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BW Businessworld

India’s Peripheral Rental Market To Ride On The Emergence Of Remote Working In The Wake Of COVID-19

With the coronavirus spread setting in motion the world’s biggest work-from-home experiment, the peripheries are, however, set to score one against central locations with their expensive price tags.

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In the past decade, rental value of commercial property in India’s large cities have skyrocketed, making them count among some of the world’s most expensive rental markets. This was also reflected in residential property rentals - in areas lying close to the central business districts of cities such as Mumbai, Delhi and Bangalore, tenants today have to pay eye-popping monthly rents, often for living in old buildings, because this way they don’t have to waste their valuable time in traveling back and forth to work. 

On this one point alone, the rental real estate of the peripheries could never challenge its peers in the heart of the city despite the fact that tenants could rent much larger homes for significantly lower rents.

In Delhi’s prime central localities, for instance, you have to pay at least a couple of lakhs of rupees as monthly charge to rent a well-constructed 2BHK home. In Noida, on the other hand, a unit of a similar configuration and more amenities would come for a monthly rent of Rs 15,000 or less. A similar variation would be seen between central localities in Mumbai and areas in Navi Mumbai.  

With the coronavirus spread setting in motion the world’s biggest work-from-home experiment, the peripheries are, however, set to score one against central locations with their expensive price tags.

As it stands, a large number of companies across the globe have been operating through remote working by their employees since March of this year. Amid the continued rise in infections despite world-wide lockdowns, some corporations have already unveiled plans to operate remotely until the end of the year. Despite earlier concerns around the concept of remote working, many in fact are now of the opinion that remote working could emerge as the preferred mode of working rather than being a temporary aberration.

This would eventually lead to tenants, who previously preferred central locations despite having to pay astronomically high rents for smaller configurations and limited amenities because they could “walk-to-work” and not waste time in traffic, moving towards the suburbs, which are sitting on a huge supply of relatively affordable and larger homes, and which are ideal for “work-from-home". 

In fact, the wheels of change are already in motion. According to the Zumper National Rent Report released earlier this month, the demand for rentals in key US cities has started to shift away from “pricey" localities in the city centres, and is seen "moving toward neighbouring, less expensive areas”.

With the demand for homes in the peripheries set to see a boost against the backdrop of the coronavirus crisis and the various lockdowns, property investors in these areas would benefit from the associated growth in rental values because it would almost certainly lead to an increase in capital values over time.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Dhruv Agarwala

Agarwala is CEO and Founder of PropTiger

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