Covid-19 third wave hits rental housing market in India

The third wave of the Covid-19 pandemic has delayed the recovery of India's rental property market, which has been underperforming since the breakout of Covid-19 two years ago.

Following the virus epidemic in early 2020, the rental housing market fell by 5-15% in key markets across the country. Companies expected staff to return to work in the second half of 2021, and only then did signals of stability begin to show. However, the third wave, led by Omicron, arrived and halted the expansion.

Samantak Das, chief economist and head of research & REIS (India), JLL, told the media that After the second wave, the rental housing market began to recover steadily, with rents enjoying an uptick of 5-7% in some places, as office participation increased following intensive vaccinations.

The extension of the work-from-home paradigm owing to the Covid-19-led travel limitations, according to Das, may cause house rentals to plateau and show minor easing over the next two-three months.

Top corporations in key cities have been ramping up operations since October, with half of their workforce projected to be working under the hybrid work model by the middle of the year. Schools had also reopened in part. However, the third wave has caused several businesses and schools to postpone their reopening plans until March.

Top cities such as Bengaluru, Chennai, Hyderabad, NCR, Mumbai, and Pune, which house the majority of corporates, may not be able to witness a rental recovery if the current wave is not contained, according to property brokers and experts.

Following a 5-10% drop in Mumbai mid-segment rentals in the June quarter, rents have stayed relatively constant within the range, and are projected to remain stable with modest pressure moving forward.

Residential rentals in Delhi-mid-segment NCR's corridors began to rebound at the beginning of the October-December quarter, as people began to return to work, with office participation rates above 50%. Rents are likely to stay flat or revert to September quarter levels if another wave arrives with some delay.

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