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COVID-19 impact: Mumbai rental prices fall by up to 25%

Mumbai’s real estate landscape, residential rented properties in particular, is witnessing a major reshuffle. Here’s how: a 3 BHK apartment at a prime location in Mumbai’s Bandra West that was never rented below Rs 90,000 per month is now available for Rs 65,000 to Rs 70,000. That’s a drop of almost 28 percent. Yet, there are no takers.

“This particular house has never been vacant for more than 2 weeks. It’s a well-furnished, spacious flat and would always fetch the amount quoted by the owner,” says Pawan Makhija who runs a broking business covering Mumbai suburbs.

Pawan says owners are being compelled to decrease rents to keep their houses occupied. He has never seen prices drop so sharply in a span of just two months in at least 15 years of his broking career. Many owners have started to re-negotiate rent with tenants who are unwilling to continue with their lease.

Several tenants are looking to relocate to smaller and cheaper houses. “25 percent of my clients have vacated houses in the last 2 months and this is likely to worsen after the lockdown is lifted,” adds Pawan. So what has suddenly changed for Mumbai’s rented property market? 60-year-old Anita Thomas is fully dependent on rental income since 2011. She owns two houses in Mumbai, one in Borivali and the other in Bandra.

The 2BHK apartment in Bandra that fetched her at least Rs 75,000 per month was lying vacant for two months since the lockdown started. As finding a suitable tenant became harder, Thomas agreed to give the flat to a family who could afford to pay only Rs 62,000 per month. That’s a loss of Rs 13,000 every month.

Job cuts, salary cuts and shutting down of firms due to the lockdown has left many migrant middle-income earners in the lurch. Those without a job are either looking for smaller accommodations or are temporarily heading back to their hometowns.

Job uncertainty is another factor that is pulling many people back from moving into a new house even if it is available at cheaper rates. “The earlier occupant was a foreigner. She vacated the house and flew back to her home country soon after the government indicated there will be travel restrictions,” says Anita Thomas.

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