Stagnant property sales push up housing rentals, says report
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With property transactions remaining stagnant for a while now, residential rentals have reportedly started climbing as more people prefer to rent instead of buying a house.
According to a new report by Jones Lang LaSalle, "With a sustained increase in capital values keeping most potential buyers at bay", rental values continue to increase.
While the usual annual increase in residential rentals is in the range of 9 to 11 per cent, over the last one year, rents have increased in the range of 10 to 20 per cent.
Ashutosh Limaye, head of research at JLL (India), said that while in Mumbai overall, the quarterly increase is about four per cent, the highest hike has been registered in the Bandra-Andheri-Goregaon belt.
"Property prices have long crossed their 2008 peak. Besides the high capital values, the reason for rental appreciation in this micro-market is the demand-supply mismatch. In the eastern suburbs, where the supply is not so constrained, the rentals haven't gone up at the same rate," said Limaye.
Limaye added that the increase in rentals will continue for a while. However, this trend would not last long as people who have been waiting for prices to crash will gradually start buying property when they don't see any price correction in sight, he said.
The report further stated that the lull in sales of residential units in Mumbai continued with only two major new projects launched recently in Mumbai.
These projects are Indiabulls' Blu at Worli and Runwal Greens at Mulund, both launched in May.
The report said, "Capital values in Mumbai have witnessed a sustained rising trend on the back of new amendments to the Development Control Regulation Act."
According to a report by the London-based property consultants Savills, rental yields in Mumbai are amongst the lowest across international cities.