India’s expectation for rental real estate is at its peak, with widespread urbanization countrywide, spilling of migrant population into the metropolis, and the popularity of striving housing missions like “Housing for All” formulated by the Central Government.
The big demand for rental homes in India and the fact that it has been underserved to date due to the nonappearance of good business planning and care of a workable rental ecosystem makes a compelling case for the immediate development of rental housing in different cities of India. The declaration of Affordable Rental Housing Complexes (AHRC) to solve the increasing housing crisis is the best step in this direction.
Cities of India have seen a radical spurt in migrants in the last 2 decades. Economic Survey of 2016-17 reveals that approx. 9 million migrants a year between 2011-2016 move to different cities in India on the hunt for good employment opportunities & a better lifestyle.
While this constant flow of urban migrants into metropolises has been a reason of concern, given the dismal urban planning infrastructure of cities, the big number of 11 million unoccupied and 0.8 million unsold inventory across India, is a big reason why we need to think again seriously on the rental housing crisis.
An underlying litany of issues
Expensive land value in the cities, trust issues among landlords, and the nonexistence of proper rental operational & management systems have formed a huge gap between demand and supply of rental housing. Even as major policy initiatives like RERA, PMAY, Model Tenancy Law, have laid the footing for the development of rental housing, the lack of feasibility and sustainability of rental models have pushed this idea away from good advancement and circulation.
If we observe the rental market closely, we will know that it has been unwantedly managed with pro-tenant Rent Control Acts (A central Rent Control Act was passed by the legislature in the year 1948), which makes it unfeasible for landlords to put their properties on rent and maintain them together. Second thing is that the low rental yields in India of 2-4%, one of the lowest in the world, offer a small incentive in undertaking the risk of renting apartments for a long time.
The much-required tonic
If India wants to apply a successful rental housing model just like in many developed countries of the world, then it has to adapt the rental housing market in urban areas where prices exceed the affordable range of most city inhabitants.
The recently declared Affordable Rental Housing Complexes (AHRC), Operational Guidelines is the accurate tonic that India so very needed to make rental homes affordable for metropolitan inhabitants. The policy parameters formulated are an earnest effort to capture the lack in housing units across the country while simultaneously address the main issues comprising affordability and betterment of the life of weaker sections of the society.
Besides this, the AHRC parameters have a shorter execution time frame which will hasten rental housing accessibility to less than 2 years. Investors are in search of long-standing constant returns can also revel at the detail that AHRCs can match risk-return profiles of offshore wealth and other independent bonds, allowing them a good position in the billion-dollar residential real estate market of India.
Rental & Property Management providers to be in charge
While the introduction of AHRC guidelines has provided the fire, the rental housing program so extremely required, it has also exposed the best spot for rental and property management corporations to hold this disorderly rental business by bringing the huge available stock of vacant housing into the rental market of India. According to the different reports & statistics, India has total $20billion residential property rental market ($0.8billion rural + $13.5billion urban + $5.7billion NRI property brokerage).
Property management start-ups are optimistic about controlling the profitable rental market by bringing complete and cost-effective features that open the gates to an easy and safe renting experience.
Major cities like Mumbai, Chennai, Bangalore, and Hyderabad are experiencing a good rental boom because of recent government regulations, tax reduction, and the advent of rental & property management firms. Delhi NCR is also fast catching up as rental trends like shared living and co-living are getting higher.
A boom in rental space coming up
Equipped with technology and digital marketing portals, rental and property management firms are taking along both landlords and tenants from the step of searching for the property to end with closing tenancy contracts.
From making sure that properties are rented out at the right time, to review of properties quarterly and conducting maintenance and restoration works in good time; and from educating property owners on rental market prices to performing background verification of potential tenants, property firms have won the trust of landlords and tenants and simultaneously are dealing with problems of housing scarcity and rental property management hassles.
The rental property management profession in India is still in a budding stage. However, the uncontrolled transparency and rental assurance guarantees assured by property management firms are catching the consideration of developers who are keen on converting their unsold inventories to sales.
As metropolises expand and gradually developed shortly, the requirement for rental and property management firms will see a sudden rise as rental homeowners and NRI commercial property investors caught in the active web of routine lifestyle would look for easy management of their assets without any outer intrusion.
