HOME > BUSINESS > IT woes to bring down real estate rentals in Bangalore, IT hubs

IT woes to bring down real estate rentals in Bangalore, IT hubs

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 in NCR are expected to see 10-20 per cent reduction in the housing rents over the next three quarters, according to an ASSOCHAM paper.

“IT and ITeS professionals aged 30 to 45 years and above, earn between Rs 20 to 50 lakh per annum on an average and typically pay even up to Rs 50,000-1.50 lakh per month as rent, in case they do not own their flats for self use. There is another a range paying between Rs 15,000-Rs 35,000 and upward. All these segments are witnessing easing of the rentals,” said the paper.

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.

“Going forward, the rentals may ease at least by 10-15 per cent in Bengaluru, Chennai and Hyderabad, while the decline may be steeper, up to 20 per cent in Pune, in the next three quarters. Gurgaon and Noida are also witnessing a correction in rentals up to 10-15 per cent,” the industry association said.

“Gurgaon is holding up because of the demand push from the national capital region (NCR).”

This should come as welcome news to salaried people in these cities. Rents have increased by around 10% per year in most cities in India, partly because of the average increase of 15-20% in the value of the property every year for the last 10-15 years.

A policy of easy money by the US Federal Reserve starting about ten years ago has pushed the prices of most assets across the world into unchartered territory. While this has been ‘good’ for the owners of those assets, it has caused pain to those with fixed or salaried income as the assets were pushed out of their reach.

The US Federal Reserve is now starting to wind back its policy and suck out the estimated $3.5 trillion back from the market. Stock markets and real estate prices in India are expected to be impacted going forward.

A slowdown in IT services business, which accounts for about 10% of India’s GDP, is also pushing down demand for real estate, though NRI investors continue to be present in the Indian market.

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

“Earlier, the biggest of the IT firms would add tens of thousands of new employees every year along with liberal sops for the existing staff. That scenario has totally changed. Even if these companies may be adding on net basis, the new jobs are not being added in an enthusiastic way,” adds the paper.

“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”.

“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”, ASSOCHAM Secretary General Mr D S Rawat said while releasing its paper.

In any case, the markets for real estate has gone down in major micro markets owing to a combination of factors. With a large inventory of even ready flats which would be available for use in the next few months, the supply for the rental markets would further improve.

Follow ULTRA.news
Indian Real Estate unsold inventory to fall this year – Fitch Fitch Ratings said it expects a slight improvement in the finances of real estate companies in India and forecast increasing consolidation and a reduction in the massive unsold inventories on their books."We expect the cash flow from operations of the rated Indian developers...
TCS sets up new delivery center in Hyderabad for US-based Zebra Technologies Tata Consultancy Services, India's biggest foreign exchange generator, said it has set up a Global Development Center in Hyderabad to cater to Zebra Technologies, a billion-dollar US corporation that specializes in tracking technologies such as bar codes and RFID.The new cen...
Hiranandani offers guaranteed rental for Bangalore project for 2 years As some consumers stay away from making big ticket investments into real estate, developer House of Hiranandani has come up with a 'guaranteed rental' scheme for those buying property at two of its towers at the Devanahalli township in Bengaluru.The company said that, depend...
RERA sales freeze drags down DLF Q2 profit by 94%, sales restarted Real estate major DLF reported a sharp decline in its revenue and profit for the July-September quarter after it stopped taking new bookings due to the implementation of RERA in May.The company's net profit fell by 94% to Rs 12.57 cr in July-September quarter from Rs 204.60 ...
Oracle Financial Services has yet another stellar quarter, sales up 12% Banking software maker Oracle Financial Services Software, formerly known as iflex, reported strong year-on-year numbers characterized by robust revenue growth and strict control over costs, however revenue slipped on a sequential basis.Consolidated revenue for the quarter w...
TCS inaugurates mega campus in Thane, to eventually relocate most Mumbai employees Tata Consultancy Services said it inaugurated the first phase of Thane delivery center that will have the capacity to seat 30,000 employees when fully developed, which will make it the largest in Mumbai.The company, which has a huge operation in Vikhroli in the city, said it...
Godrej Properties Q2 sales and profit double quarter on quarter Godrej Properties, one of the few big real estate giants that weathered the slow down in the market over the last three years well, has reported strong numbers for its second quarter.Revenue from operations jumped 49% to 492 cr, while net profit rose by 91% to 44 cr.Both...
Cognizant raises lower-end of 2017 guidance again IT services provider Cognizant seemed all set to clock the upper end of its full-year guidance for calendar year 2017, raising the lower-end of its forecast once again.The company, which had changed its revenue growth forecast for 2017 to 9-10% from 8-10% last quarter, furth...
Google’s AWS rival cloud services come to India Google has opened its first data center for third-party cloud services in India at Mumbai.This will enable developers to host their applications, websites and other IT projects within India, enabling faster response times for their customers in the country.Before this, th...
HCL, Red Hat to jointly offer cloud infrastructure leasing service HCL Technologies, one of the top five Indian IT services companies, said it has tied up with Red Hat -- the biggest open source software company -- to offer Linux-based virtual infrastructure for companies.A thematic by Red HatUnder the product, clients will be able to ...
Indian IT sector margins to fall to 21.2% from 23.5% by 2020 – ICRA Indian IT companies will continue to struggle to maintain growth rates and their margins will continue to fall in line with the trend seen in the last few quarters, credit rating agency ICRA said.The rating agency predicted a sharp decline in revenue growth rate from about 1...
Wipro increases stake in Oracle cloud specialist Drivestream to 44% IT company Wipro Ltd said it increased its stake Drivestream, which focuses on implementing Oracle's cloud solutions, to 43.7% from 26.1% by investing around Rs 26 cr.Wipro had first invested in the company about four months ago, and seems to have liked what it saw. It made ...
Ramco wins multi-million managed services deal from British MNC Bank Cloud-based enterprise software provider Ramco Systems said it won a multi-million dollar order from a big British MNC financial group to provide managed payroll services.Ramco will help the company, part of the FTSE 100 index, to consolidate its payroll operations in 14 co...
Nila Infrastructures to construct 3,152 flats for Rajasthan government Nila Infrastructures Limited said it got a contract worth Rs 107.3 cr from Jodhpur Development Authority to create 3,152 flats in Barli.The Company will also get 7.5 acres free of cost that can be sold or developed.The township, to be completed in four years, comprise 2...
Indiabulls Real Estate on the mend post demonetization hit – Fitch Fitch Ratings affirmed property developer Indiabulls Real Estate Limited's Long-Term Foreign-Currency Issuer Default Rating at 'B+' with a 'stable' outlook, noting that conditions for the real estate developer are improving."The Stable Outlook reflects the recovery in IBREL'...
Moody’s to train SBI employees to appraise loan applicants State Bank of India, the country's largest bank, said Moody’s Analytics will train its employees to source, appraise and monitor loans.SBI employees will be granted the Moody’s Analytics Certificate in Commercial Credit (CICC) as part of the program.The program has been...
Tata Elxsi to bring Unity gaming platform to enterprise Tata Elxsi, the hardware design company from the Tata stable, has tied up with Unity Technologies to set up a center that will develop solutions based on the Unity visualization engine.The Unity platform is arguably the most widely used engine for developing mobile phone gam...
Wipro acquires 25-year-old US-based design consultancy Cooper Wipro said it has agreed to acquire US-based design consultancy Cooper, without disclosing the financial details."Headquartered in San Francisco, Cooper has been a leading brand in interaction design, UX and professional design education for more than 25 years," the Indian I...
Infosys wins SAP contract from Finnish lift-maker KONE IT outsourcing company Infosys said it has been chosen as a partner by lift-maker KONE for developing and maintaining its enterprise resource planning or ERP system.Infosys has been able to "transition, elevate, evolve and transform" KONE's ERP service delivery and landscape...
Piramal Enterprises invests Rs 280 cr in Thane real estate project by Puranik Piramal Enterprises Limited said it will invest Rs 280 crore in Puranik Builders' “Puranik City Reserva” project in Thane. The investment, routed through Piramel Finance, will be modeled on the ‘financial partnership’ model, it said.Puranik City Reserva is a theme-based ...