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Why have Delhi rents jumped?

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Why have Delhi rents jumped?

Last updated: June 4 2011
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  • Why have Delhi rents jumped?

    Does anyone have any idea why the rents in Delhi are skyrocketing? I have been house hunting and find that even DDA flats, badly maintained with dirty mosaic floors, iron window panes that do not shut, old fixtures and peeling plaster, are beng quoted at Rs 33,000 (for three bedrooms) and over in areas like Alaknanda, Munirka and other South Delhi localities. In fact, a DDA flat in Panchsheel Enclave was quoted for Rs 45,000 and one at Kaveri Apartments was being quoted for Rs 37,000. Just why have the rents gone up so dramatically. Three years ago when I was house hunting these places ranged from Rs 22,000 to Rs 25,000. And in localities like Greater Kailash you could easily get a flat between Rs 25,000 to Rs 35,000 (for a house spread over 300 sq yards). The Rs 35,000 flat is today being placed at Rs 55,000.

    Now, on what basis are prices being decided? Who decides them? Tell me if I am right – I think the brokers in Delhi are the ones who set the prices. They quote a higher rate for they gain directly in the form of commission they get. The higher the price of the house, the higher their commission. So they egg on the owner giving him a higher price that what his house is worth and meanwhile tell the tenant looking for a house that he should up his budget. This is the game that they play.

    Earlier the brokers would take 15 days rent as fee from the tenant and 15 days from the landlord. But now they are charging a month’s rent each from both. So in a Rs 35,000 a month apartment, a broker makes Rs 70,000 as deal, whereas earlier he would be making Rs 35,000 only.
    Any ideas on how this practice can be curbed? Would like to know your thoughts on this matter.
  • #2

    #2

    Re : Why have Delhi rents jumped?

    There are many reasons for rents going up:

    1. Capital value of properties have increased, so landlords want more rent. 3% of Rs 90 lacs is significantly more than 3% of 45 lacs.

    2. Unfortunately a lot of people can't afford to buy a house now because of prices going up. So they are forced to rent. Demand for rental flats has increased but inventory had not increased much in proper Delhi.

    3. Price of petrol are going up. So people want to stay closer to their work places in Delhi leading to more demand.

    4. Goddamn brokers have gotten even more greedy. They are also creating false impression of short supply and more demand in the market leading to higher rentals.

    Any ideas on how this practice can be curbed? Would like to know your thoughts on this matter.
    Only way out is to move to areas where rent is less (west Delhi and north-west Delhi) or buy your own house ASAP.

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    • #3

      #3

      Re : Why have Delhi rents jumped?

      Yup, moving farther and closer to public transportation is one option, but not everyone can do that.

      In Delhi(or infact all the metros), there is literally no relation of rent and price. It all depends on how desperate you are and how much that property suddenly got into demand. Dealers would always quote you 20-30% more and it has left to you how to negotiate...I would say talking to landlord sometimes is better, but lot of them are not ready to directly deal with tenants anymore.

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      • #4

        #4

        Re : Why have Delhi rents jumped?

        I dont agree that rents have increased a lot. I myself have a house in south delhi. And the 2nd floor is rented at approx 20k(decent 2bhk). Although if we take a new renter, it will surely be near to 27k.
        But anyways you should be able to find a 2bhk for 25k in a very decent location.
        If you compare the rents/costs ratio it is still far less.
        A flat whose cost is luike 2.5 cr, rents is like 25k.
        And a flat whose cost is like 40lakhs, its rent is like 10-12K. So still its quite cheap.

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        • #5

          #5

          Re : Why have Delhi rents jumped?

          There are flats coming up in Delhi. I do not think there is a shortage. Now where there used to be single storey or at best a first floor, exist three to four floors. This has led to real congestion on roads and just no place to park the cars. The flats are really swanky - imported tiles, aluminium panes stc... but no place to park a car! Or at best one car.

          An increase of Rs 7,000 in rent in a year on what was being charged at Rs 20,000 I would say is high.

          I suppose the fact that it has become very difficult to buy property, is leading to these high rates. Somehow the jump in rents has been in the last four to five months. Areas like Saket, once very middle class, are now considered posh because of the malls, the water shortage notwithstanding.

          Do you see any let down in the rents in the near future?

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          • #6

            #6

            Re : Why have Delhi rents jumped?

            Originally posted by Shiro View Post
            There are flats coming up in Delhi. I do not think there is a shortage. Now where there used to be single storey or at best a first floor, exist three to four floors. This has led to real congestion on roads and just no place to park the cars. The flats are really swanky - imported tiles, aluminium panes stc... but no place to park a car! Or at best one car.

            An increase of Rs 7,000 in rent in a year on what was being charged at Rs 20,000 I would say is high.

            I suppose the fact that it has become very difficult to buy property, is leading to these high rates. Somehow the jump in rents has been in the last four to five months. Areas like Saket, once very middle class, are now considered posh because of the malls, the water shortage notwithstanding.

            Do you see any let down in the rents in the near future?
            call it interest accomodated and inflation adjusted - apart from demand and supply - bhai anyways I have bought two one bhk in unauthorised colonies of delhi and getting cool yield on the investment.

            Dilli hai bhai - "naveda" nahi

            rohit

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            • #7

              #7

              Re : Why have Delhi rents jumped?

              Rohitji,
              Buying in unauthorised colonies -- either you must be very brave or extremely well versed with reality.
              How did you ensure the title was clear of what you were buying?

              Comment

              • #8

                #8

                Re : Why have Delhi rents jumped?

                Originally posted by Shiro View Post
                Rohitji,
                Buying in unauthorised colonies -- either you must be very brave or extremely well versed with reality.
                How did you ensure the title was clear of what you were buying?
                In most unauthorised colonies there is no clear title. You have to purchase a lathi prior to buying a property there or you must know prominent people in that locality or you should live on the property yourself to maintain possession.

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                • #9

                  #9

                  Re : Why have Delhi rents jumped?

                  Originally posted by ThePunjabi View Post
                  In most unauthorised colonies there is no clear title. You have to purchase a lathi prior to buying a property there or you must know prominent people in that locality or you should live on the property yourself to maintain possession.
                  There is an old saying "Jar, Joru aur Jamin - Jor ke" well I believe in calculated risk - I bought in Jawahar Park F block which got the provisional certificate to regularize.

                  Moreover this colony is one of the 733 colonies which got the Govt nod in Feb 11 to go ahead with all the development work
                  to start

                  The area where I bought is in south delhi so its connectivity to everywhere is wonderful, Bus service using BRT, metro from Saket and the Nizamuddin rly station.

                  The place is crowded which means no political party can overlook it.

                  It is next to Sainik Farms so not that polluted.

                  what more ?

                  yeah the title - that is clear I have checked the chain - the land owner sold to builder and builder after building flats sold to enduser and the land record is clear.

                  In a nutshell - I m loving it.

                  rohit

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                  • #10

                    #10

                    Re : Why have Delhi rents jumped?

                    And so MANAGE WELL AND BE HAPPY is the motto.Right?

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