As the impact of the coronavirus pandemic is being felt across the globe, the real estate market in Mumbai, especially, the property rental market is witnessing a major reshuffle. Much has been changed since the coronavirus hit the world in December 2019 and as the Indian Government applies extreme measures to contain the Pandemic, many businesses including real estate came to a painful halt. This has caused the demand for rental properties to plummet across the nation, especially in metro cities like Mumbai, Chennai, and Bangalore.
So, what exactly has caused this stress in the property rental market in Mumbai? Can it recover from this heavy hit? Here is how the COVID-19 pandemic has impacted the property rental market in Mumbai.
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How has COVID-19 impacted the Property rental market in Mumbai?
Finding a good house of rent in Mumbai that you can actually afford is one of the hardest achievements in the city. However, in recent times, tables have turned as the rental prices in Mumbai have dropped to an all-time low due to COVID-19. Impact of COVID-19 on Rental Market in Mumbai has resulted in a price drop span of just two months and many rental brokers in the city claim that they have never seen prices drop so sharply in such a short span in their entire career. Here’s how the COVID-19 pandemic has impacted the Property rental market in Mumbai.
1. Work from home.
Mumbai is one of the major Information Technology (IT) hubs in India. It is the headquarters of India’s largest IT company, TCS and the city has several IT business parks including the World Trade Center. So, a huge sum of the population in Mumbai are IT employees who have come from different parts of India. They usually rent apartments or PGs. Now, as many IT companies have offered indefinite work from home options to employees due to COVID-19, most of the non-Mumbai employees have returned to their hometowns leaving the rental apartments vacant.
2. Financial pressure
Job cuts, salary cuts, and shutting down of firms due to the coronavirus lockdown has left many middle-income earners in the dark. Also, a large part of rental property in Mumbai’s prime location such as Bandra and south Mumbai is occupied by entertainment freelancers. As the entertainment industry is still struggling to reel back to its normal form, these entertainment freelancers are completely cut off from their income. These populations under huge financial pressure are either looking for a smaller accommodation or heading back to their hometowns.
3. Expats and Foreigners
Expats and foreigners occupy a huge part of rental property in Mumbai’s posh and prime locations. As soon as the government announced travel restrictions, they headed back to their countries to be with their families and there is no indication of when they will be back or whether they will be back. Usually, expats stay in fully-furnished, sophisticated rental houses whose rent will be no less than INR 75,000. Today, with expats having returned home, homeowners are finding it difficult to find tenants who can afford to pay such high rent amounts and the property rental market in Mumbai has taken a temporary hit.
4. Pressure on owners
With the middle-class working population in Mumbai still under the clutches of COVID-19, most of the tenants are unable to pay the rent. In fact, most of them are even struggling to meet their daily needs. This puts the homeowners under pressure to reduce the rent for their tenants. 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 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, Mumbai’s property rental market has been severely hit. But Mumbai has always seen more demand than supply for rental homes and housing. So, the impact of COVID-19 on the property rental market in Mumbai has got 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