the hiring challenge. “Stress affects health, it affects work, everything.”
Arpan Batra, owner of real estate consultancy Engen Spaces, said the lack of supply has prompted estate agents and ultra-picky home owners to demand LinkedIn profiles and resumes from potential renters. He and Waqar Ahmed of Ahmed Realty – who has 35 clients looking for homes and no inventory to offer – both saw rent prices double in the past year.
Multiple interview rounds including zoom have become common now.
Part of the problem is an artificial constraint on supply, Batra said, halting construction work during the pandemic.
According to Anarock, Bangalore added around 13,560 residential units in the first quarter of this year, a growth of only 3% as compared to 55% growth in Mumbai. Bangalore is now the top Indian city for rental yield with 3.9%.
Nowhere is the problem so acute as in neighborhoods in central Bangalore, Whitefield and the Outer Ring Road (ORR) area. Krishna Kumar Gowda, general manager of the Outer Ring Road Companies Association, said there are about 350 companies in the 17-km ORR stretch and they together employ one million workers. The density is high and affects the availability of rental homes within reasonable distance, he added. Intel Corp., Microsoft Corp., KPMG, Goldman Sachs and Morgan Stanley Inc. Google’s offices are along the length of the road and a new Google campus with a capacity to house 10,000 workers is coming up fast, Gowda said. Moved to Bangalore for a new job, found a two-bedroom house in February at a rent of 50,000 rupees ($600) a month. This is one-and-a-half times the rent and only half the size of the apartment they previously had in New Delhi’s Gurgaon district. It took him weeks to scour the market with the help of 25 estate agents. Still, he considers it an achievement.
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