Subdued sentiment dampening rentals in IT hubs: ASSOCHAM

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SME Times News Bureau | 26 Jun, 2017
With IT sector witnessing subdued sentiment amidst pressure on hiring and annual pay rise for employees, the country's software and services hubs such as Bengaluru, Hyderabad, Chennai, Pune and Noida-Gurgaon are expected to see 10-20 percent reduction in housing rents over the next three quarters, an ASSOCHAM paper said in New Delhi on Monday.

Unlike in the past when the fresh inflows of young professionals were pushing the demand for rentals in Bengaluru, the house owners in India's 'Silicon Valley' seem to have done a reality check and are accordingly slashing the rentals, while offering better amenities, the study said.

"Even in the existing rental deeds, the tenants are seeking better options and no hike in the monthly outgo, quoting the adverse industry outlook. With better options, the market is tilting in favour of the tenants, especially those paying above Rs 50,000 per month," it added.

Going forward, the rentals may ease at least by 10-15 percent in Bengaluru, Chennai and Hyderabad, while the decline may be steeper, up to 20 percent in Pune, in the next three quarters. Gurgaon and Noida are also witnessing a correction in rentals up to 10-15 percent, the study forecasted.

According to the ASSOCHAM's latest estimates, while the IT sector continues to employ over four million people, mostly in the four to five big cities, the hiring growth has subdued.

"The IT and other services like financials are among the sectors which pay well. Besides, the age profile of these employees is quite tempting for the marketers. They are good spenders and want good life. These factors kept the markets for rentals pushing up, especially in gated and well-equipped housing complexes and societies in Bengaluru, Gurgaon, and Hyderabad. There is certainly a pause visible," said D.S. Rawat, Secretary General, ASSOCHAM.