Premium Housing Supply Falls Short as Demand Rises in Indian Cities

India’s rental market faces significant strain. While salaries are rising, rents are also escalating. Consequently, tenants are dedicating a much larger portion of their income to rent than in the past. This situation is particularly pronounced in cities such as Mumbai, Hyderabad, and Bangalore.

Sudhanshu Mishra, Principal Partner at Square Yards, shared his thoughts on these current renting trends. “The supply that is coming in is skewed. The majority of new supply is concentrated in the premium segment. Housing is particularly scarce near business districts and easily commutable areas,” he said.

This issue affects working professionals and middle-income families. The new rental supply primarily targets luxury properties, often out of reach for the average renter. Most of these units are located in upscale towers with premium amenities. Although they may appeal to investors or expatriates, they do little to assist the broader population seeking affordable rental options.

Simultaneously, supply in well-connected regions is significantly limited. Locations near offices or business hubs are highly sought after, yet new developments in these areas have decreased. Project approval delays, increasing costs, and land scarcity impact housing provision. This creates a notable supply-demand disparity. Individuals seek residences in the city centre or close to their jobs, but choices are scarce. This mismatch is resulting in considerable rent increases throughout cities.

Square Yards indicates that this trend will persist in the coming months. Return-to-office directives are driving more individuals back to urban areas. Young professionals, particularly in IT and finance, favour locations offering swift workplace access. Nonetheless, developers fail to construct sufficient housing for middle-income users in these regions.

Mishra says rents will keep rising without a fresh supply in this segment. He also stressed the need for better planning and added, “Always ensure that lease terms are clearly written in the agreement, including rent escalation clauses and notice periods.”

India’s rental market is experiencing a significant transformation. With the widening gap between demand and supply, thoughtful urban planning and equitable rental policies become more crucial. Industry stakeholders argue that addressing the current rental crisis requires a diverse supply mix.

Read more through the links below to uncover the key trends and market leaders driving this growth:

Business Standard: https://bit.ly/3RRHB8Z