COVID deals a big blow to real estate revenues

Mysore/Mysuru: The COVID-19 pandemic has affected the real estate scene in Mysuru where students and professionals do not feel the need to pay high rents to stay on in the heart of the city anymore. As work from home is the new norm, they are shifting to their native places or moving to the city outskirts as rents are cheaper there when compared to the Central Business District. 

As a result, many houses in central areas are vacant. When the first lockdown was announced in March  and subsequently extended, many rented houses were vacated as many people lost their jobs while most of the professionals faced a steep salary cut. These factors — job losses, salary cuts, businesses shutting down — have played a role in changing home rental patterns.

In many areas of the city that are considered as a haven for home rentals, rents have fallen or are being renegotiated. 

Remote work arrangements and online classes, which do not require professionals to stay near their workplace or children’s school, salary cuts and job losses are among the factors that have triggered a reverse migration. 

Even the thriving business of Paying Guest accommodation and furnished apartment business have seen a slump. Many houses in Hebbal, Vijayanagar, Mahadeshwaranagar, Metagalli, Kumbarakoppal, Loknayaknagar, Manchegowdanakoppal, Lakshmikanthanagar, Hinkal, Hootagalli — the areas that had mushrooming rental, PG and serviced apartment business due to the concentration of IT companies — are vacant and landlords are finding it difficult to repay the surety and bank loans taken to invest in properties. 

There is absolutely no demand for single-room accommodation and even 2 BHK houses as many migrant workers have left Mysuru to their native places and so far there is no news of them returning. 

Also, many PGs that were occupied by students are vacant as colleges and universities are shut. “In usual times, the rentals usually increase anywhere between 5-10 percent on an average in a year. No correction in rents has taken place as of now. This trend will continue for some months,” said Vishnu Prasad, a real estate dealer in Vijayanagar. 

Even the commercial complex rentals and city’s office market was on a very strong footing with a robust momentum in demand until the first-quarter of 2020. However, as businesses faced disruptions in the wake of the pandemic the office space market and building rent felt the pinch and went into decline mode. Many deals faced delays and new enquiries were put on temporary hold.

Reduced rents

Experts say rent levels may reduce further if the COVID-19 pandemic doesn’t ease and companies decide to extend the work from home option for a few more months. “With the current situation of job cuts and salary losses, tenants are either vacating properties or demanding rent relief. Also, many houses are becoming affordable as owners have slashed rents in the hope of getting some income,” Prakash Rathod, a property consultant from Ramakrishnanagar said. 

“Many house owners are approaching us because their tenants have vacated. Many homes are left empty. Rents have come down because most owners are willing to take lower rates. They feel it is better than leaving the house vacant,” he added.

Families who used to reside in 3 BHKs are shifting to 2 BHKs. They may stick to the same area, but this downgrading helps them reduce their monthly expenses. “Slowly, demand might pick up for smaller accommodation on the outskirts as now the preference is not for crowded areas due to the pandemic. There might be no takers for huge houses at least for six to seven months till there is mass availability of COVID vaccines,” says Goutham Shankar, whose 3 BHK is lying vacant since two months.