With the world under the clutches of a microscopic villain, the lockdown and restrictions imposed on account of COVID-19 in Chennai have made the once busy and bustling city deserted with only local residents seemingly still around. Chennai has been declared as the epicentre for the spread of COVID-19 in Tamil Nadu. This impact of COVID-19 on rental market in Chennai has felt heavily in major areas in Chennai, especially in Old Mahabalipuram Road (OMR), as it is witnessing an increasing number of young professionals vacating rented homes and paying-guest accommodation or asking for rent relief. This is not just leaving the investors and landlords who have invested in rental markets disappointed but also has left landlords scouting for suitable tenants amid the pandemic in a large metro city like Chennai.
So, what exactly has caused this stress in the property rental market in OMR, Chennai? Can it recover from this heavy hit? Here is how the COVID-19 pandemic has impacted the property rental market in OMR, Chennai.
Impact of COVID-19 on Rental Market in Chennai:
As Chennai became a hotspot for COVID-19, many people fled the city to save themselves from Coronavirus. But this has caused the city to lose its natural balance at many levels. Impact of COVID-19 in Chennai has hit rock bottom for house rents and demand for rental houses and paying-accommodation across the cities experienced a sudden decline. Even in high-demand rental areas in Chennai like Anna Nagar, Thiruvanmiyur, Porur, Sholinganallur, T Nagar, and Ambattur, rents dropped to about 50% in June. In fact, over the past 6 months, Chennai’s property rental market witnessed a sheer nightmare due to COVID-19. Here’s how the COVID-19 pandemic has impacted the Property rental market in OMR, Chennai.
1. Work from home
With social distancing and masks being a part of our lives these days, most of the companies have quickly adapted to the new normal. Suddenly, ‘work from home’ seems like the best option that a company can give its employees and virtual meetings, online events, and remote working facilities have taken the center stage. But this is not the case for the commercial market like the property rental market. With corporates and MNCs working to reshape their working model, the commercial real estate sector, especially the property rental market in OMR has suffered a heavy blow. Chennai is one of the important Information Technology (IT) hubs of India and is home to over 4000 IT companies that are spread across the city. So, a huge sum of the population in Chennai is the working population who have come from different parts of India. They usually rent apartments or PGs. Now, as these companies have offered indefinite work from home options for employees, they have vacated their rental houses and paying-guest accommodation and left OMR leaving the rental homes and PGs vacant.
2. Financial pressure on residents
Work from home and remote working is just one part of the story. The COVID-19 has also left many people jobless and income less. Many companies in Chennai have implemented job cuts, salary cuts, and shutting down of certain operations to save their business from going bankrupt in the pandemic. This has left many middle-income earners in the dark. Also, a large part of rental property in OMR is occupied by daily workers who depend on these IT populations and middle-income earners for their daily wages. Since travel restrictions and curfews are still active in many parts of the cities, they are completely cut off from their income. These populations under huge financial pressure are either looking for smaller accommodation or heading back to their hometowns.
3. Heavy blow on small businesses and services
OMR has a vibrant ecosystem of businesses and services. A lot of these small businesses like hotels, small cafes, and other small establishments operate on rental spaces. On account of the lockdown restrictions in Chennai, many of these small businesses have gone bankrupt and have been cornered to vacate the rental establishments. Even after the lockdown relaxations announced by the government, many small businesses that have reopened now still await customers. This has caused a lot of business in the area to shut down after lockdown.
4. Pressure on owners
A large part of the population of Chennai is made up of middle-class people who have lost their source of income due to the COVID-19 situation. In fact, most of them are even struggling to meet their daily needs, and obviously, paying monthly rent is an uphill task in this situation. This puts the homeowners under pressure to reduce the rent for their tenants. But this is hard on homeowners too as the majority of homeowners are servicing home loans that they have taken against the property and they have little option but to succumb to the pressure of lowering the rents. They are compelled to decrease rents to keep their house occupied. Many homeowners have voluntarily reduced 25%-30% of the rent amount on humanitarian grounds. This is not just in OMR, even in the top spots of Chennai like T Nagar, Alwarpet, and Teynampet, Beasant Nagar the situation is quite similar, as landlords have voluntarily lowered monthly rents by 20%. This is seen as a win-win strategy for both the tenants and homeowners as it eases the financial pressure on the tenants and gives an opportunity for homeowners to retain an income opportunity in uncertain times like these.
Being one of the worst-hit areas by the COVID-19 pandemic, Chennai’s real estate landscape, especially, the property rental market in OMR is witnessing a major reshuffle. This situation is not just for Chennai, prime rental markets across India including Bangalore, Mumbai, Pune, and Hyderabad have witnessed corrections of varying degrees. But the property rental market in OMR and other areas of Chennai are slowly rising up as many property listing websites see a good increase in the number of listings now as compared to that of June. So, Impact of COVID-19 on Rental Market in Chennai has got a dip in the rental prices to be a short-term phenomenon, and the property rental market will normalize by mid-2021 if the government successfully contains the spread of COVID-19. Moreover, Chennai has always risen successfully from these kinds of difficult situations in the past and the residents believe that it will rise up to its full glory again. It is known as a ‘city that never disappoints anyone’ and certainly, the demand for rental homes and housing is sure to soar up once the pandemic eases.